Understanding New York Foreclosure Law

The laws regulating foreclosure in the State of New York outline the steps that a lender must take to regain a property from a borrower that has defaulted on their mortgage. New York foreclosure law allows lenders that have supplied mortgages to borrowers for the purchase of a property to take possession of that property from the borrower if they fail to make the monthly payments on their mortgage. There are two types of foreclosure that may be initiated by the lender under New York foreclosure law; a judicial foreclosure and a non-judicial foreclosure. Many lenders choose to use the judicial foreclosure method because the procedure for a non-judicial foreclosure is complicated and has a tendency to become tied up in endless litigation.

New York Foreclosure Law Procedures

When applying New York foreclosure law to a judicial foreclosure, the lender must first file a lawsuit with the Supreme Court of the county where the property is located. The lawsuit basically sues the borrower and anyone holding an interest in the property for sole possession of the property due to a default on the mortgage. A copy of the complaint and a summons from the court to appear and answer the charges listed in the complaint are sent to the borrower. The lender will also file a notice of lis pendens with the court, which is a notice that states that a lawsuit is being filed that may affect the title of a piece of real property. The exact filing dates and the length of time that the borrower has to answer the summons are listed in the New York foreclosure law and if any part of the foreclosure process is not completed in a timely manner, the lender may have to begin the foreclosure process over or the borrower will have a default judgment placed against them by the court.

If the Supreme Court determines that, under New York foreclosure law, the borrower has defaulted on the mortgage loan, a judgment of foreclosure will be awarded to the lender. The judgment of foreclosure gives possession of the property listed on the mortgage agreement to the lender and the lender can do whatever they want with the property from that point on. Typically, the lender will attempt to sell off the property as soon as the judgment of foreclosure is awarded by the court. Under New York foreclosure law, the property can be listed in a foreclosure sale in which potential buyers can bid for the purchase of the property at a public auction. Any proceeds gained by the lender from the foreclosure sale must be dispensed according to the instructions outlined by the court in the judgment of foreclosure.