Macco Law Group, LLP

How Long Does Foreclosure Take in NY?

How Long Does Foreclosure Take in NY?

Foreclosure is a legal term that no homeowner wants to hear. It means you have been unable to keep up with your mortgage payments and the lender is trying to use the foreclosure to recover their money. However, you have certain rights to avoid or delay foreclosure, or even negotiate a settlement with your lender. In New York, foreclosure proceedings can take about 455 days (or 15 months) on average, depending on how you respond to the lawsuit.

As a highly rated bankruptcy and foreclosure law firm in Long Island, New York, the Macco Law Group, LLP, has over 40 years of experience handling all aspects of foreclosure defense – from reviewing your mortgage documents and filing a response to the lawsuit, to negotiating a settlement or loan modification with your lender. If you need a proven and capable Long Island foreclosure lawyer to help you navigate this complicated situation while protecting your interests and helping you avoid foreclosure scams and frauds that prey on vulnerable homeowners, you should reach out to us today.

Foreclosure sign in front of a two story house

Understanding Foreclosure in New York

Foreclosure is a legal process initiated by lenders when a homeowner defaults on their mortgage payments. The lender can repossess and sell the property at fair market value to recover the amount owed on the loan, effectively barring the homeowner’s right to that foreclosed property. This can be done by court action or by a power of sale clause in the mortgage.

Our Long Island bankruptcy attorney and foreclosure attorneys will explain the steps involved in foreclosing property in New York in more detail later in this post, but the general timeline goes something like this:

  • Day 1: First missed payment
  • Day 120: Mortgage lender or loan servicer can start the foreclosure
  • Day 150: Lender sends a notice of default or breach letter to the homeowner so they have a 30-day period to address the issue.
  • Day 210: Lender sends a 90-day pre-foreclosure notice to the homeowner, which means they must wait at least 90 days after sending this notice before filing a foreclosure complaint in court.
  • Day 230 or 240: Lender files a “lis pendens”, summons and complaint, and serves them to the borrower
  • Day 250 or 270: Borrower’s deadline to answer the complaint
  • Day 290 or 310: Court schedules a mandatory settlement conference
  • Day 320 or 340: Settlement conference takes place
  • Day 350 or 370: Court grants a judgment of foreclosure and sale to the lender
  • Day 430 or 455: Property is sold at a public auction

It’s important to note that foreclosure is different from other real estate processes, such as short sale, deed in lieu of foreclosure, or bankruptcy. A short sale means the lender agrees to accept less than the full amount owed on the loan and releases the lien on the property. A deed in lieu of foreclosure is when the homeowner voluntarily transfers the title of the property to the lender in exchange for being released from the loan obligation. While a bankruptcy refers to the homeowner filing a petition in court to discharge or reorganize their debts, which may affect their ability to keep or sell their property.

Regardless of why you are facing foreclosure, it can have serious consequences; not only will you lose the property, but you will also end up damaging your credit score and may also face a deficiency judgment. Under a deficiency judgment, the lender (or loan servicer) sues the homeowner for the difference between the amount owed on the loan and the amount received from selling the property.

Person signing with a pen where another person points to

What is the Pre-Foreclosure Period?

The pre-foreclosure period is an important opportunity for homeowners to try to resolve their situation and save their home. This is the time between the first missed payment and the start of formal foreclosure proceedings. During this window, the lender may contact you and offer various options to avoid foreclosure, such as forbearance, a repayment plan, loan modification, short sale, or deed in lieu of foreclosure.

We highly recommend getting in touch with a skilled foreclosure attorney during your pre-foreclosure period to understand all your available options regarding preventing repossession.

