New York Foreclosure Laws
Judicial Foreclosure Available: Yes
Non-Judicial Foreclosure Available: Yes (Rarely Used)
Security Instruments: Mortgage, Deed of Trust
Right of Redemption Period: No
Deficiency Judgments Allowed: Yes
Time Frame: 120 Days
Public Notice: Complaint
New York is a title theory state, which means that a property title will remain in trust until the loan is paid in full. In the state of New York, a title can be secured by either a mortgage or a deed of trust. Both documents serve the same purpose and contain the same general principles.
In New York, lenders may choose to foreclose on a property if the borrower defaults on their loan. Both judicial and non-judicial methods of foreclosure are permitted, although non-judicial foreclosure methods are rarely used.
The state does not have a right of redemption period, meaning that once the property is sold at auction, the borrower cannot reclaim it. Lenders are entitled to seek deficiency judgments in the event that a foreclosure is sold for less than what was owed on it. The borrower will be responsible for paying the difference between what the property sold for and the amount of their loan default. The motion for a deficiency judgment must be filed in court within ninety (90) days of the foreclosure sale.
Types of Foreclosures Allowed in New York
New York statute allows for judicial foreclosures on defaulted property. This type of foreclosure, also known as foreclosure by judicial sale, involves selling the defaulted property under court supervision. In order for a judicial foreclosure to be possible, no power of sale clause may be present in the loan documents.
The lender must file a complaint against the borrower to obtain a decree of sale from the court having jurisdiction in the county where the defaulted property is located. If the court finds the borrower to be in default, they will grant them a short period of time to pay off the loan and additional costs. If the borrower does not take action, then the court will order the property to be sold at auction.
The sale must be advertised between four (4) to six (6) weeks and will be handled by the county sheriff or a court appointed referee. The highest bidder will claim the property. In New York, the lender may bid on the property as well.
Once the property is sold, the person conducting the sale must execute a deed to the winning bidder. The successful bidder must then pay 10% of the bid price at the time of the sale with the remaining balance due in thirty (30) days. The person in charge of the sale must also pay the lender the amount of the debt (as well as additional costs) out of the proceeds of the sale and must obtain a receipt for payment from the lender.
Within thirty (30) days of the sale, the person who held the sale must file a report of the sale with the clerk of court. The sale cannot be confirmed until three (3) months after the report is filed.
Non-judicial foreclosure methods are permitted in New York, but are rarely ever used. In order for non-judicial foreclosures in New York to be possible, the loan documents must contain a power of sale clause. The property may be sold at auction without court supervision.
Working with a Foreclosure Lawyer in New York
Receiving a notice of foreclosure can be devastating. Borrowers can spend a lifetime making a house a home to have that all be erased in a manner of just a few short weeks. Although a property may be foreclosed in the event that a borrower defaults on their loan, there is a way to stop it. If you have received a notice of foreclosure or are falling behind on your mortgage payments, speak to a leading foreclosure attorney in New York right away to fight for your rights as a homeowner.
When you work with a skilled team of foreclosure lawyers in New York, you can rest assured that your case will end positively and in your favor. Your paralegal will speak to your lender and devise a plan of action in lieu of foreclosure, such as mortgage modification, refinancing or short sale. Being that foreclosures actually cost lenders money, chances are they will agree to your foreclosure lawyer’s proposal.
Whether you are struggling on your mortgage because of pay cuts, job loss or even medical bills, you have a right to fight for your home. Don’t wait another minute before contacting a top team of foreclosure attorneys in New York right now to prevent your home from being repossessed.