New York State specific Foreclosure Procedures
Borrower miss payments:
Once a borrower becomes delinquent on their mortgage the lender, Mortgage Company or servicer will send various notices to the borrower stating that they are delinquent.
A number of standard mortgage agreements require the lender to send a default notice within 30-days of the default, commonly referred to as the “30-day default notice.” This 30-day notice is not required by New York State Law or Federal Law and will only be required if set forth in the terms of your specific mortgage.On the other hand, New York State Law does require a lender to send the borrower what is called a “90-day Pre-Foreclosure Notice.” The 90-day notice is required by law to be sent by the lender to the borrower ninety days before the lender initiates foreclosure proceedings. The lender cannot sue a borrower until the notice is sent. The notice must be sent to either the mortgage premises or the current address of the borrower.
Further, for all foreclosure proceedings initiated after February 13, 2010 the lender is required to file the 90-day notice with the New York State Banking Department as well as specific information regarding the specific loan.
Borrower is sued and foreclosure proceedings begin:
Once a lender initiates foreclosure proceedings the Plaintiff is required to notice the borrower of the action. The Plaintiff must hire what is called a “process server.” A process server will go to the borrower’s home, current address or place of business and “serve” them will legal documents, called a Summons and Complaint.
If the process server cannot locate the borrower personally, New York State law allows a process server to serve a person of “suitable age and discretion.” A person of suitable age and discretion could be someone else at the mortgaged premises, the borrower’s current address or their place of business, meaning a co-tenant, wife, husband, son, daughter, co-worker etc.
The last option for the process server, if no one can be located at the mortgaged property, borrower’s current address or place of business, the process server is allowed after “due diligence” to affix the legal documents any of the aforementioned locations. Although what “due diligence” is not specifically spelled out in the law, the Courts usually require the process server to make approximately three attempts, on different days at different times of day, to locate the Defendant borrower before they can affix the documents to a location as adequate service.
Next the Plaintiff must file proof with the Court that their process server served the Defendant borrower with legal documents; this is referred to as an “Affidavit of Service.” The affidavit of service states who was served, how, where and a brief description of the person served.
Borrower receives notice of Foreclosure Settlement Conferences:
Within 60-days of filing the Affidavit of Service, the Plaintiff must ask the Court to schedule a “Mandatory Foreclosure Settlement Conference.” The Court will schedule the conference and send a letter to the borrower informing them of the date of the conferences and what documents to bring to the conference. The Plaintiff Lender move forward with any litigation while actively engaged in the Settlement Conferences.
Appearing in the Foreclosure Action:
Despite the Mandatory Foreclosure Settlement Conferences the Defendant is required to file a timely “Answer.” The time in which the Defendant has to file his/her Answer depends on the method of service, but it is usually 20-30 days after the date in which the Defendant was “served” the papers.
For example, if a process server came to your house on January 1, 2011 and “served” you personally a Summons and Complaint you would have 20 days to file an Answer. That means you would need to file an answer by January 20, 2011 in order to fully protect any defenses you might have.
Another example is more complicated. If a process server comes to your house, you are not home, and instead gives your legal papers to your seventeen year old son, on your behalf on January 1, 2011 you would have 30-days to file an answer (January 30, 2011). Now what if your son holds on to the papers for a week before you get them and you don’t get them until January 8, 2011? It doesn’t matter when your son actually gives them to you, you have 30-days from the date he received them to Answer timely.
But what is an answer? A legal Answer is literally just that, an Answer. An Answer will address all of the counts alleged in the Plaintiff’s Complaint, and will “answer” each of Plaintiff’s claims. The Defendant must respond to each claim by either admitting the claim is true, denying the claim outright or stating that the Defendant does not have enough knowledge to determine if the claim is true or not.
It should be noted that the process server doesn’t always properly serve a defendant. If you are not properly served with papers the above mentioned timelines won’t necessarily be binding on you and you might have other options for defending the action.
Litigating the Foreclosure action:
The next stage of a foreclosure action depends on a number of variables. If the Plaintiff and the Defendant have entered into the Mandatory Foreclosure Settlement Conferences hopefully they have been able to workout a Loan Modification or some other type of Settlement and the action will not proceed and eventually the law suit will be dropped.
However, if the parties do not enter into a settlement the action will be transferred to a different judge and the action will be allowed to move forward. How the action moves forward depends on whether or not the Defendant filed an “Answer.”
If the Defendant filed an Answer, the Plaintiff will file a “Motion for Summary Judgment” and the Plaintiff would be required to “serve” a copy of the motion on the Defendant and/or Defendant’s Counsel. This motion, in sum, says to the Court that there are no issues of fact in the case and that the Plaintiff should be granted a Judgment against the Defendant. The Defendant can oppose the motion and file what is called “Opposition.” Once the Plaintiff received the Defendant’s Opposition, the Plaintiff would be able to submit a “Reply.” Next, the Judge would look at all the papers submitted and decide whether or not to grant “Summary Judgment” for the Plaintiff. If the Court grants the Plaintiff’s motion for Summary Judgment the Plaintiff would then have to file a Motion for an Order of Reference (see below).
