Foreclosure FAQ: Questions New York Homeowners Ask
Hudson River Realtors | Referral Network Serving New York State
How long does foreclosure take in New York?
New York foreclosure typically takes 12 to 24 months from the first missed payment to auction. The judicial process, mandatory settlement conferences, and court backlogs all contribute to this extended timeline. In some counties, cases can take even longer.
Can I sell my house during foreclosure?
Yes. You can sell your home at any point during the foreclosure process, up until the auction is conducted. If you have equity, a traditional sale may allow you to pay off the mortgage and walk away with cash. If you are underwater, a short sale (with lender approval) may be an option.
What is a lis pendens?
A lis pendens (Latin for "suit pending") is a public notice filed with the county clerk that alerts anyone searching the title that a foreclosure lawsuit is pending against the property. In New York, it is filed when the lender initiates the foreclosure action.
Do I still owe money after foreclosure?
Potentially. Under RPAPL §1371, the lender can seek a deficiency judgment within 90 days of the deed delivery for the difference between the total amount owed and the property's fair market value (or the sale price, whichever is higher). However, if the lender fails to file within 90 days, the debt is considered fully satisfied.
How does foreclosure affect my credit?
A completed foreclosure can drop your credit score by 100 to 160 points and remains on your credit report for seven years. It makes it difficult to obtain new credit, rent an apartment, or qualify for a mortgage. Alternatives like short sales typically have a less severe impact.
What is the 90-day pre-foreclosure notice?
Under RPAPL §1304, lenders must send a formal notice at least 90 days before filing a foreclosure lawsuit. The notice must include information about the default amount, your rights, and a list of HUD-approved housing counselors. This notice must be sent by both certified/registered mail and first-class mail.
What is a mandatory settlement conference?
Under CPLR §3408, the court is required to hold a settlement conference within 60 days after the lender files proof of service. The conference brings you and the lender together to explore alternatives to foreclosure, including loan modifications, repayment plans, and short sales. Both parties must negotiate in good faith.
Do I have to leave my home during foreclosure?
No. You have the legal right to remain in your home until a court orders you to leave. Even after a foreclosure judgment, the eviction process takes additional time. You are the legal owner until the property is sold at auction and the sale is confirmed by the court.
What is a loan modification?
A loan modification permanently changes the terms of your mortgage — such as reducing the interest rate, extending the term, or reducing the principal — to make payments more affordable. You apply through your lender's loss mitigation department, and the mandatory settlement conference process in New York is designed to facilitate these negotiations.
What is a short sale?
A short sale is when you sell your home for less than the outstanding mortgage balance with the lender's approval. The lender agrees to accept the sale proceeds as full or partial satisfaction of the debt. It is often a better alternative than a completed foreclosure for both your credit and your peace of mind.
What is a deed in lieu of foreclosure?
A deed in lieu is when you voluntarily transfer ownership of the property to the lender in exchange for being released from the mortgage obligation. It avoids the court process entirely and is typically less damaging to your credit than a completed foreclosure.
Can bankruptcy stop foreclosure?
Yes. Filing a Chapter 13 bankruptcy petition triggers an automatic stay that immediately halts foreclosure proceedings. Chapter 13 allows you to catch up on missed payments over a three-to-five-year repayment plan while keeping your home. Chapter 7 bankruptcy also triggers an automatic stay, but it does not provide a mechanism to catch up on missed payments, so the foreclosure may resume after the stay is lifted.
What happens at a foreclosure auction in New York?
A court-appointed referee conducts a public auction, usually at the courthouse. The lender submits the opening bid (typically the amount owed). Bidders compete with certified funds. The highest bidder wins, pays a 10% deposit immediately, and the balance within 30 days. The referee delivers a referee's deed upon full payment.
Can I get my home back after a foreclosure auction?
New York does not have a statutory right of redemption after the foreclosure sale. Once the auction is conducted and the sale is confirmed by the court, the property belongs to the buyer. Your right to redeem (pay the full amount owed) ends when the auction takes place.
What is the difference between pre-foreclosure and foreclosure?
Pre-foreclosure is the period between your first missed payment and the filing of the foreclosure lawsuit. No public record exists, and you have maximum control and options. Foreclosure begins when the lender files a complaint in court and records a lis pendens, making the action a public record.
Will I get any money if my home sells for more than I owe at auction?
Yes. If the foreclosure sale generates surplus funds (proceeds above the total amount owed, including fees and costs), you have the right to claim those funds. You must file a notice of claim with the court to receive the surplus.
What is REO property?
REO stands for Real Estate Owned. It refers to a property that the lender acquired after no outside bidder purchased it at the foreclosure auction. The lender becomes the owner and typically lists the property for sale through a real estate broker.
How can a real estate professional help me during foreclosure?
A real estate professional experienced in distressed property sales can provide a current market valuation, evaluate your equity position, negotiate a short sale with your lender, market your home for a quick sale, and coordinate with your legal team to ensure everything aligns with the court proceedings.
Can the bank foreclose if I'm only one payment behind?
Technically, most mortgage contracts allow the lender to declare a default after a single missed payment. In practice, lenders rarely begin formal foreclosure proceedings until you are at least 90 to 120 days behind. New York's 90-day pre-foreclosure notice requirement (RPAPL §1304) also adds time before a lawsuit can be filed.
What is a deficiency judgment?
A deficiency judgment is a court order requiring you to pay the difference between what you owed on the mortgage and the fair market value (or sale price) of the property at auction. In New York, the lender must file for a deficiency judgment within 90 days of the referee's deed delivery. If they do not, the debt is deemed satisfied.
Does New York have a right of redemption?
New York allows you to redeem your mortgage by paying the full amount owed (including fees and costs) at any time before the foreclosure sale. Once the auction takes place, the right to redeem is extinguished. There is no post-sale right of redemption in New York.
What is a foreclosure referee?
A referee is a person appointed by the court to manage the foreclosure sale process. The referee calculates the amount owed, schedules and conducts the auction, collects the deposit and balance from the winning bidder, executes the deed, and files the Report of Sale with the county clerk.
Can I negotiate directly with my lender to avoid foreclosure?
Yes, and you should. Contact your lender's loss mitigation department as early as possible. You can also work with a HUD-approved housing counselor (free of charge) who can negotiate on your behalf. In New York, the mandatory settlement conference process provides a formal, court-supervised opportunity to negotiate.
What should I bring to a foreclosure settlement conference?
Bring copies of your financial documents: recent pay stubs, bank statements, tax returns, a list of monthly expenses, your mortgage statement, proof of any rental or other income, and any loan modification proposals or correspondence with your lender. The more prepared you are, the better the outcome.
Where can I get free help with foreclosure in New York?
HUD-approved housing counseling agencies provide free foreclosure prevention counseling. You can find a list at the New York State Department of Financial Services website or by calling the DFS helpline. The 90-day pre-foreclosure notice you receive must also include a list of counselors in your area. Additionally, many counties have free legal services for homeowners in foreclosure.