News

What happens during the home foreclosure process?

Posted: June 11, 2011

By: Brad J. Davidzik
Attorney, Jeffrey Freedman Attorneys at Law

Western New York has not experienced a foreclosure crisis on the scale of Nevada, Arizona and Florida.

However, the New York State Office of Court Administration reports that in 2010, with 1,616 cases filed, Erie was among the top five counties in the state for foreclosures.

Joseph Kelemen, head of the Western New York Law Center, which provides free foreclosure assistance says, “Every area of Western New York is affected by foreclosures; both the cities and the suburbs.”

For most of us 1,616 is just a number, however if you are having your house foreclosed on, it’s very personal. What happens when you are in danger of losing your house?

Most banks wait until you are three months in arrears before starting the foreclosure process, but some begin earlier. The first notice you will receive is the “90-day-notice.”

This notice will state exactly how many days you are behind and how much you have to pay to bring the loan current. You are given 90 days to bring the loan current before the bank begins foreclosure proceedings.

If you can’t bring the loan current, in about 60 days, you’ll receive another notice, stating the loan has been “accelerated” and the total is due within 30 days. At the end of this period the bank will file a “Summons and Complaint and Notice of Pendency.”

If there is not a valid defense, most homeowners don’t respond to the Summons and Complaint, they wait for the next step, “the mandatory settlement conference,” to explore alternatives to foreclosure.

Notice of the mandatory settlement conference comes directly from the court. In Western New York this notice includes names and phone numbers of not-for-profit law firms that provide free services.

The mandatory settlement conference gives you, at the court’s discretion, two to five months to explore a settlement. The alternatives may include loan modification, deed-in-lieu of foreclosure, a forbearance agreement, or a repayment plan.

In this area, the chance of an acceptable loan modification offer from the bank is better than in other parts of the state. About 25 to 40 percent of debtors are offered a loan modification, and about 25 to 33 percent of these are accepted.

For many, however, even though both the bank and debtors must enter the settlement process with good faith, the reduced payment is still too high in relation to the homeowner’s income. Additionally, many homeowners become discouraged with the lengthy process and give up.

When the homeowner and the bank can’t find an agreeable option the court assigns a referee to determine the actual amount you owe the bank, and the bank seeks a Judgment of Foreclosure and Sale from the court. This judgment allows the bank to sell the property at public auction, usually about a month after the judgment has been filed.

In total, the time between the first missed mortgage payment to the day of eviction is 18 to 36 months, during which many simply live in the house without making payments. Homeowners who are not able to make a satisfactory agreement with their bank may need to look at other options, which we will discuss in my next article.

« Return to all news