If the Defendant has not answered, the Plaintiff will not be able to move for “Summary Judgment” and will instead have to move for an “Order of Reference.” Now it should be noted that even if a Defendant goes to a Mandatory Foreclosure Settlement Conference, and even goes with an Attorney, unless they file an Answer or a Notice of Appearance, the Plaintiff IS NOT REQUIRED to notify the Defendant that they are filing this motion or serve them with a copy of it. Therefore, it is very important that a Defendant files a timely answer or retains counsel as soon as possible after becoming aware of a foreclosure action against them.
An Order of Reference can be done on notice to the Defendant and his/her counsel or it can be done “Exparte,” which is just fancy language to say that Plaintiff is submitting the Motion without notice to the Defendant (or Defendant’s counsel).
Within the actual Order of Reference the Plaintiff is requesting that the Court appoint a neutral referee to determine the amount of money owned to the Plaintiff by the Defendant. The Plaintiff is required to put forth an Affidavit attesting to the Defendant’s default as well as documentation showing ownership of the Note and Mortgage. Again, the Defendant can oppose the motion and file what is called “Opposition.” Once the Plaintiff received the Defendant’s Opposition, the Plaintiff would be able to submit a “Reply.” Next, the Judge would look at all the papers submitted and decide whether or not to grant the Plaintiff Motions.
A further note is that the Courts, on October 20, 2010, started to require that the Plaintiff’s attorney sign an additional affidavit attesting to the facts in the law suit and that their counsel has personally verified them. Currently, a Plaintiff cannot be granted an Order of Reference without an Affidavit from their attorney.
If the Court grants the Plaintiff’s motion for an Order of Reference, the Plaintiff is required to a ‘Notice of Entry.’ The Notice of Entry is a one page document, literally a short notice of the entry of the judgment, with copy of the signed order granting the Order of Reference. The Plaintiff must file this Notice with the County Clerk before it can move forward with the foreclosure action.
If the Court grants the Plaintiff’s motion for an Order of Reference a Referee will be appointed. The Referee will look over the foreclosure documents put forth by the Plaintiff and determine the amount owed to the Plaintiff by the Defendant. This is often called the ‘Referee’s Oath and Report.” This report will be submitted to the Court and to the Plaintiff.
Once the Oath and Report has been received by the Plaintiff, the Plaintiff will then move for a ‘Judgment of Foreclosure and Sale.” Within the Judgment of Foreclosure and Sale, the Plaintiff is asking that a final judgment be entered against the Defendant in favor of the Plaintiff and for the right to foreclosure upon and auction the Defendant’s property.
Again, on October 20, 2010, the Court started to require that the Plaintiff’s attorney sign an additional affidavit attesting to the facts in the law suit and that their counsel has personally verified them. If the Plaintiff was granted an Order of Reference before October 20, 2011, the Plaintiff is required to provide the affidavit instead, when it moves for a Judgment of Foreclosure and Sale. Currently, a Plaintiff cannot be granted an Judgment of Foreclosure and Sale without an Affidavit from their attorney.
Foreclosure sales, Auctions and Landlord Tenant Court:
Once the Plaintiff receives a Judgment of Foreclosure and Sale from the Court they can move forward with a foreclosure sale/auction of the Defendant’s property. Before the auction can occur the Plaintiff must again file a notice of entry with the County Clerk, send a notice of sale to the Defendant and publish the auction in a local newspaper for at least 4 weeks prior to the auction. There are a number of ways to postpone an auction date if you retain counsel depending of course on the specifics of your case.
Again, on October 20, 2010, started to require that the Plaintiff’s attorney sign an additional affidavit attesting to the facts in the law suit and that their counsel has personally verified them. If the Plaintiff was granted an Order of Reference and Judgment of Foreclosure and Sale before October 20, 2011, the Plaintiff is required to provide the affidavit 5-days before the property can be auctioned. Currently, a Plaintiff cannot auction a property without the affidavit from their counsel.
At the auction two different things can happen: 1) a person can buy the property from the Plaintiff at the auction; or 2) if no one bought the property at the auction and the bank is forced to hold on to the property.
In either situation before either the Bank or the private buyer can take possession of the property they must file either a 90-day or 10-day notice to quit to premises. This notice to quit is notice to the Defendant or tenants residing at the foreclosed upon property that they must vacant the property. Which notice is filed, either the 90-day or 10-day depends on a number of legal factors.
At this point, just because the house has been auctioned does not mean that the new buyer or bank can take immediate possession of the property and that the Defendant must leave immediately. At this point in the foreclosure action, the Defendant can still fight the foreclosure and remain in the property.
If at the end of the 90-day or 10-day period the Defendants and/or tenants have not vacated the property the Plaintiff/buyer files a petition in the local “Landlord Tenant Court” to have the Defendants evicted. The Defendant/tenants can respond to the petition that same way they can respond to a Summons and Complaint above.
In filing the petition the Plaintiff/Buyer is seeking a Judgment of possession/Warrant of eviction. Until this is granted the Defendants/Tenants cannot be removed from the property.
If the Plaintiff is granted the Judgment of possession/Warrant of eviction the Plaintiff will forward that to the local sheriff. Once the sheriff receives the warrant the sheriff will issue a 72-hour notice to vacate the premises. The sheriff is merely executing warrant received by the Plaintiff from the Landlord Tenant Court. It is only at the end of that 72-hour period (or whenever after that 72-hour period) that the Sheriff physically comes to the property that the Defendant and the Tenants came be forced to leave the property.
For more information or to schedule an appointment with an experienced lawyer to stop foreclosure, please contact us. We represent clients in New Jersey, New York and Connecticut.