What Is the Foreclosure Process in New York State?
Each state sets its own rules for lenders who want to foreclose on a house. How far in advance your lender has to notify you, whether your lender must go to court to foreclose, what you can do to keep your house. If you own property in New York state, knowing the state rules makes it possible for you to protect your rights in foreclosure.
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Types
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New York allows both judicial and non-judicial foreclosures, according to the American Foreclosure Specialist website. Lenders who use the non-judicial process don't have to go to court to foreclose on a house. New York law allows this if there's a "power of sale" clause in the mortgage authorizing the lender to sell the property. In practice, the website states, New York lenders almost always use judicial foreclosure.
Beginnings
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The lender must send a pre-foreclosure notice 90 days before filing a foreclosure lawsuit, according to the New York State Banking Department. That gives the borrower three months to make up any missed payments or negotiate a payment plan or mortgage modification with the lender. At the end of 90 days, the lender files, then notifies the borrower that foreclosure has begun.
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Procedure
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Once the lender notifies you of the foreclosure lawsuit, you have 20 days to respond if you were served with the papers in person, the Neighborhood Economic Development Advocacy Project states, 30 days if you were informed by mail. If you don't respond, you lose your right to state your side of the case in court. Either way, the court must schedule a conference between you and your lender no later than 60 days after you received the papers. This gives you another chance to work out a settlement; if that doesn't happen, the case goes to court.
Prevention/Solution
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At any time up until the day of the auction, NEDAP states, you can stop foreclosure by making up the lost payments, plus interest and legal costs, or working out some other arrangement with the lender, such as finding a buyer for the property. You can also fight foreclosure in court by showing that the lender made an error -- misrepresenting the amount you had to pay, for instance -- or used fraud, or that the company can't document that it owns the loan.
Conclusions
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If you can't find a way to avert foreclosure, the judge will appoint a referee to figure out the size of your debt and the details of the sale. The sale usually takes place at least four months after the court ruling, the Banking Department states. If the sale doesn't pay off the debt, the lender can sue you for the deficiency; if the sale price is more than you owed, the clerk of court will hold onto the surplus until you file to claim it.
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