Foreclosure Basics For Homeowners

Foreclosure can be very scary and stressful, because people do not know how the process works or how long it takes or when they need to leave their house. First, it is important to know that you keep all the rights of the owner and can stay in your house until a foreclosure sale is held. It could be a year or more from the beginning of the process to that sale date.

Foreclosure law is governed by state laws. Some federal laws and regulations, however, come into play. For example, the Federal Consumer Financial Protection Bureau requires mortgage companies to wait 120 days from the default date before commencing a foreclosure. For the most part, foreclosures are governed by state law and New York has some unique homeowner protections.

New York State is a judicial foreclosure state. That means a mortgage company must sue a person in court to obtain a Judgment of Foreclosure and Sale before they can schedule a foreclosure auction. Foreclosure lawsuits can take about a year to complete. Real Property Actions and Proceedings Law Article 13 (RPAPL §§ 1301-1391), is the primary state law governing mortgage foreclosures.

New York State provides homeowners a special 90-day notice period before the foreclosure can begin in the court. Also, after the foreclosure starts, the Court will stop the foreclosure to give a homeowner an opportunity to negotiate a loan modification in a settlement conference. These two protections give homeowners in New York State more time than any other state to make a plan to resolve the mortgage default and avoid foreclosure.

Here are the steps a mortgage company must take to foreclose:

(For a flow chart of the process, click here: Foreclosure Flow Chart)[i]

  1. Default notice is sent to the borrower soon after a payment is missed
  2. Statutory pre-foreclosure notice is sent to borrower at least 90 days before the foreclosure is filed with the Court.
  3. Summons, Complaint, and Notice of Pendency are filed with the Court
  4. Summons and Complaint are served on the borrower and other defendants
  5. Defendants have time to answer
  6. If owner-occupied, then the Court schedules a settlement conference
  7. Settlement conferences allow borrowers to negotiate for loan modifications or other work-outs while the foreclosure is placed on hold by the Court. Multiple conferences will be scheduled if the defendant appears at the first conference.
  8. If no settlement is reached, then the mortgage company will be allowed to file a motion to appoint a referee to determine amount owed on the mortgage.
  9. Referee will file an Oath and Report with the Court
  10. Mortgage company will then file a motion for Judgment of Foreclosure
  11. A sale is usually scheduled within 90 days of the Judgment and advertised for at least 30 days.
  12. The court-appointed referee holds an auction in the courthouse.

Clearly, a mortgage company has a lot of work to do to complete a foreclosure in New York State. They hire law firms who specialize in foreclosure and can sometimes move through this process fairly quickly. Having an attorney on your side and advising you is critical to preserving your rights throughout this process.

About the author: Daniel Webster is a partner in the law firm Webster & Dubs, P.C. in Buffalo, NY. His law practice has focused on foreclosure defense and prevention since 2009. Other areas of practice include real estate, elder law, wills, trusts, and estates. Mr. Webster was previously a staff attorney at the Center for Elder Law & Justice in Buffalo. He went to college at Hamilton College, and graduated from the University at Buffalo Law School in 2008. He is also the President of the Board of the Buffalo Cooperative Federal Credit Union.

[i] Foreclosure flow chart developed by Legal Assistance of Western New York, Inc.