How Long Does the Foreclosure Process Take in NY?

by Michael H. Schwartz
Foreclosure on house property up for sale.

With COVID-connected moratoriums on mortgage foreclosures in New York in the news, some homeowners in difficult financial situations may ask how the foreclosure process proceeds in New York. The good news for those who are behind on their mortgages is that the foreclosure process in New York can take months.

If you are facing foreclosure on a home mortgage in New York, you may have time to resolve your financial problems instead of losing your home. White Plains foreclosure defense attorney Michael H. Schwartz can help you pursue changes in the terms of your mortgage loan or take other steps to keep you in your home.

What Does the NY Foreclosure Process Look Like?

New York is a judicial foreclosure state, which means the lender must file a lawsuit in court to foreclose on a home. In many cases, a foreclosure proceeding never makes it to court. Attorney Michael H. Schwartz has never lost a client’s house to foreclosure.

When a new homeowner buys residential property in New York, they typically sign a mortgage agreement and a promissory note. The mortgage secures the loan to the house. The mortgage is recorded in county property records, and the promissory note is held by the lender until the loan has been repaid, whereupon the mortgage is marked as satisfied.

If you fall behind on your mortgage payments, you should expect to receive a letter from the lender. New York requires a pre-foreclosure notice at least 90 days before starting legal action against a borrower. The notice informs you that you have overdue payments and seeks arrangements for you to make those payments.

If you are in a situation in which you cannot pay, eventually, the lender will send another letter to inform you that the bank will call in the loan. This is a demand that you immediately pay the entire loan amount. In most cases, a lender must wait until the homeowner has missed payments for 120 days.

Few people are in a position to pay off a mortgage, particularly if they are already behind on monthly payments. In reality, the demand letter allows the lender to start legal action against you. Once the lender has filed a pending lawsuit, you will be served with the complaint and summons and have 20 to 30 days to respond.

If you fail to respond within the given time frame, the court can issue a default judgment against you, which automatically ends your right to defend the foreclosure action.

How To Respond to a NY Foreclosure Lawsuit

It is preferable to consult a foreclosure defense attorney and respond to a foreclosure complaint promptly. There are several alternatives to a foreclosure action that can be negotiated to help you stay in your home. The truth is, the lender would rather get paid than take your home from you. Further, the State of New York has enacted various laws to help mortgage holders stay in their homes. But you have to work with the court.

The court will direct you and the lender to a mandatory settlement conference, which will likely be held in several sessions. This starts within 60 days of the lender’s complaint against the borrower. These sessions will consider the:

  • Outstanding loan amount, including late charges
  • Borrower’s financial status
  • Borrower’s reasons for defaulting
  • Borrower’s potential qualification for a loan modification or government assistance.

If you reach an agreement, such as restructuring the loan to allow payments you can afford, the lender is legally required to drop the foreclosure lawsuit.

If you cannot reach an agreement, the lender may ask for summary judgment against you and foreclose on your loan. The judge may agree to this, but if you have filed a response that makes a case against foreclosure, the judge may order the case to trial. At trial, both sides present evidence and testify. It is up to the lender to prove its case.

Some of the most common defenses to foreclosure include:

  • The foreclosing party can’t prove it owns the loan
  • The lender didn’t follow the required NY state foreclosure procedures
  • The mortgage servicer made a serious mistake when handling your loan
  • You’re a military service member on active duty and protected by the Servicemembers Civil Relief Act
  • The statute of limitations has passed
  • The loan servicer used a defective affidavit or declaration.

The judge may rule in the borrower’s favor, which ends the foreclosure proceedings, or for the lender. If the lender prevails, the judge will order the sale of your home. The lender and a court official will choose a date for auctioning off your home.

At a public auction at the county courthouse, the home will be sold to the highest bidder. You will be responsible for any remaining amount the lender is owed if a foreclosure auction does not bring a price that covers your mortgage debt.

You may file for bankruptcy if you are facing foreclosure. Bankruptcy halts the foreclosure process, which gives you time to find a solution to your financial troubles.

New York’s Moratorium on Foreclosures

On May 3, 2021, Gov. Andrew Cuomo extended the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020, establishing a moratorium on foreclosures until August 31, 2021, if the homeowner files a hardship declaration with the mortgage lender or the foreclosing party, or the foreclosing court.

Contact a White Plains Foreclosure Defense Attorney Today

Michael H. Schwartz, P.C., can help you take action to stay in your home if you face foreclosure. Our clients haven’t had a single discharge denied or lost a single home in foreclosure. You can fight foreclosure and get your fresh financial start. Call or contact us online today for a review of your case and the alternatives to home foreclosure.