Information on Foreclosure Procedures in New York State
If you are a New York homeowner concerned about foreclosure, it is crucial to understand the foreclosure procedure. Both judicial and nonjudicial foreclosures are allowed in New York. The average foreclosure process takes about 15 months, which is longer than most other states. Once you are aware of what to expect and your rights as a homeowner, you will be better prepared to fight foreclosure.
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Judicial Foreclosure
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In a judicial foreclosure, the lender is required to file a lawsuit against the homeowner to obtain permission from the court to foreclose. The complaint must be filed at the courthouse located in the same county as the home. You have 20 days to respond to the foreclosure complaint. If the court finds you in default, you will have a specified period of time to pay the past-due balance plus any fees to avoid foreclosure. If you are unable to pay the balance in time, the court will order the home to be sold through a public auction.
Nonjudicial Foreclosure
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Although nonjudicial foreclosures are allowed, they are uncommon. The nonjudicial foreclosure process is very complicated. If your mortgage deed of trust contains a power of sale clause, the lender has permission to sell the home in the event of your default. Filing a lawsuit is not necessary. Since the court is not involved, issues with the title often arise, making this option less desirable for lenders. The sell is usually executed by the lender or its representative, known as a trustee. A Notice of Intent to Foreclose is not mandatory.
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Foreclosure Sale
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Foreclosure sales are scheduled at least four months after the court ruling. New York foreclosure law requires the lender to publish a notice of sale in the local newspaper once a week for four weeks prior to the foreclosure sale. The advertisement states the property address, description, sale date and location. In most cases, the auction is held at the courthouse. The auction is open to the public. Anyone is eligible to bid on the home, including the lender. The highest bidder must pay 10 percent immediately after the auction. The remaining balance must be paid within 30 days.
Redemption Rights and Deficiency Judgments
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In the state of New York, homeowners are not able to redeem the home after a foreclosure sale. The lender can obtain a deficiency judgment if the home is sold for less than the amount owed. Lenders will need to file a motion to enforce the right to a deficiency judgment within 90 days of the sale. You can avoid a deficiency judgment by selling the home through a short sale, voluntarily transferring ownership back to the bank through a deed in lieu of foreclosure or filing bankruptcy.
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