ny foreclosure | NY Short Sales

NY Foreclosure Timeline Increases

Dec 192010

Two years ago, as part of the NY foreclosure process, the state began requiring that banks and borrowers attend settlement conferences before a foreclosure takes place. While the conferences are popular with borrowers and have succeeded in helping some families keep their homes, banks have been reluctant to participate. That, and recent revelations that some lenders have improperly submitted foreclosure documents, has prompted judges to take a harsher stance with lenders. The foreclosure process typically begins after a borrower misses three consecutive monthly payments and ends once the lender repossesses the home or the borrower brings the loan current. Nationwide, there were 2.1 million mortgages in some stage of foreclosure as of October, according to research firm LPS Applied Analytics.

The average loan in foreclosure had been in default for 492 days as of October, up from 289 days at the end of 2005, according to LPS. In New York, the waits are even longer. As of October, the average NY foreclosure timeline has increased to 604 days. ”We try and help as many people as we can,” says New York Supreme Court Judge Michael Ajello. “We set up a conference and I try and persuade and cajole the banks to reduce the payments,” he says. But the banks, he adds, “are not very cooperative.” The Mortgage Bankers Association, which represents some of the nation’s biggest banks, said that banks aren’t trying to be uncooperative but in many cases loan modifications won’t help borrowers because they are unable to meet payments regardless. Staten Island’s Richmond County Supreme Court now hosts settlement conferences four days a week—double that of last year—with about 40 borrowers scheduled to appear each day.

For homeowners looking to remain in their homes, this may seem like a good development. However, since the NY foreclosure timeline is taking longer, it means that any missed payments make it that much harder to work out a deal with the lender. Also, with the large number of foreclosure cases still pending, it also adds to what’s called shadow inventory. Shadow Inventory are houses that are not yet on the market for sale but will be eventually. With an ever-increasing shadow inventory, it inevitably means an increase in the supply of houses available for sale which, in turn, means a future drop in housing prices. If an agreement is made with a bank for a lower interest rate, it means homeowners will be paying even more for a asset that is worth less. Even if you need to sell within the next five years, you may still be looking at a short sale.

GMAC Suspends Foreclosure Actions in 23 States

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Sep 302010

If your mortgage is owned by GMAC, you may have a few extra months in the NY foreclosure timeline because it seems that GMAC’s paperwork to foreclose on properties has not been entirely accurate. According to this Bloomberg piece, “Brokers were told to stop evictions, cash-for-key transactions and lockouts, regardless of occupant type, with immediate effect” according to an internal GMAC memo dated September 20. GMAC will also will also suspend sales of properties on which it has already foreclosed upon.

Following is a list of the affected states.

Connecticut
Florida
Hawaii
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Nebraska
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Pennsylvania
South Carolina
South Dakota
Vermont
Wisconsin

New York Foreclosure Timelines reset by Fannie Mae & Freddie Mac

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Sep 102010

Fannie Mae & Freddie Mac are GSE’s (Government Sponsored Enterprises) and, in our opinion, have been a primary culprit of the current real estate market. Originally created in 1938, Fannie Mae’s original mission was to buy FHA mortgages from lenders to replenish their capital so they could lend more money so people could buy more houses.

Through a long convoluted history with Congress and HUD, Fannie Mae came to own 1 out of every 4 mortgages by 2001 with a portfolio totaling over $700 billion! In 2008, the federal government took over Fannie Mae because of it’s falling capital reserves due to unpaid mortgages (i.e. foreclosures).

So far, this takeover has cost everyone who works, earns an income, and pays taxes over $145 billion with the Congressional Budget Office officially estimating the government takeover of Fannie Mae & Freddie Mac to be closer to $389 billion. Why? Because ultimately, both GSE’s ended up channeling money into loans that were not affordable to begin with.

So, now we’re in a situation where the U.S. Treasury is encouraging policies to help keep homeowners in their houses, but both Fannie & Freddie are losing money in several ways:
1. Loans modified according to federal guidelines are bringing in less money in the form of interest
2. Some loans cannot be modified and must instead be liquidated either through either a short sale or foreclosure and resale which results in financial loss on the money originally lent
3. The lengthy loan modification process and short sale process further delays income required by the GSE to operation thereby requiring additional tax payer money via more bailouts.

So, to start improving it’s cash flow and collecting on it’s capital investment, Fannie Mae has just released this past August 31, 2010, its Announcement SVC-2010-12 which revises the allowable time frame for foreclosure in 4 states, of which New York is included.

For Manhattan, Bronx, Queens, Brooklyn, Staten Island, Nassau and Suffolk counties, the timeline has been set to 420 days (14 Months).

For all other New York counties, the foreclosure timeline has been set to 300 days (10 months).

Anyone working with homeowners, please make them aware of these new guidelines because our guess is that conventional mortgages will be following suit shortly using the government policies as their guidelines and legal defense.

