How Will I Know that the Bank is Starting a Foreclosure Action?

large family home



It is very rare that a homeowner will not receive any notice of a foreclosure lawsuit.  At the start of the financial crisis in 2008, the banks were so eager to foreclose on homes that they regularly filed lawsuits against homeowners without complying with NY law.  It is now clear that the banks engaged in “robo signing” and fraudulent attempts to foreclose on mortgages without the proper documentation and proof.  Because of these irregularities, foreclosure actions that were started prior to 2010 have regularly been stretched out to 2, 3, or 4 years in the judicial process, and are still subject to close scrutiny and possible dismissal, even at this late stage of the lawsuit.

Now that most of the large mortgage banks have settled the civil and criminal actions with their shareholders and the Federal and NY State governments, the banks have streamlined their internal foreclosure processes and have hired new law firms to start foreclosure actions that comply with all new legal requirements.

Under New York State Real Property Law, a mortgage lender is now required to send the following documentation to a homeowner to alert her that she is heading toward a foreclosure action.  Failure to send these notices would allow an experienced foreclosure defense attorney to dismiss the foreclosure action at a later date.

  • Notice of Default – This can be merely a statement from the bank that you have “defaulted” on your mortgage payments.
  • Notice of Acceleration – This is a notice that the bank has “accelerated” your loan, which means that the total amount of the mortgage is now due.  At this point, the bank will probably refuse to accept any further payments from you.
  • 90 – Day Pre-foreclosure Notice – This notice must be sent at least 90 days before the bank starts the foreclosure action. This notice informs homeowners of the steps they can take to avoid a foreclosure.  This notice must also be sent to tenants and co-ops.
  • Notice from the bank that the mortgage was a” high-cost”, “sub-prime” or “non-traditional” home loan.

A “You Could Lose Your Home” Notice:

The actual lawsuit will be the biggest document you receive, usually with a pink, yellow or blue backing sheet that reads in bold, oversized letters, “YOU COULD LOSE YOUR HOME”.  The lawsuit will contain a “Summons & Complaint”, a copy of the original mortgage, the Note you signed, whether the Note was sold or “assigned” to other banks and affidavits by the attorneys and bank representatives that they have reviewed the underlying documentation before filing the lawsuit against you.  A typical homeowner will receive 3 or 4 of these large packages, either by a process server at your home, by “substituted service” where the packages are left by the front door, by return receipt mail, and by regular mail.  All tenants and a co-op or Condo board will receive the packages as well.

Once again, now that the banks and their attorneys have streamlined the foreclosure process, it is highly unlikely that a homeowner will never receive prior notice of a bank’s intent to start a foreclosure action against her.

As always, please feel free to contact me for a free consultation regarding your specific financial circumstances.