New York Foreclosure Procedure
In New York both Judicial and Non-Judicial procedure is available to lenders. However, non-judicial foreclosure is seldom utilized since the process is highly complicated that it would probably lead to 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.
Like most judicial states, in judicial foreclosures the lender first must file a lawsuit. This begins by having a summons and a complaint is filed. It is then sent to the borrower asking them to come to court to answer the complaint. The complaint is a lawsuit, which describes the lenders basis for foreclosure action. A notice of lis pendens is filed. The lis pendens is a notice that a lawsuit is pending, the outcome of which affects title. The borrower has 20 days to answer the complaint. If no action is taken within the 20 days, there will be a motion for summary judgment. After summary judgment is granted, the court usually appoints a referee who will determine the amount owed and recommend how the property should be sold. 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. Once the referee has issued the report, the court confirms the report and a judgment directing the sale of the property will be entered.
Foreclosure Notice of Sale
The sale is advertised in a county newspaper for (4) four weeks. The sale is made by public auction to the highest bidder. The lender has the option of bidding. The lender must distribute the proceeds according to the terms of the judgment signed by the judge.
After the property has been sold, the officer conducting the sale must execute a deed to the purchaser. The officer must also pay, out of the proceeds, the amount of the debt, including interest and costs, to the lender and then obtain a receipt for the payment from the lender.
Within thirty days after the completing the sale and executing the deed to the purchaser, the officer must file a report of sale, which must include the receipt from the lender, with the clerk of the court. Unless otherwise ordered by the court, the sale can't be confirmed until three months past the filing of the report of sale.
Deficiency Judgment
If proceeds from the sale do not produce sufficient funds, the lender has the right to issue a deficiency judgment against the borrower. The motion for a deficiency judgment must be within 90 days after the foreclosure auction or the lender loses this right. 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 Rights
There is no redemption period for the borrower. This is true of non-judicial foreclosure, as well.
Borrowers can reach the New York City Foreclosure Prevention Hotline by calling 212.669.4600.
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