Once payments are missed, the lender will send an acceleration letter to the borrower stating that the lender will accelerate the total amount of the mortgage if the arrears are not paid in full by a certain date. This letter is usually not sent until the borrower is at least 2-3 months in default. At this point, the lender is looking for the entire amount of arrears and will generally not accept partial payment.

New York State law requires that the lender send a specific notice to the borrower at least 90 days before filing a Summons & Complaint.

A lis pendens is a legal document filed by the bank attorney in a foreclosure matter either before or at the same time the attorney files the summons and complaint to initiate the foreclosure case. The law requires the bank attorney to file this document before filing the complaint to put the world on notice that there is pending litigation over a piece of real property.

The summons and complaint are filed with the court and initiate the lawsuit. The borrower is served and may or may not answer the complaint.

After the borrower has been served, the lender must file an affidavit with the court to show that they have served all parties and also file a Request for Judicial Intervention (RJI), which allows the court to schedule a settlement conference. The conference is usually scheduled within 60 days after the RJI is filed. There may be several settlement conferences held over many months. The foreclosure action is on hold during this time. If the borrower or their attorney does not appear at the first conference, no further conference will be held, and the case will proceed to the next step.

If an agreement is reached within the settlement conference, the lender must discontinue the foreclosure within 90 days after settlement. If an agreement is not reached or the borrower fails to appear at the first conference, the case will be assigned to a judge and proceed.

If the borrower did not file an answer, the lender will file a Motion for Order of Reference.

If the borrower filed an answer, the leader will file a Motion for Summary Judgement.

If the judge grants the Motion for Order of Reference, a referee is appointed to compute the amount due to the lender. Once the referee’s report is complete, the lender will make a motion for Judgement of Foreclosure and Sale, which asks the judge to give them an order to sell the property at auction.

If factual disputes remain from the borrower’s answer, a trial will be held. The trial will determine whether the borrower will prevail, leading to the foreclosure being dismissed, or whether the lender will be permitted to proceed with foreclosure, potentially resulting in the sale of the property.

Once the court has granted the lender a Judgement of Foreclosure and Sale, the lender can hold a public auction (usually at the courthouse), and anyone, including the lender, may bid. Once payment is made and the sale is complete, the winning bidder will take ownership of the property. If the borrower still resides on the property, the new owner can begin the process of evicting the borrower from the property.