Foreclosure Process
FORECLOSURE DEFENSE AND FORECLOSURE SOLUTION OPTIONS DURING THE FORECLOSURE PROCESS
| Event/Court | Lender Action | Borrower Options |
|---|---|---|
| Default in Mortgage Payment | Service of 90 Day and Default Notice | Modification, Negotiation and/or Bankruptcy (Chapters 7/11/13) |
| Default Continues without Resolution | Denial of Mod/Neg Proposals; | Resubmission or Appeal of Modification / Negotiation |
| Decision by Lender to Foreclose | Filing/Service of Summons and Complaint | Answer and/or Motion to Dismiss and Discovery |
| Foreclosure Settlement Conferences | Lender Attorneys Review Mod/Neg in Court | Modification/Negotiation tried by Borrower’s Attorneys in Court |
| Court Ends Conferences | Motion for Summary Judgment (“MSJ”) | Oppose MSJ and Cross-Motion (to Compel Discovery, etc.) |
| Decision on MSJ | Notice of Entry of MSJ | Possible Reargument/Appeal of MSJ Decision OR Mod, Neg and/or BK |
| Referee Computation | Filing/Service of Notice of Computation | Objection to Computation and Demand for Referee Hearing |
| Acceptance of Computation | Motion for Judgment of Foreclosure &Sale(“MJF&S”) | Oppose MJF&S and Cross-Motion (to vacate previous Decision on MSJ) |
| Decision on MJFS | Notice of Entry of MJF&S | Possible Reargument /Appeal of MJF&S Decision OR Mod, Neg and/or BK |
| Possible Foreclosure Sale Delays | Motion to Extend Time to Sell | Oppose Motion to Extend and Cross-Motion |
| Foreclosure Sale Scheduled | Notice of Sale Served/ Posted and Published | Stay the Sale through Order to Show Cause with TRO to Supreme or Appellate Court; OR Bankruptcy Filing to Stay Sale with Automatic Stay (Chapters 7, 11 or 13) |
| Referee Closing on Foreclosure Sale | Finalize Closing (Possible Deficiency or Surplus) | Possible Order to Show Cause to Vacate Foreclosure Sale |
COMPARISON AND STRATEGY OF USING VARIOUS LEGAL OPTIONS AS POTENTIAL FORECLOSURE SOLUTIONS
| Option | Advantage | Disadvantage | Strategy |
|---|---|---|---|
| Foreclosure Litigation Defense | Avoids Default and Gives the Borrower More Time and Leverage | Not in itself a resolution | Always Defend Zealously and Creatively (whenever possible) |
| Emergency Order to Show Cause (“OSC”) | Emergency Deliberation and a Potential Stay of Proceedings | Uncertain Results (since the OSC is Usually Opposed and a Judge Needs to Decide) | Useful in Emergencies in Obtaining Quick Attention from the Court and a Potential Stay |
| Appeal to Appellate Division | A Potentially Different Decision/Reversal | Uncertain Results, Long Deliberation and Expensive | If There is a Good Appealable Issue Can Put a Cloud on Entire Foreclosure Resolution |
| Mortgage Loan Modification | Potential Resolution of the Foreclosure if Obtained | Lender Has Discretion and Requires Good Income and Diligence/Persistence | If Applicant is Qualified, Strategy is to Keep Pursuing with the Best Representation Possible |
| Negotiation (Short Sale, Short Pay/Reinstate, etc) | Potential Resolution of the Foreclosure if Obtained | Lender Has Discretion, Usually Technical Requirements and Diligence/Persistence | If Applicant is Qualified, Strategy is to Keep Pursuing with the Best Representation Possible |
| Chapter 13 – Traditional Catch-up Plan | Automatic Bankruptcy Stay; Assured Resolution If Can Afford | High Income Needed to Pay Both the Mortgage and Arrears Over 5 Year Plan; Comprehensive approach to all debt | If Can Afford is the Only Certain Resolution |
| Chapter 13 – Loss Mitigation Plan | Automatic Bankruptcy Stay; Resolution If Can Obtain Modification | Good Income Needed to Pay the Modified Mortgage Payment; Both Lender and Court Decide | If Can Obtain an Affordable Modification While in a Chapter 13 Case, It Can Be a Resolution |
| Chapter 7 Liquidation | Automatic Bankruptcy Stay: Eliminates Debt | Need Equity in Property Not to Exceed Levels Protected by Liens and Exemptions | Used to Stay Foreclosure Sales and for Delay |
| No Action / No Response | Initially Save Time / Money | Lose Home Faster; In the Long Run Nothing Saved | Even if Don’t Care Not a Good Choice |
| Pro Se or Unqualified Representation | Initially Save Time / Money | Lose Home Faster; In the Long Run Nothing Saved. | Even if Don’t Care Not a Good Choice |
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