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Foreclosure Attorneys Suffolk & Nassau Counties, Long Island

Foreclosure Solutions are varied and need to be combined and tailored to every client’s specific circumstances to maximize a client’s ability to save their home.

• The Foreclosure Crisis
• Foreclosure Solution Strategies
• Deciding on Which Foreclosure Solution to Pursue
• Stopping Foreclosure Auction Sales on an Emergency Basis
• How Has Covid-19 Affected Foreclosure Law and Practice?
• The Potential Benefits of Foreclosure Solutions and the Role of our Law Office

A New Potential Foreclosure Crisis –

As you must be aware due to the Coronavirus caused recession of 2020, many homeowners are behind with their mortgages. Lenders had initially been tolerant, with most lenders allowing temporary forbearance of the missed payments. But as time has dragged on and the arrears of homeowners have exacerbated, many lenders have started to demand a cure either over time in the form of a reinstatement (usually over 1 year) or through a modification which requires an application by the borrower and approval by the lender. These new potential foreclosure situations are coming when there is still a foreclosure problem remaining from the previous 2008-2014 recession, especially in our Long Island and New York areas, which was caused by overly aggressive mortgage lending and borrowing. The previous recession had caused a foreclosure crisis whose effects are still present in the form of many older foreclosure matters which have taken a long time to resolve and homeowners still struggling with mortgage problems whose origins where in the last recession. In this market which has not yet healed from the last recession, the new turmoil caused by the Covid recession has caused many homeowners to their dismay find themselves in arrears on their mortgages and/or threatened by foreclosure. Some of these problem mortgage situations are new, having been caused by Covid-19 related furloughs, layoffs and lockdowns; while other mortgage issues have been problematic for a long time but have been made much worse due to this new recession. This new potential crisis, is made worse because it is coming before we have fully recovered from foreclosures caused by the previous recession. Yet despite these hardships, programs, policies, court decisions and laws mostly enacted during the last recession, but some new in reaction to this new Covid caused recession, can potentially give homeowners a better chance to save their homes. Because homeowners are frequently confused as to their options, and because the advice of their mortgage holders can be inaccurate and/or misleading, a homeowner threatened by foreclosure or in foreclosure needs to quickly get reliable information from an attorney who concentrates in this area.

Foreclosure Solution Strategies –

Saving homes from foreclosure often involves combining strategies: Defending AND Negotiating. A homeowner in arrears with their mortgage or in actual foreclosure needs to gain both Time AND Leverage in order to best increase their possibilities of successfully saving their home. The different solutions to foreclosure – mortgage modification, negotiated resolutions, foreclosure litigation defense, and bankruptcy – overlap and often reinforce each other. We represent clients in every type of foreclosure solution.

New York State is a one-action rule state where the lender needs to elect whether to exercise their right to foreclosure against the secured property (and then later in a more narrowed manner to have the potential, brief right to pursue any deficiency) or to pursue a money judgment. See, https://www.cadwalader.com/ref-news-views/index.php?nid=31&eid=151 The foreclosure remedy is usually chosen where the lender has sufficient or at least significant equity in the property to support their claim, while a money judgment is sometimes preferred if – as in the case of a secondary mortgage subordinate to an under-secured first mortgage – equity in the property is completely or mostly lacking to support the lender’s claim. Whether or not an action is a foreclosure action or an action for a money judgment affects many rights. This section is based on the foreclosure remedy election by the lender which what the lender elects the majority of the time.

Deciding on Which Foreclosure Solution to Pursue-

Foreclosure Solutions are varied and depend on many factors; they include litigation (answering the Complaint, defending the foreclosure action, and Emergency Orders to Show Cause), negotiations (mortgage modifications, forbearance agreements and short sales), and bankruptcy (chapters 13, 7 or 11). We can advise and represent our clients in all of the possible solutions to the foreclosure process; these potential solutions are reviewed based on the client’s goals and the stage of the foreclosure proceeding. In order to decide which Foreclosure Solution to pursue, we ask our clients several important questions as follows: i) At what stage is the foreclosure?; ii) What is your main goal as to the house?; and iii) What is your main financial difficulty in terms of the mortgage? We explore and offer to our clients the possibility of all Foreclosure Solutions as follows:

