| New York
Judicial foreclosure available: Yes
Non-Judicial foreclosure available: Yes
Preferred Method: Judicial Foreclosure
Judicial foreclosure (foreclosure by lawsuit) is the primary method
of foreclosure in New York. Although non-judicial foreclosure is
available, it is seldom used. Non-judicial foreclosure procedures are
sufficiently intricate to lead to potential title disputes. Such
problems might make it very difficult to evict a tenant. Junior lien
holders might also dispute the title and tie the matter up in
litigation. Thus most lenders will elect a judicial foreclosure.
Judicial Foreclosure
Judicial foreclosure begins when the lender files a lawsuit. The
lender will sue the borrower and any person who has a claim to the
ownership or a possession interest. The lender, as plaintiff, has a
summons and a complaint served on the borrower. The summons commands the
borrower to come to court and answer the lender?s complaint; the
complaint is the lawsuit proper, which describes the lender?s legal
and factual basis for foreclosure. A notice of lis pendens must be
filed. The lis pendens is a notice that a lawsuit is pending, the
outcome of which affects title. Often, the borrower fails to answer. In
that event, the court will appoint a referee to compute a figure for the
foreclosure. The court may then sign a judgment of foreclosure and sale.
If the borrower appears and defends against the lawsuit, then the court
will determine the merits of the defense. The referee will need an oral
hearing. If the lender wins, then a judgment of foreclosure and sale
will be awarded.
Typically the foreclosure sale is advertised for 4 to 6 weeks. The
sale is made by public auction to the highest bidder. The lender may
bid, as well. The lender must distribute the proceeds according to the
terms of the judgment signed by the judge. Surplus money will normally
be held by a referee.
Deficiency
If the mortgage contains an express covenant to pay, then the lender
may seek a deficiency judgment against the borrower if the court ordered
sale does not produce sufficient funds. The lender can ask the court for
a deficiency judgment for the amount left unpaid after the foreclosure
sale. The motion for the deficiency judgment must be made within 90 days
after the foreclosure sale. The court must determine the market value
and credit the greater of the market value or the foreclosure sales
price against what remains unpaid on the loan.
Redemption
After the judicial foreclosure, there is no redemption period. This
is true of non-judicial foreclosure, as well.
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