New York is a judicial foreclosure state. This means your lender must start an action in court and prove its claims in order to foreclose on your home. The plaintiff in your case may be your lender, the bank taking your monthly payments, or another entity. You and anyone else who has an interest in the property should be named as defendants. If you have missed one or more monthly payments you can expect the following:

STEP 1: Pre-Foreclosure Notice

At least 90 days before starting a foreclosure action, the lender or the mortgage servicer is required by New York law to send you by regular and certified mail an important notice (the “90-day notice”) to advise you of your default, the amount the lender claims is owed on your mortgage, and the steps you can take to avoid foreclosure. The notice must be titled in large, bold lettering as shown here:

YOU MAY BE AT RISK OF FORECLOSURE. PLEASE READ THE FOLLOWING NOTICE CAREFULLY.

Most importantly, the notice provides information on how to access free legal and counseling help and must list at least five approved housing counseling agencies for the area where the property is located. The notice also makes clear that you have the right to remain in your home until you receive a court order telling you to leave the property.

STEP 2: Foreclosure Action is filed

Unless your mortgage default is resolved, the lender may file a foreclosure action in New York State Supreme Court in the county where your property is located. You will receive a Summons and Complaint which contains the lender’s allegations.

Yes! If you do not file a written answer to the Complaint you may lose some important protections. You should seek assistance from a free legal service provider such as The Legal Aid Society to help you with your answer.

Your answer may either admit or deny the lender’s allegations. In addition, you may have defenses to the foreclosure action or claims (called “counterclaims”) against the lender. Free legal help is available to assist you in preparing your answer. See the bottom of this page for additional information about free legal services.

If the summons and complaint were handed to you directly, you have 20 days to answer. If the papers were delivered to someone else in your home with a follow up mailing you have 30 days to answer. If you missed the deadline for filing your answer, you may have another opportunity to file an answer within 30 days of your first settlement conference. To serve your answer you send a signed copy to the lender’s attorney and file the original with the court.

STEP 3: Settlement Conferences

New York law entitles you to settlement conferences where you and the lender are required to negotiate in good faith to try to achieve a solution such as a loan modification, a short sale or other loss mitigation. Such settlement conferences are held at the court where the foreclosure action is pending, either before a referee or a judge. Both parties are required to come to court with certain documents and information in order to conduct meaningful negotiations. Prior to the conference, the court will send you a notice with the date on which the conference is scheduled for. Do not ignore such a letter or notice.

It is very important that you do not miss any of your conferences. If you miss your conference and the court has not been notified, you could be released from settlement conferences and your lender may proceed with the foreclosure.

Although the law does not mandate a specific settlement agreement the law does require the parties to negotiate in good faith to avoid foreclosure where possible. If the court after holding a hearing finds that the lender has not negotiated in good faith, the court may issue an order prohibiting the lender from collecting interest and fees for a certain period of time or impose fines, among other penalties.

If the court finds that you, the homeowner failed to negotiate in good faith, the case may be released from the settlement conference part, permitting the lender to proceed with the foreclosure.

The following are some of the options that may be available to you:

Reinstatement
Pay all past due monthly payments, late fees, and other charges.

Loan Modification
May change terms of the loan, including the interest rate, term of the loan or the principal amount.

Repayment plan
Past due amount will be divided into monthly payments that will be paid in addition to monthly payments.

Forbearance
Monthly payments may be deferred or in some cases lowered for a designated amount of time.

Short Sale
Lender allows homeowner to sell the property for less than the amount due on the loan.

Deed-in-lieu of Foreclosure
Homeowner transfers the ownership of the home to the lender to dismiss the foreclosure.

Once a foreclosure action is started against you, you will be bombarded with letters, phone calls and even people knocking on your door with all kinds of “offers” and “promises” to save you home with loan modifications, refinancing schemes, cash for keys etc. Many homeowners have been victimized by such schemes, paying thousands of dollars for modification that never came, or even being tricked into signing papers that transferred the home to another party. These practices violate various New York laws. Do not engage with such scams or sign any papers without consulting one of the free legal service providers or housing counselors.

Learn more about common foreclosure scams here.

If you are a homeowner facing foreclosure, call the Foreclosure Prevention Project at 718-298-8979 for Queens and 646-340-1908 for the Bronx. Please leave a message with your name and phone number and we will return your call within 24 hours.

You may also call 311, or The Center for New York City Neighborhoods at 646-786-0888, or the HOPP Hotline at 855-HOME-456 (855-466-3456).

The information in this document has been prepared by The Legal Aid Society for informational purposes only and is not legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. You should not act upon any information without retaining professional legal counsel.