What is the New York Foreclosure Process?
The state of New York has a specific process that must be followed for a bank to foreclose on your home. Lenders are required to send you a pre-foreclosure notice 90 days before any further actions are taken. The law allows for two different types of foreclosure depending on how your mortgage was written. If you become delinquent on payments, there are options that allow you to keep your property even if foreclosure proceedings have already begun.
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Judicial Type
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The process of judicial foreclosure begins with your lender filing a complaint against you to get the property back. You are required to appear before a judge and a notice of pending lawsuit will be given. At this time, the court will consider your case and in some instances you may be granted more time before the foreclosure process continues. If you do not appear in court, the judge will order the property for sale. If the court rules against you, a period of time will be issued in which you may pay the default amount, plus any fees, and avoid foreclosure. The property will be ordered for sale if you fail to pay the bank by the date set by the court. This foreclosure process is used most often in New York and may take from seven to nine months.
Non-Judicial Type
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A non-judicial foreclosure takes place if your mortgage contains a power of sale clause. The clause allows the lender to sell the home under predetermined guidelines if you fall behind on payments. This process gives your bank the right to sell your property without approval from a court. Your lender may carry out the sale of the home, or appoint a trustee to act in their behalf. The non-judicial foreclosure process is uncommon because the majority of mortgages in New York are written without a power of sale clause.
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Notice of Sale
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The process of announcing the home is for sale generally takes place four months after the court orders the property sold. The notice of sale must be placed in a local newspaper in the county the home is located in. The advertisement for the sale has to appear in the paper at least once per week for four weeks before the home can be sold.
Foreclosure Sale
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Foreclosure sales are public auctions usually held at your county courthouse. The home will be sold to the highest bidder, which is usually the bank holding the default mortgage. In most cases, 10 percent of the final bid amount must be paid immediately after the bidding ends. The buyer is required to pay the rest of the balance within 30 days and is then given full ownership of the property.
Deficiency Judgment
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A deficiency judgment may be granted to the lender if the home is sold for less than the amount you owed on the property. If the bank files for the judgment within 90 days of the foreclosure sale, the court will determine the market value of the property. If the market value is more than the amount paid at the foreclosure sale, the court will order you to pay the difference to the bank.
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References
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