If you live in New York, and are going through the foreclosure process, there are a number of terms you are going to come across. Today we’ll be talking about a Notice of Computation and a Referee Hearing and what they mean to you in your foreclosure process.

How Does the Court Determine How Much I Owe?

In a foreclosure proceeding, the court needs to determine how much you owe to the lender/bank that holds your mortgage. The court wants to know the total amount, including the mortgage loan (balance on the date of default), plus interest, taxes, insurance costs, and other collection expenses including attorney fees, inspection costs, filing fees, etc. They use this figure when ordering a Judgment of Foreclosure and Sale.

There are two ways the court can get this information – through a Referee Hearing or through a Notice of Computation.

What is a Referee Hearing?

In foreclosure cases, the court can learn the final amount you owe through a Referee, since the calculation needs to be fair and accurate and shouldn’t be done by the lender or the lender’s attorneys (since they are self-interested parties who are participants in the foreclosure action). So the court, through an Order of Reference, appoints a Referee who is considered to be a neutral party, trusted by the court to make the necessary calculations to determine the final amount owed.

Your lenders’ attorneys will forward what they feel is the total amount owed directly to the Referee. Your lender knows the information needs to be reasonable since not only does the Referee review the calculations, but so does the court and other parties of interest. This is when the Referee Hearing occurs, allowing you and your foreclosure lawyer to input on what you feel the final total should be. The Referee will take this information and gather further details from other sources to generate a report on the final valuation of what you owe. If all parties (you, your lenders, and the Court) accept the report, your lender will file a motion for a Final Judgment of Foreclosure and Sale.  The Referee will then be instructed by the court to conduct the foreclosure auction and sale of your property.

What is a Notice of Computation?

One way your lender’s attorneys can avoid the necessity for a Referee Hearing is to serve you and your foreclosure attorney with a Notice of Computation. This is their way of saying that “We already did the math; we don’t need an independent third party.” Needless to say, your foreclosure lawyer needs to quickly dispute this and ask for a Referee Hearing.

Another way the Referee Hearing can be avoided by your lender is through a court order granting summary judgment stating that a Referee Hearing is not required. This effectively defers the issue to the next step in the process: the Motion for the Judgment and Sale. Here your foreclosure attorney can dispute your lender’s computations, which may then result in the Court ordering a Referee Hearing.

Issues that Can Be Raised in Disputing Computations

Your foreclosure attorney can raise a number of issues disputing the computations of either the lender or the Referee that may cause the court to question the calculations:

• Default Date – Sometimes amounts are inconsistently stated, and the question becomes “why is the lender using different amounts?”. Sometimes it’s because you may have made payments after the foreclosure started in trial modifications and/or attempts to resolve matters in a Chapter 13 bankruptcy case.
• Interest Rate – The interest rate in the loan may have been changed by a modification, which often has several levels of stepped-up interest. Also, the lender sometimes asserts a higher default rate on the loan, which needs to be carefully calculated.
• Amount of Interest – Sometimes the lender spent an inordinate amount of time foreclosing (with delays and withdrawn and resubmitted motions and periods of inactivity). When these cause an inordinate amount of interest, these kinds of amounts can be disputed.
• Breakdown and Proof of Expenses – Often the lender asserts escrow (insurance and tax expenses) without breakdown or proof of the actual payment of such expenses.
• Unknown Miscellaneous Expenses and/or Allegedly Paid Amounts in the Calculation – These can’t be random and need to be identified.

What to Do Next

If your lenders have sent you documentation mentioning foreclosure, reach out to New York foreclosure lawyer Ronald Weiss immediately. After a free consultation, he can tell you what you need to know about fighting a foreclosure lawsuit and help you get your case started. Call 631-271-3737 and take the first step to a fresh start.