In New York, the entire pre-foreclosure period typically lasts at least 120 days. To give you a better idea, here is how it works:

  • Day 1: The homeowner misses a mortgage payment and falls into default.
  • Day 30: The lender sends a notice of default or a breach letter to the homeowner, informing them of their delinquency and giving them a chance to address the default within a certain period (usually 30 days). The notice also states that if the default is not cured by the deadline, the lender may accelerate the entire amount due on the mortgage and start a foreclosure case.
  • Day 90: The lender sends a 90-day pre-foreclosure notice to the homeowner by mail. This notice is required by New York state law and gives the homeowner information about curing the default and finding help. The notice also includes a list of at least five non-profit foreclosure avoidance counseling agencies in the area that can help. The lender must wait at least 90 days after sending this notice before filing a foreclosure complaint in court.
  • Day 120: The lender files a lis pendens (a pending lawsuit), summons and complaint with the court, initiating a judicial foreclosure process against the homeowner.

How Does the Foreclosure Process in New York Work?

New York is a judicial foreclosure state, which simply means the lender must file a lawsuit in court and obtain a court order to sell the property. This can take several months to over a year if it’s a contested foreclosure where the homeowner responds to the lawsuit and counterclaims or defends themself. If the homeowner does not respond to the lawsuit, the foreclosure can be completed in as little as 6 months.

Here are some of the steps involved:

Filing and serving the foreclosure complaint

The process begins when the lender starts a foreclosure lawsuit against the homeowner by filing three documents with the court:

  1. A lis pendens: This is a notice that establishes that there is a pending legal action affecting the property. It warns anyone who wants to buy or deal with the property that there is a foreclosure case going on.
  2. A summons: This is a document that tells the homeowner that they are being sued and they have to respond to the lawsuit.
  3. A complaint: This document states the legal reasons why the lender wants to foreclose on the property.

The lender also has to deliver or serve these documents to the homeowner (either in person or by mail), and the homeowner has to receive them so they know about the lawsuit and can defend themselves. The summons and complaint also tell the homeowner how much time they have to file an answer to the complaint.

Filing an answer

Once the homeowner receives the documents mentioned above, they must file an answer with the court and serve it to the lender or their attorney. This document admits or denies the allegations in the complaint and raises any defenses or counterclaims against the lender. The answer may also request a settlement conference, which is mandatory for owner-occupied residential properties in New York.

Attending a settlement conference

The court then schedules a settlement conference within 60 days after filing proof of service of the summons and complaint. This conference is a meeting between the homeowner, their attorney (if any), the lender and their attorney, and a court official. The purpose is to explore alternatives to foreclosure, such as loan modification or a short sale.

Legal proceedings

If no settlement is reached at the conference, the case proceeds with discovery and motions. Discovery is the exchange of information and evidence between the parties, while motions are requests to the court for certain orders or rulings. For example, your mortgage lender may file a motion for summary judgment, asking the court to grant them a foreclosure judgment without a trial. You may file a motion to dismiss, asking the court to dismiss the case for various reasons.

Going to trial

If there are disputes between you and your lender, the case will go to trial, where both of you will get an opportunity to present your arguments and evidence before a judge (or jury). They will decide whether the lender is entitled to foreclose on your property and whether you have any valid arguments against it.

Obtaining a foreclosure judgment

If the lender wins at trial or by summary judgment, they obtain a foreclosure judgment from the court. This judgment states the amount due on the loan, interest, fees, and costs and orders the sale of the property.

Scheduling a foreclosure sale

After obtaining the foreclosure judgment, the lender appoints a referee to conduct the sale of the property. The referee publishes a notice of sale in a newspaper once a week for four consecutive weeks leading up to the date of the foreclosure sale. The notice contains the date, time, place, and terms of the sale and a description of the property.

In New York State, the publication requirement for the notice of sale for a foreclosure property is governed by Section 231 of the New York Real Property Actions and Proceedings Law (RPAPL). According to RPAPL Section 231, the notice of sale must be published in a newspaper in the county where the property is located.

Conducting a foreclosure sale

On the sale date, the referee holds a public foreclosure auction at the courthouse or another designated location. The referee accepts bids from potential buyers, who must have cash or certified funds ready. The highest bidder wins the property and receives a referee’s deed from the referee; this document transfers the ownership of the property to the winning bidder.

