Foreclosure defense is a perfect strategy to work with if you’re facing financial difficulties. If you realize that you can’t afford to pay the entire amount of your mortgage payment, a foreclosure defense might be what you need.
Homeowners in New York can learn about the many foreclosure defenses and remedies which may be offered to them through a free consultation with a lawyer. The attorney will review the situation with you and explain to you what options are available for you to receive your mortgage payments back on track and keep from having your home foreclosed on.
In addition to working with a foreclosure attorney, you could also consult a tax professional for a professional tax analysis that will show the amount of your home equity and how much money you will owe in taxes annually.
Types of Foreclosure
In the USA, individual countries follow a judicial or nonjudicial foreclosure procedure, typically determined by if they’re a mortgage condition or deed of trust country. But, you may safely presume that all countries allow some kind of judicial foreclosure procedure. New York is a judicial foreclosure state.
|Judicial Foreclosure||Nonjudicial Foreclosure|
|States that predominantly use this type of foreclosure||Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, New Jersey, New Mexico*, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, Vermont, and Wisconsin||Alabama, Alaska, Arizona, Arkansas, California, Colorado**, District of Columbia (sometimes), Georgia, Idaho, Maryland**, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Carolina, Oregon, Rhode Island, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wyoming|
A judicial foreclosure happens when the lender notifies the debtor of missed payments and the debtor fails to cure the default option. The creditor subsequently files a suit against the operator and also a lis pendens is filed with the recorder’s office. The instance is on public record and post coverage that the land is generally offered in a public auction.
Nonetheless, in a non-judicial foreclosure, the creditor has a power of sale, which may be implemented while the debtor is in default. Within this kind of foreclosure, you’re additionally sent a notice of default, that will be listed at the county’s deed’s office, and also are provided a predetermined period of time to make up the missed payments. The difference with this type of foreclosure is that in case you don’t catch up on payments, the lender will notify you of the sale of this home and will subsequently be permitted to market the house at an auction or set it in the Multiple Listing Service or MLS.
What’s a Judicial Foreclosure Procedure?
The judicial foreclosure process is one of the most controversial facets of mortgage. The federal government has enacted laws that are supposed to aid homeowners in such difficult times. Additionally, there are many local ordinances in locations where judicial proceedings take place. If you end up in this situation, it is very important to know what’s a judicial foreclosure.
Judicial foreclosure means foreclosure cases that proceed through the courtroom. This kind of foreclosure process frequently takes place when a mortgage notice lacks the power of sale clause, which will lawfully authorize the mortgage creditor to sell the home when the default occurred. It is often a very long process, lasting several months to years to finish.
From the judicial foreclosure process, your residence is “sold by a judge” following your default mortgage was issued by a county clerk. The sale will happen after the court issues the sale warrant. The foreclosure will take place before an auction occurs and the proceeds will be utilized to pay the loan balance owed to the house.
Step one involved in the process is a request for a judgment of foreclosure. The court will review this petition and determine whether to grant the petition. A default option must then be entered before the sale of the house takes place. The court can also sell the home later if it is not happy with the sale cost and can create a receiver or a trustee. More about the timeless and the whole process you can find in this guide.
Though this judicial foreclosure process appears to be harsh and complex, it’s in fact rather straightforward. But, there are particular laws that are going to be in effect throughout the foreclosure procedure which will need to be followed. If you’re in need of help with the legal process involved, it’s highly suggested to employ a foreclosure lawyer to represent your very best interest.
Reasons to Avoid The Foreclosure. Besides The Obvious One.
A lot of people will try to make their mortgage payments so that their credit score will stay in good standing. The only way that you could prevent this from happening would be to negotiate with your creditor. If you can convince them that you have no other choice than to foreclose your home, they will probably agree. Be certain you have the proper evidence to back up your claim to ensure that they’ll give in.
When you have a foreclosure on your property, the lender will often take away all of your belongings. Including personal items such as light fixtures and appliances. If you can prove that you have enough income to cover these items, the bank will probably agree to it. If not, you will still need to sell them before the foreclosure process is finished. A great deal of people just gets a buyer for all these items, which can help raise their credit score.
Lots of individuals have found that if they’re facing a foreclosure, they ought to seek the advice of a lawyer. If you can’t afford to hire an attorney, in addition, there are companies (many of them non-profit) out there who can provide you free legal advice. These professionals will have the ability to tell you how best to stop your foreclosure.
Foreclosure can be a very stressful time and several people find themselves in this situation. If you want to save your house, the first step is to understand how to stop your foreclosure. If you can use these common foreclosure defenses, you will have the ability to stop your foreclosure.
Common Foreclosure Defense Strategies
Below you can find a list of some foreclosure defenses you can try in to apply in your situation.
The Mortgage Servicer Produced a Serious Mistake
Mortgage servicers make mistakes all of the time when they are dealing with borrowers and their balances.
