Upon entry of Judgment of Foreclosure and Sale1 in New York Supreme Court, the judgment will generally direct that the mortgaged premises be sold at public auction at a particular date and time, typically four months after entry of the foreclosure judgment. At common law, however, a borrower’s right to redeem the home lasted until the home was officially sold at public auction, meaning that entry of judgment of foreclosure and sale does not act as an end-all for the borrower’s rights. The most common avenue New York foreclosure attorneys will take, especially those retained only after a judgment of foreclosure and sale is entered, is to file an Order to Show Cause to stop the sale pursuant to CPLR 2214(d).2 Orders to show cause may be filed in lieu of a notice of motion to vacate or reargue the judgment of foreclosure and sale, and they generally result in quicker adjudication when time is of the essence.
The form of an Order to Show Cause (“OSC”) in New York will vary greatly based on the facts and circumstances of a particular borrower’s case. As many New York foreclosure attorneys know, certain borrowers simply arrive at the office with the judgment of foreclosure and sale in hand. In this case, the OSC may request the Court not only stop the sale but also vacate the judgment itself in order to allow the borrower to interpose an Answer in the foreclosure action. The most common reasons 3 an attorney may request the default, and in turn the judgment, be vacated is if the court lacks personal jurisdiction over the defendant as a result of improper service. It should be noted that lack of personal jurisdiction is often waived if the defendant made an appearance in and defended the foreclosure litigation. If, however, the judgment of foreclosure and sale is the defendant’s first legitimate notice of the court proceedings, then it is possible the lender and/or loan servicer failed to abide by the complex notice and service requirements applicable in New York foreclosure cases. A defaulting borrower can challenge the court’s personal jurisdiction through an OSC by asserting that either (1) he or she never received the 90-day foreclosure notice or (2) he was simply never served with the foreclosure summons and complaint. Because New York Real Property Actions and Proceedings Law (RPAPL) Section 13044 specifies that the proper form and service of a 90-day notice is a “condition precedent5 to commencing a foreclosure proceeding” in New York, proper notice must be sent in accordance with the requirements of the statute before a foreclosure action can be filed. If the notice is not sent in accordance with the requirements of the statute, the Supreme Court is generally divested of jurisdiction. In circumstances where this defense was not waived, such as when the borrower never appeared in the action, this in an avenue for both stopping the sale and vacating the default in a foreclosure action.
In situations where the borrower not only made an appearance in the foreclosure action but also fully litigated all relevant matters, you generally lose the option of successfully requesting the court vacate its original judgment. The borrower can, however, stop or at least delay the foreclosure sale by filing a notice of appeal with the appellate division and an OSC with the trial court. The OSC may request either a stay of the litigation under CPLR 22016 or notify the trial court of a specific stay of enforcement of the order for judgment of foreclosure of sale under CPLR 55197 pending appeal. Stays of enforcement under CPLR 5519 are generally granted automatically upon service of a notice of appeal when the order appealed from directs the sale of a mortgaged property and payment of any deficiency. It should be noted that CPLR 5519(a)(6) does require that the appellant pay any deficiency as a result of the undertaking, but this may be modified pursuant to CLPR 5519(c), which grants the appellate court permission to limit, vacate, or modify the order for which the stay is sought. Filing for Chapter 7 of Chapter 13 individual bankruptcy in federal court is also a means by which the borrower can stay enforcement of the judgment for foreclosure and sale. While an OSC may be filed with an affirmation or affidavit informing the court of the borrower’s intent to file a bankruptcy petition in federal court and requesting relief under CPLR 2201, the automatic stay of litigation8 applicable in most bankruptcy matters only takes effect after the bankruptcy petition is filed.
If the borrower would not benefit from filing for bankruptcy, his attorney is convinced that the matter is not fit for appeal, and all meritorious defenses have been litigated, the best course of action may be to file an OSC requesting an equitable remedy. Generally, “the court’s invocation of its equity powers to deny the remedy of foreclosure and sale or to set aside its effects is limited to cases wherein there is clear and convincing evidence of fraud, exploitive overreaching or unconscionable conduct on the part of the mortgagor or other party.” Wells Fargo Bank, N.A. v Ahr, 2014 NY Slip Op 51757(U) (S. Ct. Suffolk County). Equity is often invoked when there is no direct remedy at law that a foreclosure attorney believes would ultimately prevent the sale, but it is clear that the result would be unjust. An attorney may argue the following should result in the equitable reconsideration of a judgment of foreclosure and sale:
Although New York courts have held that equitable remedies in such matters are imitated based on the extreme conduct of the plaintiff-lender, the applicability of equity in itself in such matters leaves the door open for an experienced New York foreclosure attorney to ensure your rights as a borrower are protected.
With the protections afforded by New York foreclosure law, an experienced Long Island foreclosure attorney should be able to recognize when it may be beneficial to file an OSC in an attempt to prevent the sale of your home. Whether its asking the court to vacate default and essentially reset the action, filing a notice of appeal and request to stay enforcement of the judgment, or submitting a petition to bankruptcy court, there are options available to defaulting borrowers even after entry of a judgment of foreclosure and sale. Ronald D. Weiss, P.C., Attorney at Law is your premier foreclosure attorney on Long Island, serving both Nassau and Suffolk County residents. He can analyze the specific facts of your case in order to determine whether filing an order to show cause might be beneficial. Contact him today online or at 631.271.3737 for a no-risk consultation.