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- Stop your foreclosure sale date
- Lower your mortgage payments
- Lower your principle balance
- Keep you in your property
Your home is probably one of the most significant investment they you made in your lifetime. If you are facing mortgage foreclosure you need an attorney who will take quick and aggressive action to defend you.
Foreclosure Defense in Queens, Brooklyn & Manhattan (6 NYC Locations)
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The common defenses that our legal team uncovers include:
- Lender Violations of Federal or New York Law
- Lender’s Failure to make required disclosures prior to closing on the loan
- Plaintiff does not own the Promissory Note or Mortgage
- Lender engaged in predatory lending practices
- Fraud by the Lender
- Breach of contract
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Understanding New Yorks Mortgage Foreclosure Process
What is “Foreclosure”?
What is commonly called a “foreclosure” is a lawsuit that the mortgage holder files against a homeowner in the supreme court where the property is located. The mortgage holder is usually a bank or finance company.
New York is a judicial foreclosure state, which means that the lender has to sue the borrower in order to enforce their rights under the mortgage and note. If the lender wins the lawsuit, it obtains a judgment from the court, which allows the lender to sell the property at an auction. The money received from the sale is used to repay the debt.
Foreclosure begins when the lawsuit is filed. A homeowner is considered “in foreclosure” until a judgment is made by the court.
The Mortgage and the Note
When you borrow money to buy a home, refinance a home loan, or take out a home equity line of credit such as for home repairs, you sign two contracts with the lender: the Note and the Mortgage. The Note is the agreement that the lender is lending you money and your personal promise to pay it back. The Note includes the terms and conditions of repayment, such as the interest rate, term of the loan, and charges for late fees. The Mortgage is a separate contract that gives the lender a security interest in the property — your pledge of the home as collateral for the loan. The mortgage explains what the lender can do if terms of the note and mortgage are not met, such as going ahead with a foreclosure on the mortgage for failure to pay under the note.
The Acceleration Letter: Before filing a foreclosure against a homeowner, a lender must send an Acceleration Letter to the borrower. The letter tells the borrower that the lender will accelerate the entire amount of the mortgage if the arrears (the total amount overdue) are not paid by a certain date. The Acceleration Letter is sent to the borrower after the borrower defaults on the loan. A borrower is usually considered in default on a loan after missing one payment, though the Acceleration Letter is often not sent until the borrower is 2 to 3 months in default.
90 Day Pre‐Foreclosure Filing Notice: Under New York State law, the lender must send the borrower a special notice at least 90 days before filing a foreclosure summons and complaint. The notice must have specific language and must attach a list of at least 5 nonprofit housing counseling agencies located near the borrower.
The Foreclosure Process
The borrower must file an Answer to the summons and complaint with the court within 20 days of the date of receipt if the summons and complaint were served in person, or within 30 days if they were sent by mail or delivered in another way. This is your opportunity to explain why you think there were errors regarding your mortgage origination and/or servicing. You must send a copy of the Answer to the lender’s lawyer as well as the court.
If you do not want to file an Answer but you do want to be notified of future court actions, file a Notice of Appearance with the supreme court in your county. This means you should receive written notice of all future proceedings, including the auction of the house. (If you file an Answer, you do not need to file a Notice of Appearance.)
Note: Failure to File an Answer: If the borrower fails to file an Answer, the borrower defaults. If the borrower defaults:
The lender files a motion with the court for an Order of Reference, asking the judge to appoint a referee to add up the total amount owed to the lender according to the terms of the mortgage, including principal, interest, late charges, and foreclosure fees and costs; After the referee adds up the total amount owed, the lender files a motion with the court to request the court to enter a default Judgment of Foreclosure and Sale;
Lender Files Summons and Complaint
The lender files a “Lis Pendens” (a pending lawsuit) in court. The “lis pendens” warns all people that title to the property is in litigation.
The lender also files a Summons and Complaint with the court, which initiates the lawsuit. The lender “serves” the Summons and Complaint on the borrower(s).
