Quick Facts
– Judicial Foreclosure Available: Yes
– Non-Judicial Foreclosure Available: Yes
– Primary Security Instruments: Deed of Trust, Mortgage
– Timeline: Typically 120 days
– Right of Redemption: No
– Deficiency Judgments Allowed: Yes
In New York, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.
Judicial Foreclosure
The judicial foreclosure process is one in which the lender must file a complaint against the borrower and obtain a decree of sale from a court having jurisdiction in the county where the property is located before foreclosure proceedings can begin.
Time To Pay Delinquent Account
Generally, if the court finds the borrower in default, they will give them a set time to pay the delinquent amount, plus costs. If the borrower does not pay within the set period of time, the court will then order the property to be sold by the sheriff of the county or a referee.
Public Auction
Typically the foreclosure sale is advertised for 4 to 6 weeks. The sale is made by public auction to the highest bidder. Anyone may bid, including the lender.
After the property has been sold, the sale officer must execute a deed to the purchaser. The officer must also pay, out of the proceeds, the amount of the debt, including interest and costs, to the lender and then obtain a receipt for the payment from the lender.
Notice Of Sale
Within thirty days after completing the sale and executing the deed to the purchaser, the officer must file a report of sale, which must include the receipt from the lender, with the clerk of the court. Unless otherwise ordered by the court, the sale can’t be confirmed until three months past the filing of the report of sale.
Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage in which the borrower pre-authorizes the sale of the property to pay off the balance on loan in the event of their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Although this type of foreclosure is permitted in New York, it is rarely used by lenders.