- Crediting your payments into the wrong party (so that you weren’t, in actuality, overdue to the extent claimed )
- dual-tracking (chasing a foreclosure in precisely the same time a loan modification or other foreclosure avoidance option, like a short sale or deed in lieu of foreclosure, is pending) in violation of federal law or maybe state law, if appropriate
- imposing excessive penalties or penalties not approved by mortgage contract, or
- substantially overstating the amount you must pay to reinstate your mortgage.
The Foreclosing Bank Didn’t Follow State Procedures
Sometimes, the foreclosing bank doesn’t follow state procedural requirements for bringing a foreclosure actions. If this happens, you might have the ability to challenge the foreclosure. If your challenge is successful, the court will issue an order requiring the foreclosing bank to begin over.
The Statute of Limitations Has Passed
If a substantial amount of time lapses between once you stop making your mortgage payments and when the creditor starts a foreclosure (or restarts one against you), the actions might violate the statute of limitations. When appropriate, the statute of limitations might be a strong defense against foreclosure.
You Are a Service-member on Active Duty
Most of all, in the event that you took out your mortgage before you’re on active duty, your foreclosure must occur in court even if foreclosures in your state customarily occur outside of court, unless your creditor receives a waiver from you.
When a military member receives a mortgage after moving on active duty, the SCRA provides certain foreclosure protections too.
Listed below are a few more typical foreclosure defenses:
- You did not get a violation letter from the servicer notifying you of the default in breach of the terms of the mortgage or deed of trust.
- You’ve got an FHA, VA, or USDA loan and you also don’t think that the creditor followed federal regulations associated with loss mitigation before starting the foreclosure. (There are certain laws governing loss mitigation in regards to these sorts of loans)
- You’re making payments on a loan modification program and so the foreclosure should not have been pioneered. (To learn what to do and what not do from the loan modification process, read Do’s and Don’ts for obtaining a Loan payable .)
New York State Foreclosure Laws During Covid-19
Governor Andrew Cuomo’s Executive Order 202.28 put a moratorium on evictions and foreclosures for 60 days beginning June 20, 2020, as long as nonpayment is by “somebody that’s qualified for unemployment benefits or insurance under federal or state law or facing financial hardship because of this COVID-19 pandemic.”
As of July 27, 2020, Administrative Order 157/20 eliminates a court-ordered suspension of residential foreclosures but retains a limited suspension of industrial foreclosures in the area until August 19, 2020. Under the arrangement, courts might resume a residential foreclosure activity after scheduling a minimum of one conference. This type of conference will probably be the exact same or comparable to the essential settlement convention (see below), even if a settlement conference was formerly held. Through these seminars, the courts should consider all facets of the scenario, such as “the consequences, if any, the COVID-19 pandemic has had upon the parties” No sale or auction of land might be scheduled to occur before October 15, 2020.
Additionally, a new country law empowers homeowners who have non-government loans who have been impacted by the coronavirus to acquire a yearlong mortgage forbearance.
On July 31, 2020, New York Attorney General Letitia James declared a $20 million allocation to assist homeowners facing fiscal burdens due to the coronavirus pandemic. The money goes toward financing the Homeowner Protection Program (HOPP), which assists borrowers in New York to prevent foreclosure by linking them to lose, mortgage-assistance, and foreclosure-relief services. The funds will also cover licenses.
Other Foreclosure Defense Options
One of the most common foreclosure defense for homeowners in New York is the “Forbearance” program. This type of program allows the lender to temporarily stop foreclosure proceeding while the debtor is negotiating an amicable solution. The borrower may request the lender to keep on making payments to the bank until the negotiations are completed.
Another option is called “Forbearance Sale”. This is an auction process where the bank buys the property and then re-sells it to the homeowners in the auction. This is a great alternative for homeowners who have multiple properties in New York. The lender may use the proceeds from the foreclosure sale to help pay off other loans and prevent foreclosures on all the properties.
Homeowners who own property in New York that they can not sell for whatever reason might qualify for a “forbearance lien”. This means that the lender or investor can place a lien on the property during the process of foreclosure to prevent the sale of the property by the lending company.
The last foreclosure defense for homeowners in New York is a brief sale. Under this plan, the lender will take less than the amount of money owed on the mortgage and offer to pay the rest through a brief sale agreement. This type of foreclosure defense is frequently used when the initial loan balance was composed of unsecured debt.
A brief sale allows the homeowner to keep the house and avoid having his or her home foreclosed on because it is less costly than the whole mortgage balance. The property will be placed on the market for a brief time period before being sold to the owner.
Tips to Avoid Foreclosure
- Do not ignore the issue.
- Organize your financial details.
- Inspect your budget.
- Check Interest rate.
- Simplify your spending.
- Utilize your resources.
- Collect your loan records and establish a case file.
- Contact your lender as soon as you understand that you have an issue.
- Know that your mortgage rights.
- Understand foreclosure prevention options.
- Contact a HUD-approved home counselor.
- Learn about your state’s foreclosure legislation.
- Prevent foreclosure avoidance companies.
- Do not lose your home to foreclosure recovery scams!
- If everything else fails, sell the house prior to the foreclosure sale or provide the home to the creditor.
