Protecting Your Rights And Interests During The Foreclosure Process
Foreclosure can be intimidating and overwhelming. As with any lawsuit, legal assistance is essential to navigate the process and protect your equity and property.
The legal team at Fadullon Dizon Krul LLP has decades of combined experience in successfully litigating foreclosure actions throughout New York State and is ready to assist. Whether your goal is a loan modification or other settlement with your lender, or the complete discharge of a mortgage, the firm’s attorneys will fight for the dismissal of the lawsuit against you and bring any appropriate counterclaims on your behalf against your lender to the full extent permitted under New York law.
A Guide To The Foreclosure Process In New York
The most important thing to know if you are in (or at risk of) residential foreclosure in New York is that New York is a “judicial foreclosure” state. This means that in order to foreclose on your home, your lender or loan servicer has to go through the court system to obtain a “judgment” before they can legally take your house.
A foreclosure lawsuit is fundamentally no different from a typical lawsuit, and, just like in any other lawsuit, you have the right to defend yourself and hold the lender or servicer to the same legal standards as any other litigant in court.
First, keep in mind that before your lender or loan servicer is legally allowed to begin a foreclosure lawsuit against you, it is required by law to follow certain procedures, and, often times, also required under the mortgage agreement to take particular steps before it is allowed to “accelerate” your debt by declaring the full amount of the debt due and owing.
For example, under New York State law, in most cases, your lender or loan servicer is required to send you a letter, often called a “90-day notice” or “RPAPL 1304 notice,” by both certified and first-class mail, before it can legally start a foreclosure lawsuit against you. If the lender or servicer fails to send you the notice or fails to send the notice in the precise manner required by law, the law requires that the foreclosure lawsuit commenced by the lender or loan servicer be dismissed.
Additionally, under most mortgage agreements, your lender or loan servicer is also required to send you a letter called a “notice of default” that states the amount of money that it claims you owe and give you an opportunity to cure your default by paying that amount before it is allowed to “accelerate” the debt to demand the full amount they claim you owe. Again, if the lender or servicer fails to send you the notice in the manner required by the mortgage agreement, but starts the lawsuit anyway, the law requires that the foreclosure lawsuit be dismissed by the Court.
Next, after completing the above-mentioned (and other) preliminary steps, the lender or servicer generally hires an attorney to file a legal document called a “summons and complaint,” which officially begins the lawsuit against you.
The lender or servicer’s attorneys will then hire a process server to go to your place of residence or employment to “serve” the “summons and complaint” upon you. Be aware that in any lawsuit, service of the summons and complaint upon you, in the exact and precise manner required by New York State law, is a strict requirement of “due process,” and if the process server fails to follow the law in serving you, any lawsuit commenced against you must be dismissed by the Court.
To protect your rights, you must answer the complaint by serving a document called an “answer.” If you do not answer the complaint, you will be “in default” in the litigation, which means that you admit the lender or servicer’s allegations in the complaint against you and greatly simplify the lender or servicer’s goal of foreclosing on your home.
Under New York State law (CPLR 3408), you are likely entitled to mandatory settlement conferences that are held under the supervision of the Court, and once you’ve filed an “answer,” you can try to settle the foreclosure action with the lender or servicer instead of proceeding with litigation. In fact, under most circumstances, the lender or servicer is not allowed to actively litigate the case against you while you are participating in these mandatory settlement conferences. You are of course entitled to attempt to settle the lawsuit at any time, but having the Court oversee and mediate the settlement process can be quite helpful, especially considering that the law requires the lender or servicer to negotiate “in good faith” in attempting to resolve the foreclosure.
If you have filed an “answer” in response to the lender or servicer’s summons and complaint, as you are strongly advised to do, the lender or servicer, assuming no settlement is reached, will be required to make a “motion for summary judgment,” which is essentially an attempt by the lender or servicer to prove that they are entitled to foreclose on your property without the need for trial. If you are at this stage in the foreclosure process, it is crucial to file strong opposition (generally in the form or legal memoranda or affirmations drafted by your attorney) to the lender or servicer’s “motion for summary judgment” (and, in some cases, a “cross-motion for summary judgment” wherein you can ask the Court to dismiss the foreclosure action altogether). The papers you file will generally elaborate on the defenses you raised in the “answer” and/or attempt to the show the Court that the lender or servicer’s “motion for summary judgment” is defective, not supported by admissible evidence, or otherwise legally improper or insufficient to warrant a ruling in the lender or servicer’s favor.
