When is it too late to stop foreclosure? You never want to find yourself in a position where you are asking that question, but it helps to know the answer regardless. If you encounter financial difficulties that could affect your ability to pay your mortgage, you need to understand how that situation could potentially unfold.
The idea of losing your New York home due to foreclosure is terrifying. In this article, you will learn about what you can do to avoid or delay foreclosure on your home. We will also lay out the potential timeline for stopping foreclosure so you can act in time.
Continue below to learn more about how foreclosure works in New York State.
When Is the Latest Time You Can Stop a Foreclosure in New York State?
In New York State, homeowners can end the foreclosure process at any time before their home is sold to another party. That is made possible by the Right of Redemption.
As long as you settle matters with your lender before the sale of your home is officially completed, you can still take back ownership of it.
Reclaiming your home after it sells at auction is no longer possible. Although some states provide a final redemption period that gives homeowners a final opportunity to reclaim their home after an auction, New York State does not offer that option.
You must get everything in order before then to avoid losing your home.
How Can You Stop the Foreclosure Process in New York State?
Homeowners in New York State have time to save their properties from foreclosure if they cannot make their mortgage payments on schedule.
So, what exactly can you do during that time? How should you go about stopping foreclosure on your New York home?
Let’s go over the different ways you can stop the foreclosure process in this section of the article.
Pay Your Loan
The simplest way to end your home’s foreclosure is to pay off your loan. You can go about doing this in one of two ways.
As the homeowner, you can pay your outstanding debt by reinstating your mortgage or pay off the entirety of your loan. No matter your choice, you should be prepared to pay more than what is currently on your mortgage.
Remember that you accrued interest and other charges when you failed to pay your mortgage on time. Those fees will now catch up to you.
Discuss Alternative Payment Plans with Your Lender
Continuing with your mortgage terms may not be a realistic option for you at the moment. You may need some relief. You should discuss alternative payment plans with your lender to secure that relief.
Hire an attorney and develop an alternative payment plan that can work for you and your lender. Then, present it to your lender and see if they find your plan to be agreeable.
Sell Your Home
If you cannot come up with the money to pay the remaining debt you owe on your home, you can try to sell it instead. By selling your home, you can secure the money you need to pay off your debt. You may even get some extra money you can use while searching for a new place if your home is in high demand.
Work with a home-buying company if you want to sell as quickly as possible while still snagging a good deal.
You never want to be in a position where you must sell your home to avoid foreclosure. That said, it could still prove to be your most sensible move.
Fight the Foreclosure Lawsuit
Once your lender files a foreclosure lawsuit, you will have an opportunity to contest their claim. Head to court with a lawyer by your side and start mounting your defense.
Homeowners can use various defenses in foreclosure cases.
If you long suspected that the terms of your mortgage were unfair, you can bring that up in court. You and your lawyer can argue that you failed to make payments because the terms of the deal were never reasonable to begin with.
You can also base your defense on the plaintiff’s mistakes while initiating the foreclosure process. Highlight that they failed to send the pre-foreclosure notice or the summons at the appropriate times. Defendants in foreclosure cases can also argue that the plaintiffs did not include the proper documentation when they sent the pre-foreclosure notice.
These technical errors can have a major impact on the outcome of a case. By drawing attention to these mistakes, you can convince the court to favor you.
It is also possible that the plaintiff is basing their case on a mistaken premise. For example, they may claim that you owe more money than you do because they failed to account for a previous payment. You can also win your case by pointing out that mistake on the part of your lender.
Ask the Court to Vacate the Default Judgment
The court may issue a default judgment if you do not respond to the summons in your foreclosure case. Therefore, to stop the foreclosure process, you need to give the court a good reason to vacate that initial judgment.
Many of the defenses that work in foreclosure cases are usable if you are trying to get the court to vacate a default judgment against you. In addition to those defenses, there are other reasons you can point to as valid grounds for vacating the judgment.
For instance, you can tell the court that you were ill or incarcerated on the trial date. You can also say that you had other commitments, such as a trip out of town or work.
The court may also vacate the judgment if you can prove that the other side gave you false information regarding the trial.
A defendant in a foreclosure case may also ask the court to vacate a judgment by showing that they are taking action to pay their debt. You can accomplish that by showing the court that you are in the process of selling your home or refinancing a mortgage.
