New York Foreclosure Information
When you develop a definite plan of action with well-timed, well-informed steps, you can stop
the foreclosure process and save your home. We have outlined the foreclosure process for the
state of New York.
Judicial Foreclosure Available: Yes
Non-Judicial Foreclosure Available: Yes
Preferred Method: Judicial Foreclosure
Judicial foreclosure (foreclosure by lawsuit) is the primary method of foreclosure in New
York. Although non-judicial foreclosure is available, it is seldom used. Non-judicial foreclosure
procedures are sufficiently intricate to lead to potential title disputes. Such problems
might make it very difficult to evict a tenant. Junior lien holders might also dispute the
title and tie the matter up in litigation. Thus most lenders will elect a judicial foreclosure.
Judicial Foreclosure
Judicial foreclosure begins when the lender files a lawsuit. The lender
will sue the borrower and any person who has a claim to the ownership or a possession interest.
The lender, as plaintiff, has a summons and a complaint served on the borrower. The summons
commands the borrower to come to court and answer the lender’s complaint; the complaint
is the lawsuit proper, which describes the lender’s legal and factual basis for foreclosure.
A notice of lis pendens must be filed. The lis pendens is a notice that a lawsuit is pending,
the outcome of which affects title. Often, the borrower fails to answer. In that event,
the court will appoint a referee to compute a figure for the foreclosure. The court may
then sign a judgment of foreclosure and sale. If the borrower appears and defends against
the lawsuit, then the court will determine the merits of the defense. The referee will need
an oral hearing. If the lender wins, then a judgment of foreclosure and sale will be awarded.
Typically the foreclosure sale is advertised for 4 to 6 weeks. The sale
is made by public auction to the highest bidder. The lender may bid, as well. The lender
must distribute the proceeds according to the terms of the judgment signed by the judge.
Surplus money will normally be held by a referee.
Deficiency
If the mortgage contains an express covenant to pay, then the lender may
seek a deficiency judgment against the borrower if the court ordered sale does not produce
sufficient funds. The lender can ask the court for a deficiency judgment for the amount
left unpaid after the foreclosure sale. The motion for the deficiency judgment must be made
within 90 days after the foreclosure sale. The court must determine the market value and
credit the greater of the market value or the foreclosure sales price against what remains
unpaid on the loan.
Redemption
After the judicial foreclosure, there is no redemption period. This is true
of non-judicial foreclosure, as well.
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