New York Foreclosure Law
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: Yes
- Primary Security Instruments: Deed of Trust, Mortgage
- Timeline: Usually 120 days
- Right of Redemption1: No
- Deficiency Judgments2 Allowed: Yes
Lenders in the state of New York may foreclose on deeds of trusts or mortgages in default using either a non-judicial or judicial foreclosure process. While non-judicial foreclosure is available, it is seldom used because the process itself is so involved and can often be riddled with disputes associated with the title to the property.
Judicial Foreclosure
A judicial process of foreclosure requires that the lender file a lawsuit and attain a court order to foreclose on a particular property. The first step by the lender is to file a notice of lis pendens (lawsuit pending). If the borrower fails to answer the notice, the court then appoints a referee to come up with a figure for the foreclosure. The judge then signs a judgment of foreclosure and sale.
If the borrower does show up and defend against the lawsuit, the court rules on the merits of the borrower’s defense. A judgment of foreclosure and sale are entered by the court if the lender wins.
Generally the notice of sale is publicized for four (4) to six (6) weeks. The sale is by public auction to the highest bidder. The lender also has the right to bid at auction.
There are no rights of redemption allowed the borrower using either a judicial or non-judicial foreclosure procedure.
The lender may pursue a deficiency judgment if the mortgage instrument contained an express covenant to pay if the sale did not yield sufficient monies to pay the mortgage debt. The motion must be made within ninety (90) days after the foreclosure. The court determines the market value and credits the greater of the market value or the foreclosure sales price against what is remaining unpaid on the loan.
1 A borrower’s right to reacquire property lost due to a foreclosure.
2 A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.
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