My parents died a few years ago, and I inherited their home in Syracuse, New York. My then-boyfriend and I took out a mortgage on the house and moved in. We later broke up, and I couldn’t keep up with the payments on just my salary alone. The lender started a foreclosure, but the house hasn't gone to sale yet. I just accepted a new job, which pays much better than my old one. I really don’t want to lose the house because it meant a lot to my parents. If it gets foreclosed, can I get it back afterward?
No, you don’t get the right to repurchase or “redeem” the home after the sale. Some states have a law that permits foreclosed homeowners to repurchase their home after the foreclosure sale, during what's called the “redemption period;” however, New York isn't one of them.
You can redeem the property before the foreclosure sale by paying the loan balance in full. The right to pay off the loan and stop the sale is called an “equitable right of redemption.” Or, you might be able to make another arrangement with the lender before the sale that will allow you to keep the property. For example, the lender might agree to give you a loan modification, or you could get caught up on what you owe and reinstate the loan. But you must arrange one of these options before the sale happens.
Foreclosures in New York are judicial, which means the lender must file a lawsuit in court to foreclose. As part of the foreclosure process, the court will enter a judgment and order the home sold to satisfy the debt.
In New York, you can redeem up until the sale of the property. But after the home is sold pursuant to a judgment of sale, you no longer have a right of redemption. (N.Y. Real Prop. Acts. Law § 1352).
To redeem the home before the sale, you’ll have to pay the full amount of the mortgage debt, including costs and interest.
You can find out the procedure and the exact amount needed to redeem your home before the sale by calling the foreclosing lender’s attorney. You might also consider consulting with a New York attorney who can guide you through the process.
Also, you might have other options for saving your home besides redeeming the property, though (again) you must do so before the sale. For example, you could reinstate the mortgage loan by catching up on the past due amounts. Under New York law, you can reinstate at any time before the sale. But it’s a good idea to complete a reinstatement before the final judgment because the court will then dismiss the foreclosure. If you reinstate after judgment but before the sale, the sale will be stayed (postponed). The downfall? If you later default, the court can order enforcement of the judgment, and the lender can sell the house.
Another possible option is to arrange a workout with the lender that would allow you to stay in the property, such as a mortgage modification or repayment plan. (To learn what to do—and what not do—in the loan modification process, see Do’s and Don’ts for Getting a Loan Modification.)
To find the statute that discusses your right to redeem the home in New York, go to Article 13 of the Real Property Actions & Proceedings law. Statutes change, so checking them is always a good idea. How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting an attorney if you’re facing a foreclosure.