If you are one of the thousands of New York homeowners at risk of foreclosure, it is important to be informed of your rights during the process. While no one wants to experience foreclosure, understanding the laws that protect homeowners will ensure your rights are preserved through the foreclosure process as you work to avoid losing your home.
Your Rights before Foreclosure
There are certain laws and procedures in place to protect you and your home before your lender can initiate foreclosure. If you miss a mortgage payment, your promissory note may allow up to a 15-day grace period before you late fees are assessed, although this is not legally mandated. If you are behind on several payments, though, federal law prohibits your lender from filing for foreclosure until you are at least 120 days late.
Before lenders can file a lawsuit for foreclosure on a home, they must take specific steps to comply with New York state laws that protect homeowners by giving them the opportunity to catch up on payments or make alternate arrangements such as refinancing or filing for bankruptcy. At least 90 days before filing a lawsuit, the lender must provide you with information about how to remedy your mortgage default and a list of free or low-cost government-approved housing counselors. This 90-day window gives you the opportunity to try to work with your lender to find an alternative to foreclosure. The notice must tell you how much you must pay to bring the loan current. It must also give you the names and telephone numbers of at least five government approved not-for-profit housing counseling agencies serving the region where you reside.
Your Rights during the Foreclosure Process
After 90 days have passed, your lender may file with the court to foreclose on your home. According to New York law, the lender must keep you informed of the lawsuit by serving you with a formal Summons and Complaint, along with notice of your legal options and rights and what to expect during the proceedings. The law then guarantees you the right to attempt to make alternative arrangements with your lender. Therefore, within 60 days of your lender initiating foreclosure, the court will schedule a legally mandated settlement conference where you will meet with the lender’s representative to attempt to reach an alternate agreement to avoid foreclosure. If the two parties cannot agree to a settlement at the conference, the case continues in litigation.
At any time before the court issues a judgment of foreclosure and sale, you maintain the right to reinstate your mortgage. If you pay your lender the total amount due plus interest, penalty, and related costs, the foreclosure case will be discontinued. If you cure the default after a judgment of foreclosure but before the sale of your home, the court will issue a stay of the foreclosure proceedings. In New York, there is no right of redemption thus you cannot redeem your home once it has been sold meaning you must pay your lender the total amount that is due and required under New York law in order to retain your rights to your home.
Your Rights after Foreclosure
Once your home has been sold or foreclosed upon at a public auction, you will then become a tenant in your own home. The new owner might offer you a monetary incentive if you agree to move out under specified terms, but you do have the right to stay in your home until the new owner evicts you. New York law requires the owner to provide 10 days’ notice before beginning the eviction process.
If the sale price of your home does not cover your mortgage debt, your lender may seek the difference from you within 90 days of the completion of the sale under certain circumstances. Under New York’s deficiency laws, your lender is only entitled to the debt amount less the court-determined fair market value or actual sale price of the house, whichever is higher.
The best way to safeguard your rights during the entire foreclosure process is to enlist the help of a lawyer. A qualified attorney who is experienced in foreclosure cases will act as your advocate, guiding you through the foreclosure proceedings and alternatives, all while ensuring your rights are protected.