Regardless of what reason you want to cite as you seek to get the judgment vacated, you will need to file an Order to Show Cause with the court. Speak to the court clerk if you need that form. You should also work with an attorney if you want to file the Order to Show Cause properly.
The Order to Show Cause could grant you another day in court. Make sure to attend that hearing if they granted it to you.
Lastly, you can also declare bankruptcy if you want to shield your home from foreclosure. Declaring bankruptcy allows you to reorganize your debt. It gives you a way out of your likely chaotic predicament.
Depending on the type of bankruptcy you file for, you may hold on to your home or at least stave off foreclosure for a couple of months. No matter your choice, you will have more time to develop a plan. That additional time can come in handy if you have some money soon.
Of course, declaring bankruptcy does come with significant downsides. Going through that filing means significantly lowering your credit, consenting to your name being published in certain public records, and potentially losing some of your prized possessions. Then again, enduring all of that may be worth it if you can hang on to your home.
Before we discuss how to stop foreclosure, let’s first take the time to detail what it is.
Foreclosure is a legal process that involves a lender assuming control of a property after a borrower fails to make their mortgage payments. Upon assuming control of the property, the lender can now sell it to the highest bidder to recoup their losses.
A foreclosure can either be considered a judicial or non-judicial process. As you have probably guessed, judicial foreclosures involve the court, while non-judicial foreclosures do not.
Interestingly, both types of foreclosures do take place in New York State. However, non-judicial foreclosures typically do not involve residential properties.
We will focus mainly on judicial foreclosures in this article because that is the issue that most homeowners in New York State are more likely to face.
How Does Foreclosure Unfold in New York State?
Foreclosures in New York State unfold over several stages. We discuss that process in greater detail below.
The Pre-Foreclosure Stage
The foreclosure in New York State typically begins when a homeowner falls behind on their mortgage payment by 90 days. At this time, you enter what is known as the pre-foreclosure stage.
During the pre-foreclosure stage, your lender can start charging you fees related to your delinquency. The exact fees charged may vary from one foreclosure to the next. This is also when the lender is legally obligated to send a pre-foreclosure notice.
The pre-foreclosure notice should detail some of the things you can do to remedy your loan that has gone into default. It should also include a list of housing counseling agencies that the government approves in your area.
During this process, you must pay close attention and note if your lender sent a proper pre-foreclosure notice at the right time. We will detail why that is important a bit later in the article.
The borrower can settle their debt with the lender at any point during the pre-foreclosure stage. Doing so will stop the foreclosure process dead in its tracks.
Filing the Foreclosure Lawsuit and Seeking the Judgment of Foreclosure and Sale
A lender can file a foreclosure lawsuit if at least 120 days have passed since the borrower made their last mortgage payment. After that, the lender can head to court to secure a judgment of foreclosure and sale.
At this time, the lender will send you a notice that includes the summons and complaint related to your case. They will also share the details of the foreclosure process using that notice.
You will have the option to file an answer to the notice and fight the notice in court. If they receive the summons in person, borrowers will have 20 days to file an answer. They will have 30 days to respond if they receive the summons in any other way.
In the state of New York, a judge will issue that judgment of foreclosure and sale if the defendant does not answer the summons and complaint, the lender wins the trial, or if the lender wins a summary judgment motion.
Before the judge can issue a judgment of any kind, they will first sign an order of reference they will bring to a referee. The referee then tallies the total amount that the borrower owes. The final amount will include any interest and fees the borrower has accrued.
If nothing changes during this time, the judge will sign the judgment of foreclosure and sale.
The Lead-Up to the Auction
Now that the judge has signed the judgment of foreclosure and sale, the referee will initiate the process of selling your home. How this part of the foreclosure process unfolds will depend on how you acted in the earlier stages.
If you respond to the notice sent by your lender, they must put a notice about the auction in the newspaper at least 30 days before it takes place. However, if you fail to respond, your lender is not obligated to provide notice before selling the home.
You can still do something to halt the foreclosure at this stage. Use your time before the auction to remedy this situation and regain control of your home.
Contact us at House Buyers LI if you want to avoid foreclosure by selling your Long Island home. We will present you with a great offer and get the cash in your hands quickly so you can put this whole ordeal behind you.