New York foreclosure laws allow mortgage lenders to foreclose under in court or out-of-court procedures called judicial or non-judicial foreclosures. Some home foreclosures in New York can take more than 400 days to complete the entire foreclosure process. Mortgage lenders do not have to send delinquent borrowers a notice of impending foreclosures under New York foreclosure laws.
Once the mortgage lender files the complaint for a judicial foreclosure, the borrower must file an answer in 20 days. If the court finds the borrower in default on their mortgage payments, it appoint a person called a “referee” to determine how much the borrower owes and the selling price for the property.
The court grants the homeowner a specific time to pay the delinquent amount, including any costs associated with the foreclosure. Failure of the borrower to pay the court ordered amount within this time leads to the court issuing the mortgage lender a document called a decree of sale.
Non-judicial foreclosures rarely occur under New York foreclosure laws. The non-judicial process requires a power of sale provision under a mortgage or deed of trust instrument. This power of sale provision gives a mortgage lender pre-approval to sell the property at a foreclosure auction to pay off the outstanding balance if the borrowers default on the mortgage payments.
The lender must publish a notice of foreclosure sale in a general circulation newspaper in the county for a period of four weeks. The rules state that foreclosed homes must go to the highest bidders. New York foreclosure laws open the process to all bidders, including the mortgage lender.
Winning bidders must pay 10 percent of the winning amount on upon the sale of foreclosure homes. The bidder has 30 days to pay the remaining balance. The New York foreclosure laws require the officer conducting the auction to execute a transfer of ownership by deed to the winning buyer.
The person must also enter a report of the foreclosure sale, including a receipt from the mortgage lender with the court. Generally, the court can confirm the sale 90 days after filing of the foreclosure sales report.
If the foreclosure sale proceeds do not cover the loan and foreclosures costs, State of New York foreclosure laws allows lenders to file for deficiency judgments on foreclosed properties. Mortgage lenders have up to 90 days after the completion of foreclosure auctions to initiate the lawsuit. Borrowers who lose foreclosed homes do not have a right of redemption.