In some cases, the sale may be subject to confirmation by the court, which means the court must approve the sale before it becomes final. Also, in certain circumstances, the homeowner may have a right of redemption to allow them to reclaim the property by paying the outstanding debt and other costs within a specific time frame after the sale.

Distributing the proceeds of sale

After deducting the expenses of the sale (like auction and referee fees), the referee pays the proceeds of sale to the lender. The first priority is to pay the amount due on the foreclosed mortgage, including interest, fees, and costs. If there are any excess proceeds, they go to any junior lienholders or the homeowner.

Junior lienholders are creditors who hold secondary liens on a property, so their liens are subordinate to the lien of the primary mortgage or the first lienholder. The most common examples of junior liens include home equity loans, home equity lines of credit (HELOCs), or second mortgages.

Person opening wallet and some money being shown

Judicial vs. Non-Judicial Foreclosure in New York

There are two ways a lender can take back the property if the borrower defaults on the loan: judicial and non-judicial. The type of foreclosure proceeding that applies in a state depends on the state laws and the type of loan agreement.

Judicial foreclosure

A judicial foreclosure is the only type of foreclosure allowed in New York, except for some cooperatives. Co-op apartments are not considered real property but personal property and may be subject to non-judicial foreclosure under certain circumstances.

There was a time when non-judicial foreclosure also applied in New York if the mortgage note included a “power of sale” clause explicitly authorizing it. But the state repealed its non-judicial foreclosure law in July 2009, making power of sale clauses invalid unless the foreclosure began before then.

It is a court-supervised process that requires the lender to file a foreclosure lawsuit in court and obtain a court order to sell the property, as per the steps we discussed earlier. This can take several months or a couple of years to complete, depending on the complexity of the case and the court’s schedule.

Non-judicial foreclosure

A non-judicial foreclosure allows the mortgage lender to foreclose the property without involving the courts. It has a shorter timeline than judicial foreclosures and can be completed within a few months.

However, a non-judicial foreclosure is only available for deeds of trust with power-of-sale clauses, which give the lender the right to sell the borrower’s property at auction without going through the court system. Not every state, including New York, permits lenders to use this process.

Your Rights as a New York Homeowner

As intimidating as the idea of foreclosure is, you have certain rights and protections under the law to help you avoid or stop foreclosure or mitigate its consequences.

90-days notice

You must be notified at least 90 days before your lender files for foreclosure to inform you that you are behind on your payments, how much you owe, what the lender wants to do, and how to fix the problem (i.e., cure the default).

Loss mitigation options

You have the right to ask the lender for ways to lower your payments, delay the payments, change your loan terms, sell your home for less than you owe, or give up the home to the lender. They must help you understand these different options and how to apply for them. The lender also has to look at any application that you send them and decide if they can accept it before suing you.

Special provisions for military

Under federal law, active-duty service members are entitled to certain protections from foreclosure under the Servicemembers Civil Relief Act (SCRA). For example, service members can request a stay of residential foreclosure proceedings for up to 90 days or longer if they can show that their military service affects their ability to defend themselves in court.

Service members can also request a reduction of their interest rate to 6% during their period of active duty.

Lawyer consulting two other people

Don’t Let the Bank Take Your Home: Call Our Experienced New York Foreclosure Attorneys 

When you bought your home, you had a team of professionals, including a real estate agent and a title attorney, to help you close the deal. Now, you need an even more experienced and skilled Long Island foreclosure lawyer to help you keep that deal. Contacting the lender and trying to handle the foreclosure proceedings on your own runs the risk of agreeing to something that might worsen the situation.

Since 1983, our New York foreclosure attorneys at Macco Law Group, LLP, have helped thousands of property owners like you fight for their rights and win. If you are facing foreclosure, you are not alone. Due to rising costs, falling incomes, and predatory lenders, many are forced to give up their dream of homeownership – let us help.

We will guide you through the legal process and help you stop it by exploring all available options. If you are a New Yorker residing in Long Island, Nassau County, or Suffolk County and want to talk about your situation with a foreclosure or bankruptcy Chapter 13 attorney or call us at 631-549-7900 or contact us online to schedule a free and confidential consultation.