New York

New York Foreclosure Laws

Expected Timeline: Four to eight months
Security Instrument: Mortgage
Type of Process: Judicial
Protections for Servicemembers: N.Y. Mil. Law § 308
Time to Respond: Lenders must send a pre-foreclosure notice to borrowers at least 90 days before beginning foreclosure proceedings. Homeowners have twenty to thirty days to respond to the foreclosure lawsuit.
Reinstatement Period: Loan may be reinstated any time before final judgment is entered in case.
Protections for High-Cost Mortgages: N.Y. Banking Law § 6-1, Real Property Law § 265-a (Home Equity Theft Prevention Act)
Redemption Period: None.
Eviction Process: Former owners must receive seven day notice to quit property. After this, new owner may request court for possession. Court petition must be served on former owners five to twelve days before court hearing.
Deficiency Judgments: Allowed if homeowners are personally served in lawsuit or appear at lawsuit. Amount of deficiency limited to debt less fair market value or sales price (whichever is higher).
Limits on Deficiency Judgments: Deficiencies limited by fair market value of property, and are only allowed if homeowner was served in-hand or appeared for lawsuit.
Cash Exempted in Bankruptcy: $2,500 for single person, $5,000 for married couple.
State Statutes: N.Y. Real Prop. Act. Law § 1301-1391

New York foreclosure law allows both Judicial and Non-Judicial Foreclosure procedures to be used. However, the Non-Judicial Foreclosure process is rarely used.

Judicial Foreclosure is the process most commonly used in New York foreclosures. The lender obtains a judgment of foreclosure by suing the borrower in court. A summons and complaint must be filed along with a lis pendens. The borrower must appear in court within twenty (20) days to file an answer to the complaint. If the borrower does not file an answer, the lender will pursue a summary judgment against the borrower.

If the summary judgment is granted, the court will appoint a referee. The referee determines the amount the borrower owes, and decides how the property will be sold. These details are contained in a report that the referee files with the court. When the court confirms the report, a judgment of sale will be issued. This pre-sale stage of the foreclosure process may take from twelve (12) to eighteen (18) months.

Once the notice of sale is issued, it must be published for four (4) to six (6) weeks. The sheriff for the county in which the property is located or the referee will conduct the sale at the time and place specified in the notice of sale.

The high bidder will receive a deed to the property at the completion of the sale. Ten percent (10%) of the high bid must be deposited at the sale, with the remainder being funded within thirty (30) days of the sale date. Then the office must submit a report of sale to the court, who will then confirm the sale. At the sale, the lender may bid the amount due on the loan, and if no one else bids, the property will revert to the lender.

The lender has the right to sue the borrower for a deficiency judgment. The suit must be filed with the court within ninety (90) days of the sale date. The court awards the lender the greater of the market value of the property or the sale price. Determination of the market value is up to the court.

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