There are many instances wherein the lender and servicer simply fail to meet the significant burden required of them in order to win their “motion for summary judgment,” and the Courts will deny the lender or servicer’s motion. When this happens, the foreclosure lawsuit will likely be placed on track to go to trial. There have been instances where the lender or servicer is unwilling to go to trial and agrees to settle the foreclosure action at this stage of the litigation. At trial, the lender or servicer is required to prove their case using live witnesses and admissible evidence in front of a judge. If the lender or servicer loses at trial, the foreclosure action is dismissed and the case ends.
If the lender or servicer wins at trial or wins its “motion for summary judgment,” this means that the Court has officially determined that the lender or servicer has sufficiently proven that you defaulted on your mortgage payments.
At this point comes the phase in the litigation where the Court needs to figure out the amount of money you owe the lender or servicer on the note and mortgage. In order to do so, the Court usually appoints a “referee” (a court-appointed lawyer) to calculate the amount that you owe. The lender or servicer is required to prove, using admissible evidence, the amounts it claims you owe, and you are allowed to dispute those claimed amounts and submit your own arguments and evidence to the referee, and, ultimately, to the Court.
Once the referee issues his or her report as the amount you owe, the lender or servicer will make a motion for the Court to “confirm” the amount the referee states you owe and issue a final judgment against you, called “judgment of foreclosure and sale.” This is often called a “motion for a judgment of foreclosure and sale” and requires the lender or servicer to, among other things, demonstrate that the evidence of the amount you owe submitted to the referee was admissible, and that the lender or servicer did not violate your due process rights by giving you a meaningful opportunity to contest the amounts allegedly owed. Courts routinely deny the lender or servicer’s “motions for a judgment of foreclosure and sale” when the lender or servicer do not submit admissible evidence to the referee or fail to give the borrower a meaningful opportunity to contest the amounts allegedly owed.
If the Court grants the lender or servicer’s “motion for a judgment of foreclosure and sale,” the lender or servicer is then permitted to proceed to the auction of your property, where anyone, including you and the lender or servicer or any prospective bidder, can purchase your property at the courthouse auction
Until the actual sale of the property at the foreclosure auction, the owner of the property can “redeem” the property by paying the full amount of debt, but once the auction occurs, the right to “redeem,” also sometimes called the “right of equity of redemption,” is extinguished and lost.
After the auction has occurred, a borrower usually has one year to ask the Court to set the auction aside if the borrower can prove, among other things, that fraud, mistake, collusion or some other serious misconduct cast doubt as to the fairness of the auction, or if the final auction price of the property “shocks the conscience” of the Court.
It is worth noting that in New York, the “trial level” of New York State Supreme Court for any given county does not have the last word as to whether the lender or servicer is permitted to foreclose your property.
In fact, in many instances, even where the “trial level” court of the New York State Supreme Court determines in favor of the lender or servicer on the “motion for summary judgment” or “motion for a judgment of foreclosure and sale,” the appellate courts of New York (higher courts that review and can reverse the lower court), known as the “Appellate Division” (First, Second, Third, or Fourth Departments, depending on the county in which the litigation takes place), have the power to review and reverse the “trial level” courts when those courts, among other things, do not follow proper procedures or simply decide the particular motions incorrectly.
Please have faith that at any stage of the foreclosure process, whether it is at the very beginning, or the tail end, all hope is not lost. In many cases, you can still fight back, assert your legal property rights, and prevent the lender or servicer from foreclosing on your home.
Understanding and correctly navigating is crucial to saving your home, since failing to promptly respond to foreclosure filings or motions can result in an automatic default in the lawsuit and pave the way for the lender or servicer to foreclose on your property without any defense on your part. Fadullon Dizon Krul LLP can assist you in reviewing foreclosure filings and responding to foreclosure proceedings ahead of the stringent deadlines. That way, you can fight to protect your home and your interests. Call the firm at 347-967-4087 today to begin work on your response.
Work With Attorneys Who Can Safeguard Your Interests Amid Foreclosure
Lenders and loan servicers are counting on you not to fight back against foreclosure proceedings. Don’t make that mistake. Have a legal team in your corner that can give you a voice and advocate for your needs and rights as a borrower.