1. A Negotiated Modification Agreement with the Mortgage Holder – A modification negotiation can be attempted when the homeowner first falls into arrears and prior to and throughout the foreclosure proceeding. However, it is usually a strong option prior to the initiation of the foreclosure, and in the early/middle part of the foreclosure process, for a client that hopes to keep their home. By obtaining an advantageous change in their mortgage terms (the rate is lowered, the duration of the loan expanded and the arrears are resolved over the modified loan), homeowners end the danger of foreclosure and are in a better position to keep up with their payments which are often lowered. Because modifications are consensual on the part of lenders, the effort to modify is often accompanied by other legal efforts on the part of the borrowers.
2. A Litigated Defense of the Foreclosure Action – A litigated defense of the foreclosure action, initiated by filing an answer or motion to dismiss, needs to take place 20-30 days after a client had been served with the Summons and Complaint in the foreclosure action. Foreclosure Defense also involves discovery, motion practice and attending settlement conferences. If the foreclosure is nearing the end and/or if a foreclosure sale is scheduled, an Emergency Order to Show Cause in the state supreme court may obtain a “stay” of the foreclosure sale. Foreclosure defense focuses on defects in the foreclosure process and is used to slow down the foreclosure to give time and leverage to the client so as to increase the likelihood of a successful resolution through other negotiated means.
3. A Chapter 13 Bankruptcy Case Designed to Allow a Cure Over Time for the Mortgage Arrears – A Chapter 13 case, unlike a mortgage modification, is non-consensual and therefore allows more certainty in stopping the foreclosure action through the “automatic stay” which goes into effect immediately upon the filing of a bankruptcy case. Under Chapter 13 the client needs to catch up on mortgage arrears under a 5 year plan while going back to making regular mortgage payments. Chapter 13 is usually filed later in the foreclosure process by homeowners who have not been able to or who do not want to wait to get a modification, or who need to stop a foreclosure sale. Assuming that a client can make the monthly payments required under the Chapter 13 plan, this is good structured method of saving a home from foreclosure.
4. A Voluntary Sale of the Property, Pursuant to a Contract of Sale – A voluntary sale is often a “Short Sale” since many properties in foreclosure are “upside down” in that the mortgage payoff exceeds the fair market value of the property. A voluntary sale requires a qualified buyer who has entered into a contract with the homeowner in foreclosure. If the sale is a short sale the contract needs to be conditioned on consent by the lender who needs to agree, pursuant to negotiation efforts, to accept such lesser amount as the full payoff.
5. A Refinancing of the Property – If there is still equity in a house and the homeowner is eligible for refinancing or a reverse mortgage, obtaining a refinancing of the property is a potential method of paying off the arrears that may otherwise cause a foreclosure.
6. A Chapter 7 Bankruptcy Case Designed to Eliminate Debt – Often the homeowner in arrears on their mortgage also has considerable other unsecured debt due to their overall financial difficulty. A Chapter 7 case could discharge the client’s credit card, personal loans and other unsecured debt so that the client may have a better likelihood of obtaining a modification, without the burden of a considerable amount of debt that would otherwise diminish from the client’s ability to make payments under a potential modification.

Stopping Foreclosure Auction Sales on an Emergency Basis-

If the client is in a foreclosure action that already has proceeded for a period of time, and is nearing a foreclosure sale, the Law Office of Ronald D. Weiss, P.C. can file an Emergency Order to Show Cause or an emergency Chapter 13 or a chapter 7 bankruptcy case, under appropriate circumstances, to stop a foreclosure sale in an attempt to assert the client’ s rights and to give the client more time to attempt to resolve their situation and/or to cure their arrears.

