If you’re facing a foreclosure in New York, it’s important to understand some of the basics, including:
Below we’ve outlined some of the most important features of New York’s foreclosure laws. Keep in mind that this is just a summary; we’ve included statute citations so you can get more details from the laws themselves. Statutes change, so checking them is always a good idea. (If you need help finding the statutes, see How to Find the Foreclosure Laws in Your State.)
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.
Foreclosures in New York are judicial, which means process begins when the bank files a lawsuit against the defaulting borrower in court.
For an owner-occupied, one to four family dwelling, or a condominium unit, New York law requires the foreclosing bank to send a notice to the borrower at least 90 days before starting the foreclosure. (N.Y. Real Prop. Acts. Law § 1304).
If the lender or servicer doesn't send the 90-day notice at all or doesn't strictly comply with all of the law's requirements, you could have a powerful defense that might result in a dismissal of the foreclosure action. If you think the lender or servicer didn't comply with the 90-day notice law, consider talking to a lawyer to get specific advice about your situation.
The bank starts the foreclosure officially by filing a “complaint” (a suit) in court. The borrower will get a copy of the complaint, along with a summons and other notices about the foreclosure process. (N.Y. Real Prop. Acts. Law §§ 1303, 1320). Borrowers gets 20 or 30 days to respond to the complaint, depending on whether they're served personally or by another method. Notice of the sale must be published in a newspaper and publicly posted, in some cases. (N.Y. Real Prop. Acts. Law § 231).
After the foreclosure starts, the court schedules a foreclosure settlement conference to happen within 60 days after the bank files proof of service with the court clerk. At the conference, the borrower and the bank get an opportunity to negotiate way to avoid foreclosure.
The court sends a notice advising when and where the settlement conference will take place, what documents the borrower should bring to the meeting. (N.Y. Civil Practice Rule 3408). (To learn more, see New York Foreclosure Settlement Conferences.)
The law that requires settlement conferences applies to borrower-occupied properties.
“Reinstating” is when you catch up on the missed payments, plus fees and costs, in order to stop a foreclosure.
Under New York law, you may reinstate the loan at any time before a final foreclosure judgment and the foreclosure will be dismissed. If you reinstate after judgment, but before the sale, the foreclosure will be stayed. (N.Y. Real Prop. Acts. Law § 1341).
Certain states permit a borrower to redeem the home within a specific period of time after a foreclosure sale. New York law, however, doesn’t provide a post-sale redemption period. (To learn more, see If I lose my home to foreclosure in New York, can I get it back?)
When a borrower’s total mortgage debt is more than the foreclosure sale price, the difference is called a “deficiency.” Some states allow the bank to seek a personal judgment, called a “deficiency judgment,” against the borrower for this amount. Other states prohibit deficiency judgments.
In New York, a deficiency judgment is allowed if the borrower is personally served or appears in the lawsuit. To get the deficiency judgment, the bank has to make a motion with the court within 90 days of the consummation of the sale. (The sale is consummated when the deed is delivered to the purchaser.) (N.Y. Real Prop. Acts. Law § 1371).
The deficiency amount is the amount of the debt less the higher of:
If you need more information about how foreclosures work in New York or want to learn whether you have any potential defenses to a foreclosure, consider talking to a foreclosure lawyer.