New York law provides special protections to homeowners facing foreclosure including a three-month right to cure the default before the foreclosure starts and the right to participate in a foreclosure settlement conference after the foreclosure has begun. Read on to learn more about how the foreclosure process in New York works and what notices you’ll receive in a foreclosure, as well as whether you get the right to reinstate the mortgage before the foreclosure sale, whether the lender can get a deficiency judgment against you after the foreclosure, and more.
Below you can find a summary of some of the key aspects of New York foreclosure law along with citations to the statutes so you can read the law yourself.
New York’s foreclosure statutes are primarily found in: New York Real Property Actions & Proceedings Sections 1301 through 1391.
You can find a link to the Laws of New York on the New York legislature’s website at http://public.leginfo.state.ny.us. If you need help locating the statutes, see Finding Your State’s Foreclosure Laws.
We’ve summarized important parts of New York’s foreclosure laws below. You can find more detailed articles on various aspects of New York foreclosure law in Nolo’s New York Foreclosure Law Center.
New York foreclosures are judicial, which means the foreclosing party must file a lawsuit in court in order to foreclose the home. (Learn more about judicial foreclosures.)
New York law requires the following notices.
Pre-foreclosure notice. If the property is owner-occupied, New York law requires that the foreclosing party send a notice to the borrower at least 90 days before starting the foreclosure that provides, among other things:
This notice requirement is in effect until January 14, 2020.
Summons and complaint. In New York, the foreclosing party officially starts the foreclosure by filing a lawsuit (a complaint) in court. It gives notice of the lawsuit to the borrower by serving him or her with a summons and complaint, along with notices advising the borrower about the foreclosure process. N.Y. Real Prop. Acts. Law § § 1303, 1320. The borrower typically gets 20 days to file an answer with the court (if the complaint and summons are served in person) or 30 days (if service is by mail or another method). (Learn more about the difference between a foreclosure summons and complaint.)
Notice of a mandatory foreclosure settlement conference. After the foreclosure begins, the court will schedule a foreclosure settlement conference to take place within 60 days after the foreclosing party files proof of service with the court clerk. The purpose of the settlement conference is to give the borrower and the foreclosing party an opportunity to work out an agreement to avoid foreclosure, such as a mortgage modification, forbearance agreement, or repayment plan.
The court will send a notice to the parties advising them of the time and place of the settlement conference, as well as the documents that they should bring to the meeting. N.Y. Civil Practice Rule 3408. (Learn more in Nolo’s article New York Foreclosure Settlement Conferences.)
The law requiring a settlement conference applies to owner-occupied properties and is in effect until February 13, 2020.
Notice of sale. If the foreclosing party is granted a final judgment of foreclosure against the borrower, a sale date is set. Notice of the sale is published in a newspaper and posted publicly (in some cases). N.Y. Real Prop. Acts. Law § 231.
New York law provides special protections against foreclosure to military service members and to borrowers who take out a type of loan that is called a “high-cost home loan.” (A high-cost home loan is a particular type of mortgage loan that has certain characteristics and the annual percentage rate or points and fees exceed certain amounts.)
Protection against foreclosure for military service members. New York has a state law that is similar to the federal Servicemembers Civil Relief Act that applies to service members on federal active duty or state duty pursuant to an order of the governor. N.Y. Mil. Law § § 301 through 328. Among other things, it provides that a service member may apply to the court for a stay of proceedings (a postponement) in a foreclosure action if:
Protections regarding high-cost home loans. If the foreclosing party violated the laws that apply to high-cost home loans, the homeowner may use this as a defense against foreclosure. New York’s high-cost home loan statutes prohibit, among other things, balloon payments under certain circumstances, negative amortization, and mortgage provisions that increase the interest rate after default. N.Y. Banking Law § 6-l, N.Y. Real Prop. Acts. Law § 1302.
“Reinstating” is when the borrower catches up on the defaulted mortgage's missed payments (plus fees and costs) in order to stop a foreclosure. (Learn more about reinstatement to avoid foreclosure.)
Under New York law, the borrower may reinstate the loan at any time prior to final judgment and then the case will be dismissed. The homeowner can also pay the arrearage after judgment, but before the sale, and the proceedings will be stayed (postponed). If the homeowner subsequently defaults, then the court can order enforcement of the judgment. N.Y. Real Prop. Acts. Law § 1341.
In some states, the borrower can redeem (repurchase) the home within a certain period of time after the foreclosure. However, there is no redemption period after the sale in New York. (To get details on redemption rights in New York, see Nolo’s article If I lose my home to foreclosure in New York, can I get it back?)
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow the lender to seek a personal judgment (called a “deficiency judgment”) against the borrower for this amount, while other states prohibit deficiency judgments with what are called anti-deficiency laws.
In New York, the foreclosing party can get a deficiency judgment if the borrower is served the complaint and summons personally, or if the borrower appears in the foreclosure action. To obtain the deficiency judgment, the foreclosing party must make a motion with the court within 90 days of the consummation of the sale. (The sale is consummated when the deed is delivered to the purchaser.) N.Y. Real Prop. Acts. Law § 1371.
The amount of the deficiency is limited to the total amount of the debt minus the higher of:
If the foreclosed homeowners don’t leave after the foreclosure, the new owner can evict by summary proceeding after giving a ten-day notice to leave or by getting an order of possession from the court as part of the foreclosure action. N.Y. Real Prop. Acts. Law § § 221, 713.