If the word “foreclosure” has entered your life, you probably have many questions, and maybe some anxieties. We can help.
What is Foreclosure?
Foreclosure is the legal process that lenders use to take possession of a property when the borrower fails to make payments on a mortgage. When you borrow money to buy or refinance a property, you sign two contracts with the lender: the note and the mortgage. The note is the agreement that says you agree to pay the lender back for the money you borrowed. The mortgage gives the lender a security interest in your property.
For borrowers, it is important to understand the foreclosure process and their rights under the law. New York is a judicial foreclosure state. This means that the lender must sue the borrower to foreclose on the property. The borrower will then be served with a summons and complaint, which outlines the lender's claims and allows the borrower to respond.
The Foreclosure Process
Before filing a foreclosure against a property owner, the lender is required to send an Acceleration Letter to the borrower. This letter informs the borrower that the lender will accelerate the entire amount of the mortgage if the total amount due is not paid by a certain date. Under New York state law, the lender must also send the borrower notice at least 90 days before filing a foreclosure summons.
Once the lender has filed a lawsuit, the borrower has several response options. They can contest the foreclosure by filing an answer to the complaint, which lays out any defenses they may have. They can also try to negotiate a settlement with the lender or file for bankruptcy, which can temporarily halt the foreclosure proceedings.
If the borrower does not contest the foreclosure or reach a settlement with the lender, the court will issue a judgment of foreclosure and sale. This gives the lender the right to sell the property at auction to recover the amount owed on the mortgage. The borrower may still be able to redeem the property by paying off the mortgage, plus any fees and interest, up until the auction date.
Help is Available
Borrowers need to understand that foreclosure can have serious long-term consequences. Not only does it result in the loss of their home, but it can also damage their credit score and make it difficult to obtain future loans or credit. That's why it is very important that you speak to an attorney experienced in New York real estate law as soon as you realize you could be facing foreclosure.
The legal team at the Law Offices of Melvin Monachan helps borrowers navigate the foreclosure process and protect their interests. We work with clients to review their options, negotiate settlements, and represent them in court if necessary. Contact us today online or at (347) 389-1682.