Foreclosure Process. Timelines and Statute of Limitations
Sometimes foreclosure is simply unavoidable, in this case, you’ll go to court. Below is the break-down of the foreclosure process in New York:
120-day waiting period. The lender or loan servicer must wait until you’re 120 days late on your payments. This is to allow you time to attempt to refinance or change your own loan or look for other loss mitigation choices.
Acceleration letter. Depending on the terms of your mortgage arrangement, your lender might be asked to send you a notice, or breach correspondence, allowing you to know that your loan is in default and the lender will quicken the entire amount due on your mortgage
90-day notice. New York needs every creditor foreclosing on a home mortgage of an owner-occupied house to deliver a 90-day pre-foreclosure notice before initiating foreclosure.
Filing foreclosure complaint. After waiting 90 days, the creditor can go to court and file a complaint against one to foreclose on your property. You may have 20-30 days to submit an answer to the criticism, depending on if the complaint has been served in person or by a substituted method.
Certificate of Merit. A new law requires that the creditor’s attorney must submit a “certificate of merit” or “Attorney Affirmation,” stating that the attorney has examined all the vital documents related to the mortgage also that the plaintiff is your lender who’s entitled to enforce its rights under those records.
Affidavit of Service. Within 20 days of handling the criticism for you, the creditor’s attorney may be asked to submit an affidavit of support with the court. Within 60 days after the affidavit of support is filed, the court could maintain a mandatory settlement conference.
Motion for default or summary decision and order of reference. In case you cannot come to an agreement at the settlement conference, the lender will most likely file a motion for summary decision to attempt and win the case without a trial.
Trial. If the creditor doesn’t bring a summary judgment motion or attracts such a motion and does not triumph, the case may go to trial. A Trial is extremely rare in prison cases because the merits of the case can usually be set on the documents filed directly with the Court.
Reinstatement. In New York, you may attempt to reinstate the mortgage at any time before the judgment of foreclosure and sale. To reinstate the loan, then you have to pay all the past-due amounts, and any overdue fees as well as costs.
Book of sale. If you are unable to reinstate the mortgage, and judgment of foreclosure and sale is entered against you, then a sale date for the property is going to be set.
Foreclosure sale. If the home goes to a foreclosure sale, then it’ll be offered to the highest bidder, who might be the lender or a third party. The foreclosure sale takes place at a public auction, generally at a county courthouse. After payment is made, the Realtors takes ownership of the house.
Deficiency conclusion. If you are the debtor on the note, the lender can seek a deficiency judgment against you in case that the home sells for under is dependent on the order of reference. The lack is the difference between the amount you pay and the cost at auction if bought by a third party or fair market value if bought by the bank. The lender just has 90 days after the foreclosure sale to search for the deficiency judgment.
Eviction. If you do not voluntarily leave the house after the foreclosure sale, then the new owner will need to start a lawsuit to evict you in case you don’t leave voluntarily.
Foreclosure Delay Tactics
Foreclosure delays can often be used in order to protect oneself from the threat of losing a home, as well as may also be used in order to get yourself out of foreclosures in the first place.
There are instances in which the property is in a neighborhood that has a low property value, which makes it difficult for lenders to recover any equity in the property. This in turn can result in the lender selling the property at a low price. When this happens, a homeowner is able to avoid foreclosure by negotiating with the lender in order to pay less money and sell the property at a higher price in order to recoup some of their losses.
Foreclosure delays can also be used in order to ensure that a lender does not take any action in an attempt to collect any delinquent payments, such as levying a tax lien. If a homeowner is not able to pay their loan then it is very likely that they will lose the home. By using foreclosure delay tactics, such as paying off the loan on time each month or even delaying payment until the lender agrees to it, homeowners are in fact doing themselves a favor by avoiding foreclosure.
Foreclosure Rescue Scams
The last but not least topic we want to cover is foreclosure scams. Scammers are targeting individuals having difficulty paying their mortgages. Some claim in order to “rescue” homeowners from foreclosures, while others assert to alter your own loan for a fee.
Some common phrases the foreclosure scammers use include:
“100% money-back guaranteed”
“Unable to pay? Stop foreclosure today!”
“We have relationships with banks which could accelerate your approval procedure.”
The ideal method to conserve your house is to learn about foreclosure and track down proper mortgage counseling businesses that can assist you out of the jam. The moment you quit giving good attention to this dilemma, fake foreclosure businesses start exploiting you.
How to Raise a Defense to Foreclosure
While these foreclosure defenses for homeowners in New York aren’t guaranteed to prevent foreclosure, the odds are good that the homeowner will have better chances of getting their mortgage paid off in the long run. As you may know, foreclosures can occur to any homeowner, and there are ways to save the home.
But be sure you don’t do it yourself. You need the advice of a foreclosure attorney who can help you in negotiating with the creditor on your behalf. Just remember, foreclosure defense is a chance that is available to you, but you shouldn’t ignore it. A lawyer can work to find the total amount of the loan reduced and also work to protect your rights. It may not be easy, but it’s likely to avoid foreclosure!