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Foreclosure In New York

It’s no secret that homes are being foreclosed upon in record numbers. Traditional reasons such as job loss, divorce and medical bills are prevalent.

However, there is a newer more insidious reason. The lenders have actually added to their own problems by making home loans at unreasonably low interest rates “teaser rates” for a limited time period.

After the initial period, the rate goes up, and many times the borrower is not able to make the new higher payment amount. As a result, the banks, and other home loan lenders, are seeing ever-increasing payment defaults, which in turn has caused them to initiate foreclosure proceedings.

The first phase of the foreclosure process is called pre-foreclosure. After a period of missing payments, usually three to five months , the lender will send a notice of default to the borrower. If the borrower and lender cannot reach a mutually acceptable repayment solution, the lender proceeds to complete the foreclosure process and attempts to take possession of the house.

The time period varies according to the lender and also by state regulations, which are not all the same.

What should I do if I have been served with a Foreclosure Summons and Complaint?

Answer – Answer – Answer

If you have recently been served with a summons in a foreclosure action in New York, your lender has commenced the process to redeem its collateral – your home.

A foreclosure proceeding is different than most other types of litigation. In its simplest form, a foreclosure proceeding is comprised of six distinct steps which results in an order being entered in State Court permitting your lender to sell your property. While this process can generally take between 12 and 18 months to complete, IF YOU IGNORE THE SUMMONS AND COMPLAINT WHEN IT IS SERVED, YOU COULD LOSE VALUABLE RIGHTS WHICH YOU CANNOT GET BACK!

In order to protect your rights, it is extremely important to file a sufficient well reasoned answer in a timely manner.

Should I File a Lawsuit Against My Lender BEFORE a Foreclosure is Started?

The facts of each individual case can help to decide whether a borrower should sue right now to obtain some relief, before any foreclosure proceeding has started, and before any default by the borrower has occurred. This might be the best approach, especially if it is clear to the borrower that he/she is going to have to go into default at some point. It is possible that you may be able to obtain relief before you go into default. With this approach, you appear not to be using the lawsuit claims as a defense to an existing default, which makes you appear more aggrieved than if you wait until a foreclosure proceeding has been commenced. Many borrowers wait until they are defending a foreclosure before they urge the court to stop the foreclosure because of the facts that occurred when the mortgage was made. This late notice to the court that a borrower was wronged appears to be an “excuse” for being behind in payments rather than a request for judicial intervention. Many times this can be “too little too late”. The best approach if your lender has committed any of a number of bad faith acts may be to act preemptively.

Most people put off bringing suit for “lender’s liability” until they are in desperate need. You might want to consider going into court to obtain relief prior to going into default, to prevent you from having to go into default. It may be worth your while to consider this preemptive tactic, to strike first, before you are in default, so that your claims are heard as you have described them in your complaint, and not as a collection of “defenses” and “counterclaims” to a lender’s lawsuit against your for foreclosure and later for recovery of a “deficiency judgment” for the amount of the judgment not satisfied by the distress sale of the mortgaged property.

Can I Sue If I Am Trying To Get A Loan Modification?

If you have applied for assistance from your lender through the “loan modification” process and feel that they have not treated you fairly, you may have grounds for legal action. These are just a few examples of lenders bad faith that could be actionable:

  • Time taken by your lender for review
  • Supposedly lost or never received documents
  • Trial modifications never made permanent
  • Constant request for new financial documents
  • Submitted documents allowed to go “stale” without ever being reviewed
  • Paperwork supposedly sent by the lender that never arrives
  • Borrowers told by the lender to ignore the foreclosure paperwork

This is just a small sampling of issues related to the loan modification process that can be contested in court. The Law Office of Brian McCaffrey can evaluate your situation and advise you on what your options are.

New York State Foreclosure Reforms

On August 5, 2008, NYS Governor David A. Patterson signed into law reforms which have created a process by which lenders, in certain circumstances shall be required to meet “face to face” with homeowners to provide those homeowners with an opportunity to work out repayment terms without the necessity of the prolonged frustration of the present loss mitigation process.

The new law essentially has a two part approach.

The first part is the requirement that lenders provide a 90 day notice of their intent to commence foreclosure proceedings.

The hope of the Governor and the Legislature is to have homeowners who are in distress to meet with a professional to review their situation in order to avert foreclosure before the process is commenced. Unfortunately, the vast majority of homeowners with sub-prime mortgages either owes substantially more than their property is worth in todays market or do not have the financial resources to formulate a viable repayment plan.

The second part establishes mandatory settlement conferences in foreclosure proceedings involving homeowners with certain sub-prime mortgages.

In either event, you need someone on your side to advise you in this time of need.

This Law Firm is experienced in real estate, bankruptcy and landlord tenant matters. Our attorney’s have experience in providing guidance to homeowners in your situation. We have worked with numerous homeowners through the current economic crisis.

The most important thing for you to do right now is to explore all of your options, including the possibility of suing your lender, answering the foreclosure summons or filing for bankruptcy.

In a free, no obligation consultation we can review your overall financial situation and outline various options that meet your specific needs.

Call us today for a free initial consultation.

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