Learn how New York foreclosures are different than most states
New York foreclosures are handled much differently than most states. It is very important to know the foreclosure laws in your own state.
How are New York foreclosures different from many other states?
There are judicial and extrajudicial foreclosures.
In short, most states use the non-judicial approach. This means that because the properties are held by a deed of trust, the foreclosure process does not include state courts. A foreclosure is handled at the County level by the Sales Trustee who is arranged by the lender. Therefore, foreclosures in “trust states” take slightly less time than judicial foreclosures. In fact, a foreclosure in a “Trust Estate” can take as little as 104 days from the time between a Lis Pendens (mortgage default notice) and the Foreclosure Auction.
Property in New York is secured through mortgages rather than deeds of trust. Foreclosures in New York are considered judicial foreclosures because foreclosure proceedings must go through the courts before a property can be sold at public auction. Because the proceedings must go through the courts, it takes 12-18 months after a lis pendens is filed and the property hits the auction block. The reason it takes so long is because everyone involved (including the mortgage holder, creditors, owner’s tenants, etc.) must receive the documents.
Eleven Judicial Foreclosure States
or New York
or Maine
Connecticut
or New Jersey
Pennsylvania
Ohio
Indiana
South Carolina
or florida
Louisiana
North Dakota
Now that we are familiar with the differences between judicial and non-judicial foreclosure states, it is important to understand the judicial foreclosure process. The following are the steps that will be taken before and after a foreclosure in New York State.
What happens before a foreclosure proceeding begins?
o The lender may send a warning of impending foreclosure to the borrower. PLEASE NOTE: Although this may be done as a courtesy to you, it is NOT a requirement in New York.
o The lender files a lawsuit against the borrower for the delinquent amount.
o The borrower is then notified of the foreclosure proceedings and is required by law to appear in court. At this point, a lis pendens (notice of pending judgment) is recorded.
o If the borrower does not appear in court, the court will rule against the borrower, thus allowing the foreclosure sale.
o If the borrower appears in court, the court will consider the case before entering judgment. If the court rules against the borrower, the foreclosure sale will be scheduled. This will generally take 7-9 months.
What happens once a foreclosure has been scheduled?
o The sale date will normally be scheduled at least 4 months after the court ruling.
o The notice of sale must be published in the local newspaper once a week for at least 4 weeks prior to the sale.
o In New York, foreclosure sales are conducted by public auction at the county courthouse. The highest bidder will receive the property. Anyone can bid, including the lender.
o The winning bidder will generally have to pay ten percent of the final offer in the sale, with the remaining balance due within 30 days.
o Once the property is paid in full, the winning bidder takes possession of the property.
o The borrower will have no redemption rights after the sale.