Different Kinds of Foreclosure Actions and/or Circumstances Leading to Foreclosure

Foreclosure actions are for the most part against residential homes where the borrower/homeowner fell behind on their mortgage note payments. Typically the loan is is a 30 year loan and is either fixed or adjustable at prevailing rates of interest at the time it was taken by the borrower. However, this typical arrangement is not universal and there are many foreclosures now that do not fit the regular pattern. Any secured lender or lien holder with any kind of secured interest in a property can potentially foreclose against that property. Our office with capabilities in foreclosure litigation defense, real estate law, bankruptcy law, mortgage modifications and negotiation and estate administration matters is uniquely able to help in these kinds of different foreclosure circumstances. The following are alternatives to the typical foreclosure action fact pattern:

1) Reverse Mortgage Foreclosures – A reverse mortgage is taken out by a person who is over a set legal age, designated by the lender, where the person can take out a loan, secured against their home, without committing to making on going payments. Rather than making ongoing payments, the borrower commits to giving the lender the entire property after their death. Reverse mortgages are aggressively sold to seniors with significant equity in their homes, who sometimes, due to financial difficulty, have no choice but to take out a reverse mortgage. Issues can arrive leading to foreclosure even before the death of the borrower, if the borrower falls behind on real estate taxes or with property maintenance/repair which are still the borrower’s responsibility. Most reverse mortgages however, only go to foreclosure upon the death of the borrower, if the borrower’s adult children are in the home, and cannot sell or refinance the property quickly enough to pay off the lender and, despite that, try to stay longer at the property, which was often also their home, as they try to find ways to raise the necessary funds to be able to save the property from foreclosure. We often help borrowers and/or their heirs avoid foreclosure by defending the litigation to buy time while we also look at chapter 13, refinancing and/or sale options.

2) Business Loan Foreclosures – Often a private loan to a small business requires collateral and the only and/or most significant potential collateral of the borrower is their personal home. If the borrower takes out the funds together with a personal guarantee which is secured against their home, the borrower has committed their home and may be subject to foreclosure if they have hardship and fall behind with the business loan. We often help borrowers defend against lenders with business loans that often have interest and terms that are higher and more extreme than a typical residential home mortgage, given that this loan was a commercial loan. Nonetheless, the foreclosures here can affect a family home and in that sense are sympathetic situations where the borrower, together with our office, explores all options to save the property from foreclosure.

3) Tax Lien Foreclosures – Often seniors owning their homes, have paid off their homes and only need to keep up with real estate obligations to maintain their homes. The combination of deteriorating health and low income of the senior home owners can result in arrears with paying the real estate taxes on their homes, which despite NYS star programs, may still be high. To avoid the loss of their homes to foreclosure, we often defend foreclosures based on real estate tax arrears and/or represent our clients in a Chapter 13 case which we file on their behalf with the intent of catching up on mortgage arrears over sixty (60) months.

4) Judgment Lien Foreclosures – Often an owner of a home has financial obligations and/or liabilities other than their mortgage. If these become problematic and end up in court and getting a judgment against the borrower, the debt for that judgment, although it was usually unsecured prior to becoming a judgment, once it is a judgment, it is usually becomes a judgment lien against the borrowers home. While, it is in the discretion of the court awarding the judgment, whether to allow a foreclosure based on the judgment lien and while most judgment liens are not usually allowed to foreclose, in more extreme circumstances that can change, where the amount owed is high, the circumstances behind the debt are more extreme/emotional, where the lender or their attorney are aggressive and where the home does not seem necessary to the substance, health and welfare of the borrower. We often defend judgment lien foreclosures by defending litigation, engaging in negotiations and by trying to vacate what are usually default judgments.

5) Foreclosure of Condominium Apartment in a Doorman Building or a Gated Townhouse Community – Community living situations, like privately owned homes, are subject to foreclosure if a mortgage falls behind and goes into serious default. However, what is unique in condominium apartments and gated communities is that service of process may be an issue in that the service processor may not be able to enter and access the individual apartment of townhouse. In these situations there is a legal issue whether service on the “gate keeper”, the doorman or the security guard is valid service.

6) Home Improvement Loan Foreclosure – Home improvement loans may be aggressively sold to persons, especially in poorer, minority communities or to seniors where the loan has problematic terms combined with the home improvement services often being less than adequate. When these loans are not timely paid, a foreclosure action may result. We can defend the litigation and negotiate a resolution based on the appropriateness of the loans, the services rendered in return for the loans and the track record of the companies that engage in these transactions.

