In the meantime, here’s what you need to know:

Foreclosure is the legal process by which a lender, or mortgagee, attempts to recover the balance of a loan from a borrower, or mortgagor in default of the loan by forcing the sale of the real property used as collateral for the loan. Generally, the borrower has an equitable right of redemption, which allows the borrower to repay the debt and retain ownership of the real property. The foreclosure proceeding is intended to terminate that right of the borrower and legally seize possession of the real property used as collateral.

A bank or other lender must follow certain procedures in the foreclosure process in order to obtain and sell real property to satisfy a mortgage that is in default. A bank or lender will generally wait until the loan is at least three months in default before commencing a foreclosure proceeding. However, in reality, banks usually do not start the process until much later on – in many cases after the borrower has stopped paying the loan for a year or more.

If you receive a summons and complaint in a mortgage foreclosure action, you must not ignore it. To do so may cost you your home.  There is a very short time frame in New York to answer a complaint, which will vary slightly depending on how you are served.

Filing an Answer

Your answer will contain two very important parts (sometimes three). The first part of your answer will contain your responses to the allegations against you, to which you can either admit, deny, or deny knowledge or information sufficient to respond. The second part of your answer will contain your affirmative defenses. These are defenses generally known to attorneys who are experienced in the field of foreclosures, which are technical in nature and can serve as a complete defense to the foreclosure action if they are successfully raised and established. It is a general rule of law that any affirmative defense not raised in a written answer is deemed to have been waived. That is why it is crucial that you retain an attorney whose practice focuses on foreclosure defense. An answer can also include any counterclaims you may have against the lender.

Never default in the action by doing nothing; and never attempt to answer a complaint on your own. Instead, seek legal counsel immediately. To speak with us for free about your foreclosure action, contact us via telephone or email here.

Mortgage Assignments

Mortgages and their underlying notes are often bought and sold several times during their lifespans. These transfers of title are referred to as assignments. It is the burden of the lender to prove that it had proper title to the mortgage and note, and that burden is not always simple for banks to meet.  If the bank or lender bringing the foreclosure action lacks proper title, then it cannot maintain the action. This type of defect in the title is often caused by a technical error leading to a disruption in the chain of custody of the mortgage and note. Examples include the failure to properly record the mortgage and note by one of their former holders in the chain of custody. When a bank has properly established its title, it is said to have standing to bring the action. A lack of standing is one of the many affirmative defenses your attorney can raise on your behalf.

Settlement Conferences

In New York, the law requires that in foreclosure proceedings involving a residential property intended for less than five families, which serves as the principal place of residence of the borrower (not an investment property, or property intended for five or more families), a settlement conference is required to be held. A court attorney referee (an official of the court system, who is not a judge) usually presides at the conference. The purpose of the conference is to determine whether the borrower is qualified to apply for a modification of the loan, and to set up a schedule by which the borrower must submit a completed modification application package to the lender, and by which the lender must review it and decide whether to modify the loan. If the borrower qualifies for a modification, there will usually be a trial period in which the borrower must make timely payments (usually no more than three monthly payments), after which the action will be marked settled and disposed.

If the homeowner does not qualify, however, the foreclosure will continue. This means the matter will be assigned to a judge who will decide the case. The bank will make a motion for summary judgment seeking to appoint a special referee to compute damages and to sell the property at an auction. As a borrower, your attorney will oppose that motion.

If summary judgment is denied, the matter will proceed to trial. If it is granted, however, a special referee will be appointed to compute the amount owed. Once the damages are computed, the lender will seek to have court grant permission for the special referee to sell the property at auction. Auctions are advertised in local newspapers and are usually held at the town hall in the town in which the property is situated. For example, if the property is located in the Town of Babylon, the auction will likely occur at Babylon Town Hall.

The foreclosure process is lengthy and often takes years to conclude. It is not unheard of for a foreclosure action to continue for three or more years. This may seem like a lot of time, but it is not; and you must not consider the amount of time foreclosure actions take to conclude as a reason to be complacent. You must retain an attorney specializing in foreclosure defense as soon as you learn of the action.

Since it is the goal of most homeowners in foreclosure actions to save their home, the primary goal of your attorney should be to get the loan modification approved. At the Murtha Law Firm, LLC, we will focus our efforts on that very important goal. If it turns out that you do not qualify for a modification, then our focus will shift to defending you in the action with the goal of having the bank’s motion denied and the matter dismissed.