Defining Residential Foreclosure:
- Foreclosure is a legal proceeding commenced by the bank or mortgagee. It is for the purpose of enforcing the terms of the note. A bank institutes a foreclosure action to recoup money owed as a result of the outstanding mortgage loan. The end result of a successful foreclosure action is the sale of the home. The proceeds from the sale go to the bank.
- A residential foreclosure involves two separate documents: (1) The Note and (2) The Mortgage.
(1) The Note:
- The Note is the contractual agreement between the bank and borrower. This is the borrower’s promise to repay the loan. It contains all the terms of the agreement including how the bank will proceed in the event you fail to make your payments.
(2) The Mortgage:
- The lien on the property securing the lender’s interest in your home.
- The authority to institute a foreclosure action is derived from the possession of the Note. In other words, the holder of the Note is the owner of the action. Occasionally, the Plaintiff is the servicer of the mortgage who has been granted the authority to bring the action.
- Your original lender may no longer own the note; when this occurs the right to bring the action transfers to the new owner or holder of the note.
The Steps in a Foreclosure Action:
A. The 90-day Notice –
- This is a required prerequisite to commencing most residential foreclosure actions. It contains a specific format, states the details concerning the arrears and provides a list of government approved housing counseling agencies. The notice must be sent out to all borrowers at least 90-days prior to the commencement of the action.
B. Summons and Complaint-
- Service of the summons and complaint marks the official commencement of the foreclosure action. The complaint states the allegations against you (i.e. your failure to pay) as well as the relief sought. This must be answered within a specific timeframe determined by the method of service.
You may be starting at a disadvantage if you attempt this alone. Errors and omissions innocently caused by a lack of familiarity with the foreclosure process can have lasting consequences. For example, certain defenses are waived if not timely raised in your answer.
Enlisting the help of an experienced attorney can ensure you are receiving the maximum protections for yourself and your home. Blutter & Blutter will make sure all the appropriate defenses are raised on your behalf.
C. Foreclosure Settlement Conferences-
- Under New York law, the court must hold a mandatory foreclosure settlement conference. This is where all parties to the action have the opportunity discuss a possible resolution under the guidance of the court. This conference is held in the Supreme Court and is overseen by a court-appointed referee.
- The primary question addressed is the borrower’s intentions with the property. If a borrower wishes to keep their home, they are typically given the opportunity to submit a mortgage modification application.
- If a positive resolution cannot be reached, the case is released from the conference part and the bank has the opportunity to move forward in the action.
D. Mortgage Modification Applications-
- Mortgage modification applications are submitted to the lender or servicer to determine whether (in consideration of the arrears on the account) they have enough income to the household to afford a modified payment. Banks follow a specific formula and are occasionally limited in their flexibility due to restrictions from a possible investor, etc.
- This is an often arduous process. Failure to submit a complete application on first submission can lead to a never-ending run around of document requests and expired paperwork.
Blutter & Blutter is heavily experienced in the application process. We can assist in getting a complete application submitted in a timely fashion which will eliminate much of the headache typically involved. While there is no guarantee that a modification will be offered, we can ensure a decision is made on the merits of your financials.
E. Motion for Summary Judgment-
- Often times, if a case is released from the conference part, the next communication on behalf of the bank comes in the form of a Motion for Summary Judgment. This is submitted by the lender’s attorneys which basically states no material issues are in dispute and therefore a judgment for the Plaintiff should be entered.
This are often arrives as an intimidating thick stack of papers filled with legal jargon and exhibits. Attempting to oppose one on your own can be a daunting task.
Blutter & Blutter can navigate through this motion and raise an appropriate opposition on your behalf. This will give you a fighting chance to save your home or, at the very least, as much additional time as possible.
F. Post Judgment Options and Alternatives-
- If a motion for Summary Judgment is granted, there is still time to explore your options. Foreclosures are a notoriously slow process. Even a granted motion must still be followed by the appointing of a referee and the listing of an eventual sale date. Moreover, a lender or servicer will continue to review you for a modification based on a change of circumstances at any stage in the foreclosure process through the sale date of your home.
If your lender or servicer will not offer you a modification and a sale date is approaching, Blutter & Blutter can evaluate you for a possible Chapter 7 or Chapter 13 bankruptcy.
The chapter of bankruptcy which is right for you depends on the circumstances of your case and intentions with the property but these alternatives may allow you to keep your home or, at the very least, buy you the additional time you need and get you out from underneath any possible deficiency judgment.
G. What is a Deficiency Judgment?
- When the bank sells your home at public auction it often does sell for the fair market value. The outstanding mortgage debt the bank is looking to satisfy may be substantially larger. When this occurs, the bank may seeks the difference between the fair market value and the mortgage loan.
- A Chapter 7 bankruptcy can relieve you of this debt.
Blutter & Blutter understands no two cases are alike. We strive to build and apply a strategy for each case which is uniquely tailored to best represent your intentions with your home. Through our broad experience in foreclosures, debt negotiation and bankruptcy we can provide the representation you are looking for.