7) Death of the Borrower/Owner and Foreclosure Against Heirs – Often the borrower and owner of the home passes without a will and the loan goes into default without a clear owner of the home, although family may continue to live at the property and may desire to stay and keep the property and resolve the mortgage issues. Often for the lender there are service of process issues in determining which relatives to serve with process and to caption as defendants in the foreclosure action. We can defend these litigations but often we also try to resolve them by helping resolve estate administration issues. Where there is a will it is clearer who is the new owner of the property and it is easier for us to have a new legally designated owner who can defend and/or attempt to resolve the foreclosure, seek a modification, file a Chapter 13 case or otherwise engage to save the property. However, where there are numerous potential heirs, it is harder for the lender to serve process and foreclose, but it is also harder for the relatives remaining at the property to engage the lender in an effort to save the property from foreclosure. Often our office grapples with these situations and finds ways through a combination of foreclosure litigation defense, surrogates court efforts and/or negotiations to save the property for the heirs remaining at the property.

How Has Covid-19 Affected Foreclosure Law and Practice?

Moratoriums imposed by the New York State governor , the state Court system and FHA had essentially temporarily shut down the ability of lenders to foreclose. In addition the New York State Courts were closed till May 4, 2020 and even when they had reopened, the Courts initially refused to file any foreclosure action documents and treated foreclosures and evictions different than any other actions. During the period from mid-March 2020 through and including January 2022 there were effectively various New York State and federal moratoriums and laws that effectively stopped or discouraged foreclosure litigation. Since 2021 the Courts allowed defendants to file a Covid Hardship Affidavit which protected the defendant unless the plaintiff required a hearing to determine that a defendant is not facing Covid-19 related hardships before allowing a foreclosure action to continue to go forward. These moratoriums and other measures have given reprieve to borrowers unable to make mortgage payments during a period of national crisis and have given households facing mortgage challenges an opportunity to recover. On January 15, 2022 the last effective moratorium, that by New York State ended for both foreclosures and evictions essentially allowing foreclosures to resume. Because the remedy of a moratorium on all foreclosures had been a broad one and effectively included many foreclosures that were not caused by Covid-19, the moratorium has created a backlog of problematic mortgage situations where lenders during more normal times would have been more able to move forward with foreclosure process. During the mandated pause in the foreclosure legal process borrowers had more time and opportunity to try to either reinstate, modify or otherwise resolve their mortgage arrears issues. However, most lenders and borrowers during this time opted for forbearances which often allowed non-payment for up to 18 months without the requirement for payment. In addition to forbearances by lenders New York State heavily encouraged the lenders to resolved arrears caused by Covid-19 related hardships under New York State’s Rule 9-X which was specifically passed to require that lenders either modify Covid arrears or defer them to the back of the loan. In addition, New York State in January 2022 set up a Homeowners Assistance Fund in the amount of $530 million, with federal aid monies, to help homeowners behind on mortgage payments due to Covid-19 related hardships up to $50,000. per household. Please see, https://www.syracuse.com/coronavirus/2022/01/ny-has-530m-to-help-homeowners-behind-on-their-mortgage-payments-heres-how-to-apply.html

The Potential Benefits of Foreclosure Solutions and the Role of our Law Office –

The experience of the attorney representing the client is a critical factor in the client’s success when attempting to save their home from foreclosure. Since 1993 we have successfully represented numerous Long Island, Nassau County & Suffok County homeowners in foreclosure and have helped many of them permanently save their homes and re-establish their financial stability. When a homeowner is in foreclosure the legal options available to them to resolve and/or stop the foreclosure need to be carefully pursued. Such legal options are limited in terms of the number of times they can be pursued and when and how they can be pursued. Let us help you in your efforts to save your home with experience and expertise that is both affordable and personable.

Our consultations are free, the advice may be invaluable.

Contact us by phone at (631) 271-3737, or e-mail us at weiss@ny-bankruptcy.com for a free consultation to discuss legal options your legal options in terms of stopping or preventing foreclosure.