When you fall behind on your mortgage payments, you can expect most lenders to react quickly. Here is a general time line of what may occur following your first late payment and ending in foreclosure. This is taken from the Department of Financial Service’s website, but has been modified to reflect our real-world experience in hundreds of foreclosure cases over the last ten years in New York.
- You miss a mortgage payment.
- A late charge is assessed on payment. The loan servicer (the company that processes your mortgage payments) will send you a notice or otherwise attempt to make contact with you.
2 to 3 months:
- If your mortgage is for a home you live in, the lender or loan servicer must send you a pre-foreclosure notice at least 90 days before commencing foreclosure. This 90-day window gives you a chance to work with your lender to find an alternative to foreclosure. The notice must tell you how much you must pay to bring the loan current. It must also give you the names and phone numbers of at least five government-approved non-profit counseling agencies in your area.
3 to 4 months:
- The loan servicer must send a "demand" or "default" letter stating that you have violated the terms of your mortgage. You will be given 30 days to pay the delinquent amount and the late charges.
4 to 5 months:
- The servicer will begin the legal process of foreclosure. This may include sending the loan to its foreclosure department, hiring an attorney to sue you, and recording a formal notice of foreclosure or “lis pendens” with the court and serving you with notice of the action through a “summons and complaint.” These proceedings can take 7-9 months.
6 to 12 months:
- Once a summons and complaint has been served on you and the lender files proof of service with the court, the court is required to schedule a settlement conference within 60 days. This is an opportunity for you to meet face to face with your lender or lender’s representative to reach a resolution of the case. You should try to meet with a housing counselor or attorney prior to the conference. You should bring proof of income such as your two most recent pay stubs and most recent tax return to the conference.
- You will also have to respond to the summons and complaint. If you do not respond, the court will issue judgment by default, appoint a referee to calculate what you owe, and schedule a foreclosure sale. If you do respond, you have a chance to present any legal arguments you might have.
12 to 24 months:
- If the court issues judgment against you, a foreclosure auction sale will be scheduled. The sale usually occurs at least 4 months after the court ruling. A notice of sale is published in a newspaper once a week for at least 4 weeks prior to the sale date.
If you do nothing, the foreclosure process in New York City currently takes about 18 to 24 months, depending on which county you are in, from the date of the first missed payment to the sale of your home.
Foreclosure sales in New York are by public auction, usually at the county courthouse. The home is sold to the highest bidder and anyone, including the lender, may bid. Once payment is made and the sale is complete the winning bidder takes ownership of the property. At that point, once a sale is complete, you have no right of redemption. You lose your house forever, and eventually the new owner will evict you if you are still living there.
It is possible to do all this without an attorney, but getting legal advice is always a good idea in these circumstances. Court personnel generally are helpful, but they won’t give you legal advice.