New York foreclosure law

New York allows lenders to foreclose on mortgages or deeds of trust in default. Both judicial and non-judicial foreclosures are allowed, depending on the contents of the contract. The average New York foreclosure takes about 120 days, or around four months.

Judicial foreclosure
In a New York judicial foreclosure, the lender files a lawsuit against the borrower in the court with jurisdiction in the county where the home is located. If the default is confirmed, the court issues a decree of sale and gives the borrower a short time frame to bring the mortgage current and pay any additional costs (such as attorney’s fees). If the borrower fails to pay on time, the court orders the sale of the property, usually by a county sheriff or referee.

Foreclosures done in this manner are usually advertised for four to six weeks and done in a public auction. The bidding is usually open to everyone, including the lender. After the sale, the person in charge issues a deed to the winning bidder. The amount of the debt, including interest and other costs, is taken out of the proceeds. The rest is then given to the lender, who issues a receipt for the payment.

Within 30 days after the sale, the conducting officer records a report of sale with the clerk of court, with the lender’s receipt attached. The foreclosure is considered final only three months after this procedure, unless the court specifies otherwise.

Non-judicial foreclosure
The non-judicial foreclosure process is followed when the mortgage or deed of trust contains a Power of Sale clause. This serves as a pre-authorization for the lender to sell the property as payment in case the borrower defaults on the loan. This authority may be exercised by the lender or an appointed representative, known as the trustee. Although this process is legally allowed by the state, most New York lenders still use the judicial method.

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