Microsoft Word - Foreclosure_Process_in_NYS

Thisinformationismadepossibleby NewYorkStateHomes

CommunityRenewal

andNeighborWorks®America,andwasdevelopedbytheNewYorkStateCoalition

forExcellenceinHomeownershipEducation(CXHE)andEmpireJusticeCenter.



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.



Ifyoudonotknowtheexactstageoffore‐

closureyouarein,youcanfindoutfromthe

supremecourtinthecountywherethe

lawsuitwasfiled.Youneedtofindthe

“docketsheet”tofindoutthestatusofyour

foreclosure.Tofindyourcase,havethe

complaintorothercourtpaperthatshows

the“indexnumber”(usuallyatthetopright),

orsearchbyname.Youmaybeableto

accessdocketsheetsonline,dependingon

thecountyinwhichtheforeclosurewas

filed.Youcanalsogototheclerk’sofficein

thelocalsupremecourtandaskforadocket

sheetthatshowsallactionstakeninthe

courtcasesofar.



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.



Pre‐ForeclosureSteps

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.



H ELP FOR N EW Y ORK S TATE H OMEOWNERS C ONCERNED A BOUT F ORECLOSURE



UnderstandingNewYorkState’sMortgageForeclosureProcess

UnderstandingNewYorkState’sMortgageForeclosureProcess 2

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



Step1: 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).



Step2: AffidavitofService,Requestfor

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

 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;

UnderstandingNewYorkState’sMortgageForeclosureProcess 3

 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

theopposingpartiesinthelawsuit

requestdocumentsfromeachother.

Theborrowershouldsendarequestfor

discoverytothelender.Theborrower

mayreceivearequestfromthel

ender,

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co

m‐

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.

 v1.0,09‐12