New York foreclosures are done either judicially or non-judicially. However, foreclosure by court is more common and would around 15 months, the longest time for a foreclosure sale than any other State.

Though not mandatory in New York, the lender can issue a notice of initiating the process of pre foreclosure against the homeowner who has failed to pay the loan.

As a first step to the foreclosure, the lender has to file a complaint against the homeowner who is in default for not having made the loan payments as per terms of the mortgage and creates a Lis Pendens (Pending Lawsuit) against the borrower in the local court. The borrower shall be notified of the lawsuit and is summoned to appear before the court within 20 days from the date of filing the complaint.

The borrower can respond by appearing in the court then the court will hear the borrower's pleas and pronounce its judgment on the property. The court can decide if the property is question will be sold through foreclosure, or not, based on the merits of the arguments submitted. In a situation where the borrower is unable to appear before the court, the judgment is made in favor of the lender. As a result of this judgment, the lender will have the right to proceed with the activities for sale of the property through a public bidding.

Before the property can be sold through foreclosure, the court shall pass a summary judgment and appoint a referee to determine the amount owed and the method of sale for realization of the funds. Once the report from the referee is submitted in the judiciary, the court confirms it and permits the sale of the property through a public auction.

The entire procedure can take anywhere from 7 to 9 months.

The foreclosure auction can take place only after a minimum period of 4 months of the date of the judgment on the foreclosure. The next step is to publish a copy of the Public notification of the sale in a county newspaper at least once every week, for 4 consecutive weeks before the date of sale.

New York foreclosure sale is done through a public auction at the premises of the county courthouse. This auction always goes in the favor of the one who bids the highest. Any member of the public, and the lender, can bid for the property. Upon a successful bid, the prized bidder has to pay an advance of 10% of the value of the bid immediately on being awarded the bid. The remaining 90 percent has to be remitted within a time period of 30 days from the date of the bid.

If the highest bid in the public auction falls short of the amount payable by the borrower to the lender, the lender can initiate a motion for the issue of deficiency judgment against the borrower. The proceedings for the issue of a deficiency judgment have to be initiated within 90 days from the date of the sale.

The proceedings of the sale should be distributed by the lender as per the terms of the judgment.

In New York State, the borrower shall have no rights of redemption of property once the sale is concluded.

If you need more information about New York foreclosure laws, you should contact a foreclosure lawyer, or contact us so we can recommend one for you.