New York Real Estate Foreclosure Process
If you have recently been served with a summons in a foreclosure action in New York, your lender has commenced the process to redeem its collateral. A foreclosure proceeding is different than most other types of litigation. In its simplest form, a foreclosure proceeding is comprised of seven distinct steps which results in an order being entered in State Court permitting your lender to sell your property. While presently, this process can generally take between 18 and 24 months to complete, IF YOU IGNORE THE SUMMONS AND COMPLAINT WHEN IT IS SERVED, YOU COULD LOSE VALUABLE RIGHTS WHICH YOU CANNOT GET BACK!
Let’s face the facts. By now you are a number of months behind on your mortgage. You may even have tried to modify your mortgage and have been unsuccessful. In addition, you may be behind on your other obligations as well, including credit cards, medical and/or utility bills. Now is the time to look at your overall financial situation – not just the immediate problem at hand, and seek the assistance of an experienced professional!
If you have fallen into your present situation because of a temporary financial setback, and you now believe that you have the ability to begin to catch up, the bankruptcy laws may be able to assist you. If you have owned your property for an extended period, or have substantial equity that you want to protect, the filing of a Chapter 13 bankruptcy petition can provide you with the immediate protection of your assets as well as the opportunity to catch up on you debts within a 3 to 5 year period.
In Chapter 13 bankruptcy, individuals with steady incomes, who want to pay their debts can do so with the protection of a Federal Court and without the harassment of collectors and attorneys, such as the law firm which has commenced a foreclosure action against your property. Any individual is eligible for Chapter 13 bankruptcy so long as their unsecured debts (credit cards and installment loans) total less than $310,000 and secured debts (such as mortgages) total less than $1,039,000. A Chapter 13 bankruptcy case begins with the filing of a petition and supporting documents with the local bankruptcy court. IMMEDIATELY upon filing the petition, THE FORECLOSURE IS STOPPED, and your lender and their attorneys must comply with the requirements of the law.
If you purchased your property within the last three to four years with little or no money down, in today’s declining real estate market, you may owe substantially more than your property is worth today. You may already be asking yourself if this property is worth fighting for. This is a legitimate question that only you can answer.
Beware of Misleading Ads Regarding Mortgage Modification
By now you may have also received numerous solicitations about modifying your mortgage. While many of these offers may seem enticing, there is no guarantee that your lender is going to modify your mortgage! Before you engage any third party to assist you with a mortgage modification, contact your lender directly.
Mortgage modification is not rocket science. It is an application process similar to that when you first purchased your home. It is also an exteremely paper intensive process. The key to this process is staying on top of the paperwork and continually providing updated information to your lender.
From my experience, the best person to stay on top of a mortgage modification is you – the homeowner – since you have a vested interest in the process. Don’t be afraid or intimidated. Many modifications are successfully obtained without third party assistance.
Beware of Short Sales
By now, you may have also received numerous letters and calls from various parties offering their assistance with your situation. Some realtors, or even your lender, may suggest that you consider a short sale. A “short sale” is the sale of your property to a third party for less than the outstanding balance on your mortgage(s). In order to complete a short sale, your lender must agree to accept less than the outstanding balance on their mortgage. In addition, you will be required to make a full financial disclosure to your lender and acknowledge that you will be losing your entire investment and not receive any net proceeds from this transaction.
There are a number of problems with this option: (1) The only person that will walk away with any money from this transaction is the realtor – if there is nothing in it for you, why do it! (2) Upon the closing of the sale, you must relocate to a new home and immediately incur the costs of relocation and well as the payment of rent on a new home. (3) Both your lender and the realtor only care about the property – they do not care about your overall financial situation, including your other debts!
New York State Foreclosure Reforms
Since the financial crisis began in 2008, a process was implemented, and then expanded, by which lenders, in certain circumstances, are required to meet “face to face” with homeowners to provide those homeowners with an opportunity to work out repayment terms without the necessity of the prolonged frustration of the present loss mitigation process.
The law essentially has two prongs. The first is the requirement that lenders provide a 90 day notice of their intent to commence foreclosure proceedings. This can be both a blessing and a curse. The hope is to have homeowners who are in distress to meet with a professional to review their situation in order to avert foreclosure before the process is commenced. The curse is that, unfortunately, the vast majority of homeowners with sub-prime mortgages either owe substantially more than their property is worth in today’s market or do not have the financial resources to formulate a viable repayment plan. The second prong establishes mandatory settlement conferences in foreclosure proceedings involving homeowners with certain sub-prime mortgages. In either event, you need someone on your side to advise you in this time of need.
I am a real estate and bankruptcy attorney with over 20 years experience is providing guidance to homeowners in your situation. I have worked with numerous homeowners through the economic crises in the early 1990’s as well as after the dot-com bust in 2001. The most important thing for you to do right now is to explore all of your options, including the possibility of filing for bankruptcy. In a free, no obligation consultation we can review your overall financial situation and outline various options that meet your specific needs.
Bankruptcy relief covers all of your obligations. Most important, do not be afraid of the word BANKRUPTCY. Bankruptcy is not evil. The bankruptcy laws should be viewed as an opportunity to take voluntary action to regain control of your financial health. Bankruptcy is not the right solution for everyone, but it is not an avenue that should be immediately rejected.
Your property is your most valuable asset. You’ve worked hard for what you have – and you want to do everything within your power to keep it. We want to help you.
If you live in New York’s Kings (Brooklyn), Queens, Nassau, or Suffolk (Long Island) counties, and need the advice of an experienced bankruptcy attorney, contact the Law Office of Richard S. Feinsilver. Our bankruptcy attorneys can help you determine if a Chapter 13 bankruptcy filing is right for you. Don’t let a growing mountain of debt keep you from achieving your life’s goals. You owe it to yourself to act now!