A New York foreclosure is handled either in court called Judicial Foreclosure, or out of court called non-judicial foreclosure. Judicial foreclosure is far more common. New York foreclosure can take as much as 15 months.
Prior to initiating the foreclosure process, the lender may send a “Breach Letter” which is an official warning of the impending foreclosure; however, this is not required by New York foreclosure law.
In a judicial foreclosure, the lender files suit against the borrower for the amount in default. The borrower must be notified of the foreclosure proceedings and is required to appear in court to respond. In addition, a lis pendens (notice of pending lawsuit) is also recorded.
If the borrower fails to appear, the court can and typically does rule against the borrower. This allows the lender to start the foreclosure sale. If the borrower appears, the court considers the case, however, if the borrower is in default, the judge will rule that the property can be foreclosed on. When the court rules against the borrower, a foreclosure sale is scheduled. These foreclosure proceedings usually take between 7 and 9 months.
Notice of Sale & Auction
As a general rule, the sale is scheduled a minimum of 4 months after the court ruling. A Notice of Sale must be published in a general circulation newspaper in the county where the property is located once a week for a minimum of 4 weeks prior to the sale.
In New York foreclosure the sales are made by public auction and are almost always at the county courthouse. The property is sold to the highest bidder. Anyone, including the lender, may bid. Usually, the opening bid is from the lender for the default amount. The winning bidder pays 10 percent of the final bid at the sale and the remaining balance within 30 days.
Borrowers have no right of redemption after sale.