What Are the Types of Foreclosure?|Judicial & Nonjudicial Foreclosure

Brief Info on Foreclosure

This year has been a devastating year in so many ways. A pandemic. The loss of life. The loss of work. The loss and potential loss of homes. Each situation frightening-each situation life-changing for all involved.

New York is known, in our nation, as the leader in finance. This is the place that we look to for finance and wealth education and information.  However, we are in a foreclosure crisis. Whether it’s one of the boroughs of Brooklyn, Staten Island, Queens, The Bronx or Manhattan, or elsewhere, homeowners are falling behind in their payments.

Though this is not the only year that the topic of foreclosure has been highly discussed; it is the year that more people could potentially face this unfortunate process since the notable 2008-2009 crash. The foreclosure process can begin in the following common ways and several more:

  • A lien against your property
  • Missed mortgage payments
  • Overall lack of affordability
  • And more…

There are ways to deal with the lender and/or the courts to ensure that you receive the justice that you and your family are entitled to.

foreclosure type judicial

What Do You Need to Know About Foreclosure Law?

The foreclosure process can be a long and difficult one.  Here is an overview of its many steps.  If any step is skipped, overlooked, or otherwise represented inaccurately, it could prove devastating for your family and for your finances. Homeowners in this situation need a strategy to ensure that these steps are given ample attention and handled accurately and efficiently.

What Are the Types of Foreclosure?

There are two main types of foreclosures. Judicial foreclosures and nonjudicial foreclosures. There are differences between the two and we discuss them here:

Judicial foreclosure: The judicial foreclosure is explained here. New York is a Judicial Foreclosure state. This means that there is a list of processes that a lender must go through to foreclose on a home including filing a lawsuit in court. The process takes about 445 days (average) and the lender has the burden or has to prove its case so to the judge. This process begins with an owner receiving a pre-foreclosure notice. When served with a summons or a complaint, the owner has about 30 days to answer. After that, a mandatory settlement conference is placed on the books and afterward, answers and discovery from both sides are given and taken. A Motion for Summary Judgment could wrap the case up at this point but if it does not, then the trial begins, and the decision will come afterward. Either the foreclosure will be dismissed, or the property will be auctioned.

Nonjudicial Foreclosure: The nonjudicial foreclosure works differently than the above judicial foreclosure. It is less formal. If there is a “power of sale” clause in the mortgage agreement, the lender can skip most of the process above and foreclose on the property. The owner can fight the nonjudicial foreclosure but would have to initiate a lawsuit against the lender, or the foreclosing party, to have a chance to be heard in court. Regarding the timing, this could take a few months but usually takes significantly less time than the judicial foreclosure.

Strict Foreclosure

States Where Strict Foreclosure Takes Place: Strict foreclosure is only allowed in two states. Those states are Connecticut and Vermont. Generally, in this case, the lender will have to petition the court and be given an order. This order will declare that the homeowner is in default on the mortgage. If the court agrees with the lender, that the homeowner is in default, then the foreclosure is approved. The court will give the homeowner’s title directly to the lender.

Acceleration Clauses

The acceleration clause, or the acceleration covenant is a contract between the lender and the borrower. The borrower is required by the lender to repay the entire outstanding loan, if the borrower did not meet certain requirements. This contract outlines details and the terms of a loan repayment. 

Risks of Foreclosure Sale

Property Problems: We addressed some of the reasons for foreclosures and the property problems surrounding it above. Again, lack of affordability could mean all the things listed above. It could also highlight the fact that New York is just a lot more expensive than it was years ago. It is currently a great deal more expensive than it was 20 years ago, or even 10 years ago.

Taxes and Liens: “A lien secures the government’s interest in your property when you don’t pay your tax debt. A levy actually takes the property to pay the tax debt. If you don’t pay or make arrangements to settle your tax debt, the IRS can levy, seize and sell any type of real or personal property that you own or have an interest in.” This and more are detailed in the referenced link.

Slow Process and Paperwork: Earlier, we shared a copy of the process of a foreclosure for the New York foreclosure process. Here is another resource. It is our job to help arm you with as many resources as possible to ensure justice is served on your behalf and on behalf of your family. Homeowners also need to be sure that they are being notified properly. This is one of the very important pieces of the complex puzzle of foreclosure that should not be overlooked. Improper notification is a notable percentage of confusion in this process.

Foreclosure Proceeding

It is important for homeowners to know their rights. There is help in this situation. There are things that homeowners need to be aware of right now. Many will say to avoid foreclosure proceedings at all costs. If this is possible, that is a logical choice. If it is not, and the process has already begun, all is not lost. Below, we will give you some contact information to help you do just that. In addition to the reasons listed above for foreclosures, we have the reality of a pandemic.

A lot has changed since Covid-19. For example there have been several executive orders like this one: Governor Cuomo Signs Executive Order Extending Moratorium on COVID-Related Commercial Evictions Until September 20. Special protections have been made for citizens throughout the United States and specifically in the state of New York. Homeowners need to be aware of these and other special protections.

Get Legal Advice on Foreclosure

In closing. We are no doubt in a crisis. The surge and rising foreclosure rates are an alarming trend. If you are going through this or are about to go through this process, you are not alone. There are thousands of your neighbors fighting the exact same fight. They are fighting to keep their property; they are fighting to get their property back. It is disturbing, but it is not insurmountable with the proper strategy, and the proper team implementing that strategy.  It is imperative that homeowners arm themselves with the absolute best advice possible.Protect your family, protect your home, protect your lifestyle. Partner with a knowledgeable firm with experts constantly working on this issue.  A firm that has been through this process before with your neighbors and have successfully ushered them out of this unfortunate situation. Contact Moshes Law and make sure that you have the right protection and the right representation. Fill out the form below for a free consultation.