Foreclosure Defense Strategies in New York

Judicial foreclosures are used in New York – meaning that if you fail to make loan payments, your mortgage lender must file a court lawsuit against you before enforcing the lien against your house. If you find yourself involved in a foreclosure lawsuit, contact us via form below for expert help. We’ll guide you through the step-by-step process, which looks like this: 

Pre-foreclosure: Lenders must mail delinquent borrowers a pre-foreclosure notice at least 90 days before initiating a court case. This period of time gives the borrower a chance to look into options for loss mitigation. 

Lis pendens: This is the first part of the actual foreclosure process. If a borrower fails to make three payments in a row, and the lender has sent the borrower any law-required notices, the lender will then file a lis pendens at the county clerk office. This filing starts the lawsuit against the property, thus challenging its ownership. The borrower must answer the complaint within 20-30 days, depending on whether it was served in person or via mail. 

Settlement conference: The lender must provide evidence that the borrower was served the notice of summons and complaint. Within 60 days from that date, a settlement conference must be held between the borrower and the lender. Missed payments, penalties, and the terms of the mortgage will be discussed. If both parties reach an agreement, the lender must drop the lawsuit within 150 days of the settlement. 

Judgement: If the borrower didn’t appear in court, they may automatically lose the lawsuit. If they did participate in the settlement conference but the proceedings were unsuccessful, then the lender may file for summary judgment. If the court rules for this, the borrower automatically loses the case. If the court doesn’t issue the summary judgment, the case shall proceed to trial. Then, upon losing the trial, the court appoints a date of sale for the property. 

Keep in mind, though, that New York’s process of foreclosure is adjusted to account for the ongoing Coronavirus crisis. On March 16th, 2020, an eviction moratorium was issued, effectively suspending all pending evictions and proceedings. This order was renewed on August 12, 2020, and is still ongoing. 

What Is Foreclosure Defense?

Foreclosure defense is a legal strategy used by homeowners that have defaulted on their payments. This is becoming a more common action since the Great Recession of 2010, as courts have become sympathetic towards homeowners. Foreclosure attorneys can raise one or multiple types of defenses. Some of the more common foreclosure defense strategies include: 

– The bank didn’t adhere to state regulations. Every state has its own set of procedures for foreclosures. If the lending bank didn’t follow the requirements, you may be able to challenge the foreclosure. If your defense is successful, the lending bank will need to start the foreclosing process from the beginning. 

– The foreclosure lacks standing. If the party that files the foreclosure can’t prove that it owns the loan, the court can rule that it doesn’t have the standing necessary to foreclose. For instance, if a loan was securitized and bundled, it can be challenging to determine if the foreclosure party actually owns that loan. 

– The mortgage servicer made a significant mistake. While servicers make small mistakes frequently, a larger mistake may swing the case in your favor. Some examples of large mistakes include dual-tracking (if it violates state or federal law), imposing unauthorized fees, and exaggerating the amount you have to pay to reinstate the mortgage. 

foreclosure defense

– The statute of limitations has elapsed between when you stopped making payments and when the lender begins foreclosure proceedings. This can be a very strong defense. 

– You never received a breach letter from the lender notifying that you are in violation of the mortgage terms. 

Foreclosure Defense Varies by State

Because foreclosure proceedings and regulations are set by states, foreclosure defense law will vary between states as well. For instance, if you have signed a deed of trust (rather than a mortgage), you reside in a state that has non-judicial foreclosures. In this case, the lender does not have to initiate a foreclosure through the court. On the other hand, if you signed a mortgage, you likely live in a state that has judicial foreclosures – like New York. 

In non-judicial states, the lender has the advantages, as they don’t have to prove anything. Lenders have the right to foreclosure, as long as they have sent a notice of default in the proper period of time. In judicial states, however, homeowners will have the advantage, because the lender has to provide proof of claim to the court. 

how to do foreclosure defense

Chains of title foreclosure defenses are applicable regardless of whether you live in a judicial or non-judicial state. Essentially, there needs to be a clear and straightforward record of ownership from the moment you closed on the property until the foreclosure. If there’s a lapse within the chain of title, it is invalid. 

What Is the “Produce the Note” Defense in Foreclosure?

If a homeowner chooses to pursue the “produce the note” defense, they require the foreclosing lender to provide the original note of ownership (or, in some cases, a copy) to provide it can legally foreclose. However, this can be an uphill battle for the homeowner. If the foreclosing party does not have the original note, they can file for a lost note affidavit, which is typically upheld in court. 

What If the Foreclosure Terms Were Unfair?

You can challenge the foreclosing party in court by claiming that they used unfair lending practices. Some unfair practice that may hold up in court include: 

– Taking advantage of a new borrower or putting them under undue pressure

– Engaging in deceptive conduct

– Financing excessive fees and points

To find out what practices are considered unfair, reference the Home Ownership and Equity Protection Act and the Truth in Lending Act. 

How Do I Raise a Foreclosure Defense?

How you raise your foreclosure defense largely depends on the state you reside in. If you live in a judicial state, you must present the defense before a judge. In a non-judicial state, there is no automatic means in which you can initiate a legal challenge. You would have to file a lawsuit against the foreclosure and request for the court to put it on hold during the review of the case. 

Raise Defenses in Court

If you feel that you have a foreclosure defense that will stand in court, seek the services of a qualified attorney. They can advise you on the best moves to make in your particular situation. You can raise multiple defenses if you think that all of them are applicable. If you fail to raise a defense, it may be waived – so be sure to bring all of your arguments before the court at the very outset of the lawsuit. 

How to Avoid Foreclosure

When raising foreclosure defenses in court, you can do so by making a procedural defense (the lender doesn’t have the standing to foreclose), a substantive defense (the lender credited your payments to the wrong account), or another defense (for instance, you are on active military duty). 

How to Avoid Foreclosure

Raising a foreclosure defense can work in a last-case scenario, but it’s best to avoid foreclosure altogether. The following methods can help get homeowners out of sticky situations. 

Negotiate with Lender

Your lender may be able to lower the interest rate of the loan, forgive some of the debt, or create a repayment plan that takes your income into account. During negotiations, be fully transparent with the lender. If you are on a reduced income, be sure to provide proof that you can still make the adjusted payments. 

Get Government Help

The Homeowner Affordability and Stability Plan enable eligible borrowers to refinance their homes, even if they have decreased in value. Borrowers in default may also receive incentives to modify their first mortgages. If they make all payments for five years, they may receive a debt reduction of up to $5,000. 

Partial Payment

This strategy largely depends on your bank’s policy. If your mortgage payment is $900, you may be able to make a payment of $600 in the grace period. Then, you can pay the remaining balance of $300 within 30 days of the due date. There will likely be a late fee tacked on. 

File for Bankruptcy

Filing for Chapter 7 bankruptcy could delay your foreclosure by three or four months, but filing Chapter 13 bankruptcy could help you keep the house. You will be allowed to pay off any late, delinquent payments over the course of a certain period of time – typically, five years.  You can find out more here.

How to Do Foreclosure Defense With a Lawyer

Are you in danger of foreclosure? Seek legal counsel immediately. For the best foreclosure help in New York, fill out a free consultation form. Every single foreclosure case is different; legal counsel can help you find foreclosure defenses that best fit your situation and give you the best odds of keeping your home.