Foreclosure in the State of New York

Foreclosure in the State of New York:
How a Short Sale may help You

In New York, lenders may foreclose on mortgages in default using either a judicial or non-judicial foreclosure process. We will discuss the judicial process because it is the one used almost exclusively by lending institutions in this state.

The complaint of default on a mortgage is placed in the county of record where the mortgage was filed and is called a Lis Pendens law suit. This document serves to inform the court of a default on the terms of a note (mortgage) with the lending institution’s intent to force the sale of the property if the owner is unable to bring current the delinquent amount plus costs. This complaint is filed typically at the 120 day mark. The judicial foreclosure process is one in which the lender must file their complaint against the borrower and obtain a decree of sale from a court having jurisdiction in the county where the property is located. If the borrower does not pay within a set period of time, the court will then order the property to be sold by an appointed referee. Foreclosure proceedings take a long time, in many instances 9-18 months or more to work their way through the courts before an auction takes place.

The security instrument acquired at the time of sale is a deed of trust and is issued by the referee overseeing the sale of the property. All moneys to retire the mortgage’s principle, with arrearages and penalties go to the foreclosing entity, usually the first mortgage (lien) holder. All junior lien holders are wiped from the deed at that time. Any short fall incurred by the first lien holder - something that often happens if they have to take the property back and resell it - and all other creditors securing their position with the property, can be satisfied by filing a deficiency judgment against the debtor.

This is where a person specializing in a special type of transaction called a short sale might be able to help.A short sale is a nuanced and technical transaction requiring skill and experience. In a nutshell, the negotiator of the short sale convinces the bank to take less for the retirement of a mortgage than what is owed on it.What you want to be sure of is that a satisfaction of mortgage document is filed by the bank and they consent to a full release of any deficiency balance remaining; that is, the difference remaining between the short sale purchase price and the principle plus arrearages and penalties on the mortgage. This can be tough to get from second mortgage holders since they are an unsecured debt after the liquidation of the property with their removal from title. Choose a negotiator with a proven track record getting second lien holders to accept as payment in full the short sale amount released to them.

If you get a call from someone claiming to do short sales, be sure to ask them for their policies regarding the aforementioned. Also ask if they can tell you anything about the Equity Theft Act signed into law recently in New York State and how they plan to deal with it. If you get a pause on the other end…Hang up you’re dealing with an uninformed amateur. Knowing applicable laws and your options is important; dealing with reputable people is a must. Short sale real estate transactions represent 20% of all sales currently in real estate; but they must be handled by qualified people. It is a sector of the real estate market that will continue to grow for the foreseeable future with the rise in joblessness and home foreclosure rates. If you or someone you know is in trouble with their mortgage and needs to get out of a difficult situation stop foreclosure hudsonvalleyny for a free report on how to stop a foreclosure and steps you can take to slow the process giving you time and creating options.