The callousness of this process is seen when applying for a loan modification (link, separate tab pop-open), where a homeowner rarely speaks twice with the same person representing the lender. When the homeowner does speak with a representative, the rep usually just makes general statements about the loan modification process and requests the homeowner send in certain documents. The process, often, does not answer many of the homeowner’s questions.
Going to court can be even more daunting, as an inexperienced pro se (Latin for “for oneself,” a party unrepresented by a lawyer) litigant can be overwhelmed and intimidated by the formal processes of a courtroom. Additionally, foreclosure is a complex area of the law, meaning that pro se litigants, and even inexperienced lawyers, have a large learning curve to overcome before offering a sufficient defense.
What to Expect During Foreclosure Litigation
After a single missed payment, a lender will send a “Demand Letter,” which informs the borrower/homeowner that the borrower is “in default” (meaning the homeowner has missed a payment) and gives an amount due, any late charges, and a date by which to pay to bring the loan current. The lender also usually warns that, if the amount in arrears (unpaid, overdue) is not paid by this date, the lender will “accelerate” the loan, meaning the lender asks for the payment of the full amount of principal owed.
Next, a lender will send the “Pre-foreclosure Notice,” which must warn that “YOU MAY BE AT RISK OF FORECLOSURE.” While this may occur after the first missed payment and accompany the first Demand Letter, it is often not sent until after two or three payments have been missed, and is included with a second or third Demand Letter. This notice should also contain a list of at least five local non-profit agencies to contact for aid, be in 14-point type, and meet several other legal requirements. After mailing the Pre-foreclosure Notice, the lender must wait at least 90 days before commencing a foreclosure action (lawsuit) against the homeowner, which will seek to seize the home to sell at auction in order to satisfy the unpaid portion of the loan.
After the legally-required 90 days have passed, the lender will file a lawsuit (“commence an action”) with the county court in which the home is situated by filing a “Summons and Complaint.” The summons simply informs the homeowner that (s)he is being summoned to court to answer a “complaint” against him/her, namely that the payments on the loan are past due. The lender must “serve” this on the homeowner, often referred to as “service of process,” to give the homeowner notice that (s)he must appear before the court to “answer” the complaint against him/her.
The requirements for service are complex and often-litigated but, if you have received a Summons and Complaint in New York, you have either 20 days (if handed the Summons and Complaint personally) or 30 days (if it was handed to a competent family member, placed on your door and mailed to you, or you saw it in a local newspaper). TIME IS OF THE ESSENCE! If you fail to properly appear before the court within the required time, a “default judgment” may be entered against you. A default judgment just means that one side failed to appear and the other side is given the easy, unopposed win. Too often, while in court for our clients, the people of Roemerman Law see other cases with no attorney or homeowner present that suffer this unfortunate fate.
Being represented by an experienced foreclosure attorney offers you several, much better, alternatives. First, you might be able to settle with the lender on a “modification,” where you mutually agree to reduce your interest rate, forbear or defer the delinquent amount (put off paying the past due amounts until the end of the loan), reduce the principal, or otherwise change the terms of your original loan, allowing you to stay in the home (see also, Loan Modifications, link to page, new tab opens). Secondly, you may be able to have the case dismissed for a failure to properly serve you with the Summons and Complaint, a deficiency in the lender’s filing, or other reason. This is a small win, as your loan is likely still in default, but it does delay the possibility of losing your home. Finally, Roemerman Law can litigate the case for you, exhausting all options. At minimum, this delays the time to foreclose versus a default judgment. At minimum, this buys you precious time to recover from a disability, find a new job, give up the house in some manner other than by a foreclosure judgment, and/or arrange your finances before moving. In a small percentage of cases, the lender is unable to prove the homeowner defaulted on the loan, that the lender is the party owed under the loan, or some other fact that gives the homeowner the right to retain their home.
Roemerman Law has argued all three options, modification, dismissal, and full litigation, for clients. We can help guide you, given the specifics of your case, toward the best possible resolution, giving you the peace of mind to know that you fought to defend your rights and obtained the best possible result, given your personal circumstances.
Click here to see the basics on the New York Courts’ website.