Under New York law, when a lender wishes to begin foreclosure proceedings against a homeowner, they must go through the courts. This is known as a judicial foreclosure proceeding. However, just because a lender has filed a foreclosure in the courts does not necessarily mean you are going to lose your home.
First Line of Defense: Produce the Note
Since new laws were passed on July 31, 2013, lenders who are attempting to foreclose on a property must produce the promissory note that was signed for your home loan. Typically, there are two documents signed at closing: The mortgage which gives the lender the right to place a lien on the home and the promissory note which is what obligates the homeowner to pay the mortgage. This is particularly important because oftentimes, lenders “sell” mortgages to servicing companies. In order to have standing to foreclose on a property, the party who is foreclosing must produce this note to show they own the promissory obligation.
If Note is Produced
Even if a lender is able to produce the note on your home mortgage, there are still other concerns that may invalidate their ability to proceed with a foreclosure. Some of these include:
- Invalid Service of the Summons and Complaint – two copies of the service must be sent in a manner that guarantees their arrival. This may be done by personally delivering the documents, leaving them with someone at your address or by certified mail. Any failure to use one of these approved methods could delay a foreclosure.
- Improper Notification of Rights – lenders must provide certain disclosures to borrowers including information about contacting approved credit counselling services. In addition, if one or more of the borrowers is an active member of the armed forces, they must be notified of their rights through the Service Members Civil Relief Act.
- Notifications Not Done in a Timely Manner – all notices must provide the homeowner with a minimum of 90 days’ notice of the intent to foreclose. Failure to adhere to this timeline could delay the foreclosure.
Homeowners who are facing potential foreclosure need to speak with an attorney immediately upon receiving a notification from their lender of their intent to foreclose to ensure their rights are being protected. There are numerous other potential defenses other than those listed here.