As the COVID-19 pandemic continues to fade, many legal cases that were temporarily postponed by the Courts, such as foreclosures, are resuming and going forward in litigation. During the COVID-19 era, foreclosure cases, along with evictions, were stayed by executive order. That meant that if a lawsuit had been filed to foreclose a property, the Courts did not move the case forward, and simply “froze” the case, pending the end of the pandemic.
Recently, with the waning of COVID-19 and the realization that we will never be completely free of the virus, the Courts in New York have lifted the stay on foreclosure matters. This means both that new foreclosure cases may be filed, and also that existing cases may continue moving through the Courts.
With the economy in recession, and home interest rates rising due to efforts to forestall inflation, many borrowers may now find themselves at risk of foreclosure. This post will discuss what to expect in a foreclosure case now that the Courts are “back to normal.” This review will assume that the property in question is residential, and is the primary residence of the homeowner. For primary residences, there are laws in place to assist homeowners, which do not necessarily apply to cases involving commercial properties or “second homes.”
Initially, if the home loan is in default, the lender must give a written notice one hundred and twenty (120) days prior to commencing a foreclosure action. This gives the homeowner time to hire experienced counsel who may negotiate with the lender to avoid a foreclosure lawsuit being filed. If a resolution cannot be reached during this time, the lender may then file a foreclosure case in the appropriate Court, which is the Supreme Court in which the property is located. Once properly served with the lawsuit, the borrower now has 20 or 30 days to file an Answer, depending on the method of service.
After an Answer is filed, the Court will schedule a foreclosure settlement conference. Under New York law, once an Answer is filed, the matter cannot proceed further until all parties meet in a settlement conference to discuss the case and attempt, in good faith, to negotiate a resolution. This requires all parties to personally appear in Court, which was not possible during the pandemic. Now that restrictions have been lifted, parties are expected to appear, together with their attorneys, at a date set by the Court, in the Foreclosure Settlement Part.
Depending upon the results of the settlement conference, the Court may schedule additional conferences, as the lender may require submission of financial documents from the borrower so that a loan modification can be negotiated and approved. If a loan modification is made, the borrower must show that he is complying with its terms by making regular payments before the foreclosure case can be dismissed.
Our firm has extensive experience in representing parties who may be in foreclosure, including attending foreclosure settlement conferences. Now that in-person appearances have resumed, it is important to have proper representation to avoid losing one’s home in a foreclosure lawsuit.