How Foreclosure Works in New York

Home foreclosures in New York go through the courts. The New York Department of Financial Services describes a foreclosure as a lawsuit that starts when the lender files and serves a summons and complaint, and a foreclosure sale is scheduled only after the court rules against the borrower. Residential foreclosure actions are governed by Article 13 of the Real Property Actions and Proceedings Law (RPAPL).

For a home loan on a 1-4 family home or condo the borrower lives in, the lender or servicer must mail a pre-foreclosure notice at least 90 days before starting a court case. It must be in at least 14-point type, be headed "YOU MAY BE AT RISK OF FORECLOSURE," list free housing counseling resources, and say the borrower may stay in the home until a court orders otherwise; it is sent by registered or certified mail and by first-class mail. When the case is filed, an owner-occupied 1-4 family homeowner must get a "Help for Homeowners in Foreclosure" notice, on colored paper, delivered with the summons and complaint. Tenants must get a separate notice within 10 days after the summons and complaint are served. Before a court-ordered sale, a notice of the time and place of sale must be published in a local newspaper once a week for four weeks (or at least twice a week for three weeks), and in some areas also posted in three public places.

The statutes set these minimums: the pre-foreclosure notice must be mailed at least 90 days before the lender files suit; in a case involving a home loan where the homeowner lives in the property, the lender files proof of service within 20 days of service and the court then holds a settlement conference within 60 days; and the sale may take place only after the published notice runs - on or after the 28th day (and by the 35th day) after the first publication when published weekly for four weeks, or on or after the 21st day (and by the 28th day) when published twice weekly for three weeks.

When part of the loan is overdue and part is not yet due, the homeowner can pay the overdue principal and interest, plus court costs and any sale expenses, into court. If the payment is made before the judgment directing a sale, the court dismisses the foreclosure complaint; if it is made after that judgment but before the sale, the court stays the proceedings. If the borrower defaults again later, the court may order the judgment enforced.