Affidavit of Service, Requestfor Judicial Intervention, and Attorney Affirmation
The lender files an Affidavit of Service with the court, which sets the date and states how it served the borrower. At this time, the lender must file a Request for Judicial Intervention (“RJI”) with the court to notify the court that it must schedule a mandatory settlement conference. The lender also must file an Attorney Affirmation with the court. If the lender fails to file the RJI, the borrower may file the RJI to make sure that the mandatory settlement conference is scheduled.
Step 3: Borrower Files an Answer
After the judge signs the Judgment of Foreclosure and Sale, the lender publishes a notice about the auction in a newspaper at least 30 days before the auction date, and then may schedule an Auction of the property by the referee. If the borrower never filed an Answer or a notice of appearance, the lender is not required to give notice of the sale to the borrower.
Step 4: Mandatory Settlement Conference
Within 60 days of filing the affidavit of service, the court must hold a mandatory settlement conference to see if the lender and homeowner(s) can reach a mutually agreement solution. The court sends a notice to the borrower stating the date, time, and place of the conference, and tells what to bring.
Step 5: Litigation and Discovery Phase
A. If a settlement cannot be reached in the settlement conference, litigation begins and the case goes into the discovery process. The discovery phase is when theopposingpartiesinthelawsuit request documents from each other. The borrower should send a request for discovery to the lender. The borrower may receive a request from the lender, as well.
B. Motions: The lender files a Motion for Summary Judgment if it believes the borrower’s defense lacks merit (the evidence is weak or doesn’t prove wrongdoing). A motion for summary judgment is a request for the court to rule in favor of the lender even though the borrower filed an Answer in response to the summons and com‐ plaint. The lender does this if it believes the borrower has not presented evidence that their defenses have merit.
To continue fighting the foreclosure, the borrower must file an Answer to the Motion for Summary Judgment and include documentation that supports their defenses. A copy should be sent to the lender’s lawyer as well.
If the judge grants the lender’s motion for summary judgment, the lender will move for an Order of Reference as described in the note for step 3, and will then seek an auction date.
Step 6: Trial
If the case is not resolved by settlement or by motion, the lawsuit proceeds to trial.
1. How many mortgage payments can I miss before foreclosure proceedings begin?
Most New York loans contain a 15-day window if a single payment is missed where the mortgage can still be paid without a late fee or consequences. If 3 months have passed of missed payments, this is typically when a foreclosure proceeding will begin
2. If I received a foreclosure notice what should I do?
Immediately contact an experienced foreclosure attorney. A written answer to the foreclosure summons must be sent within the first 20 days. At Robert Aronov & Associates in NYC, we can guide you through the options to avoid foreclosure.
3. What options do I have to avoid foreclosure?
To avoid foreclosure there are several options, some better for your future and credit rating than others. A loan modification is possible and this is a safer option. A few other options include short sales, deed in lieu of foreclosure and filing for bankruptcy.
4. Will a foreclosure affect my credit rating?
A credit rating drop of between 80-160 points (out of a possible 850) will occur due to a foreclosure. This is very harmful and should be avoided.
5. How long will the foreclosure appear on my record?
Foreclosures remain on your record for an average of 7 years. During this time, approval for loans will be more difficult to secure and if you are approved, a higher interest rate will be charged. Your credit rating will not recover at least until the end of this time period.
6. What will happen to my house after it is foreclosed?
After a home is successfully foreclosed, it will be either sold in an auction to recover funds or the title will be returned to the lender.
7. What happens if the house is sold for LESS than I owe
If after the home is sold in an auction there is a remaining debt amount a deficiency judgment can be brought against you for the remaining balance. The lender must attempt to receive this debt within a certain time period or they will be disqualified from doing so in the future. Additionally, courts are able to limit the deficiency judgment amount in some cases. Bankruptcy is also an exit option for this additional amount but will be very harmful to your credit score.
8. What happens if the house is sold for MORE than I owe?
If the home is sold for more than was owed, a qualified NYC lawyer can assist in the court hearing to maximize the amount which will be returned to you
9. How long does the foreclosure process take in New York?
The average foreclosure proceedings will take about 15 months in New York. It is important to be responsive and take the proper steps throughout the whole process.
10. Do NYC lenders have any obligations?
Absolutely, lenders in NYC must take certain actions, and if they fail to do so it can postpone or prevent the foreclosure. They must at a minimum provide written notice to the homeowner and written claims with proof of the amount owed.