What Exactly Does It Mean To Be In Foreclosure?
When they hear the word foreclosure, people think that the bank is going to take your house right away. It’s not necessarily that simple. When you borrow money for a home in New York, the bank files a document called a mortgage. It secures what you owe against your house. If you don’t pay your mortgage payment, the bank will try to collect what you owe plus any late fees and interest. If the process goes through to the end, it could end up in the sale at auction of your house.
The bank doesn’t own your house. They sell it to a third party at auction and if there is no third party interested in it for the “strike price,” then the bank will get the ownership of your house. After an auction. In New York, homeowners have many protections and banks need to take many steps in order to foreclose on your house. There is a process that the bank has to carefully follow in order to take your house. They can’t just take it away from you.
What Is Meant By A Judicial Foreclosure And Non-Judicial Foreclosure?
New York State is a judicial foreclosure state. This means that in order for a bank to take your house and sell your house at a foreclosure auction, they must start a lawsuit with a summons and complaint. They file a lawsuit against you and you get to defend yourself. They have to prove that they own the mortgage and the note. They have to prove that they provided the required pre-foreclosure notices to you and then go through the process to win the lawsuit against you before they can move forward with selling your house. Then, in New York, the court appoints a referee to calculate how much you owe and to actually hold the auction.
In non-judicial foreclosure states, the bank does not have to file a suit against you in order to take your house. In those states, it’s not a mortgage that you sign but a deed of trust. The person who forecloses is the trustee of the deed of trust. Either a court-appointed referee or a third party sales agent conducts the auction. A key difference between a judicial and a non-judicial foreclosure is how long the process takes. In a non-judicial foreclosure state, the process may only take a month. In a judicial foreclosure state, it can take anywhere from two years to 10 years, depending on how much of a fight you are able to put up.
What Circumstances Generally Lead To Foreclosure?
Foreclosure starts with non-payment. If you missed a mortgage payment, you will start receiving phone calls from your servicer to remind you that you’ve missed your mortgage payment. When you miss a second payment, things start to happen. Depending on your contractual agreement with the bank, you may have certain protections where the bank needs to give you a notice of default and let you know that they’re accelerating the balance of the mortgage.
If the bank accelerates your loan, your entire principal balance is due. They want the entire amount and if you can’t pay that or reinstate your loan, then they move forward with the foreclosure process. Usually, they give you a period of 30 days to get current. If you don’t, then they accelerate the principle and everything is due.
For more information on Foreclosure In The State Of New York, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (212) 766-9779 or (718) 979-9779 today.
Call For A Free Consultation