Chase Bank Adds 8,000 Loan Modification Specialists

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Aug 272010

In a continued effort to help homeowners struggling with mortgage payments, JP Morgan Chase Bank has begun several initiatives including adding 8,000 new loan counselors and opening 51 open face-to-face counseling centers (click here for locations) where homeowners can meet with a Chase representative one-on-one.

According to Charlie Scharf, head of Retail Financial Services at Chase, “Our counselors listen to each family and then help them start the process, fill out documents and walk them through possible options – all at no charge to the customer.”

From our own perspective, this is a great start! Chase has been notoriously slow at performing loan modifications and they seem committed to getting a response now in 30 days. They are also starting to expand their team to help with homeowners who need to sell through a NY short sale.

NY Foreclosure Timeline

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Aug 262010

Due to the current economic crisis, many Americans are finding it difficult to pay their mortgages leading to a significant rise in the number of foreclosures. Between February 13, 2010 and May 31, 2010, lenders issued foreclosure notices to approximately 60,000 homeowners in New York State. Suffolk and Nassau counties have the highest mortgage default rates in New York with Westchester and Bronx counties coming in seventh and tenth respectively.

Fortunately, New York is a judicial foreclosure state, which means that your lender must go to court to foreclose on your home (this step generally provides a homeowner at risk of foreclosure with additional time). Below please find a general timeline of events, which should occur during the foreclosure process in New York:

Day 1:

Borrower misses mortgage payment, which is generally due on the first of the month.

Day 16-30:

Lender assesses a late charge on the payment (generally, the lender will attempt to contact you by phone or mail)

Day 30-60:

Lender must send you a pre-foreclosure notice at least 90-days prior to commencing a foreclosure action against you in court.

This notice must provide information on how much you need to pay to bring your loan current. It also must provide the names and contact numbers of at least five (5) not-for-profit housing counseling agencies approved by the government that serve the region where you reside.

Day 45-60:

Lender will send a “demand” or “breach” letter pointing out the mortgage terms you violated and giving you thirty (30) days to pay the delinquent amount and any late charges.

Day 90+:

Lender will commence legal action against you.

This entails referring the loan to its foreclosure department and hiring an outside, local attorney to begin a foreclosure action in court.

The attorney hired will most likely then file paperwork, including a “lis pendens,” which is a public notice, filed against a specific property, that an action at law is pending that may affect title to the land.

The attorney should also serve you with notice of the action through a “Summons and Complaint.”

After being served with a Summons and Complaint

Lender, or its attorney, will need to file proof of service with the court.

If you are going to answer the Summons and Complaint, which we urge you to do, you need to file your answer with the court within a specific time-frame (generally 20 days if served personally and 30 days if served by other means).
Failing to answer a Summons and Complaint can result in a default judgment against you, which could end in a foreclosure sale of your home.

New York State law now requires the court to schedule a settlement conference within sixty (60) days of the lender filing proof of service of the Summons and Complaint with the court.

This is an opportunity to meet face to face with the lender’s representative and attempt to resolve the matter. As such, it is vital that you consult a lawyer or housing counselor prior to the conference to ensure you are well-prepared for the meeting.
If the court rules against you, a foreclosure sale is usually scheduled about four (4) months after that ruling.
- A notice of sale must be published in a general circulation newspaper once a week for at least four (4) weeks prior to the sale.
- Foreclosure sales in New York are by public auction and are generally held at the county courthouse. The home is sold to the highest bidder.
- New York does not have a right of redemption, which means that you cannot repurchase the home if you come up with the money. Instead, once the sale is complete your ownership interest is lost.

In sum, the foreclosure process in New York can take up to fifteen (15) months from the date of the first missed payment – provided you take action and avoid a default judgment.

The New York Foreclosure Process: Respond to a Summons & Complaint

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Aug 052010

Have you been served with a Summons and Complaint notice for a New York Foreclosure? If so, you have 20 days to respond to the notice with the Court. RESPOND!!!

The New York foreclosure process is a “judicial” process. This means your lender must file a lawsuit before they can take possession of your house. The New York foreclosure process normally takes anywhere from 8-14 months. By filing a response to the notice with the court, your lender will be required to follow a few additional legal procedures that can add anywhere from 3-5 months to the New York foreclosure process. These extra few months may mean the difference between solving your foreclosure situation (either through a loan modification or a short sale) and losing the house to foreclosure.

If you are in the process of applying for a Loan Modification and you receive a summons and complaint notice, you must still respond to the notice! This is because a Loan Modification is an “internal bank” process and a foreclosure is an “external legal” process. The New York state foreclosure process continues in the court system until the lender directs the attorney handling the foreclosure lawsuit to stop. Your lender won’t stop the foreclosure process until you successfully complete a loan modification and successfully complete the trial payment period.