New Procedural Requirements In New York State Foreclosure Actions

(originally posted 8-11-07)
As of August 1, 2007, two new requirements are effective in connection with New York State foreclosures involving residential property. On units with not more than three units, the summons must now contain a specific notice to the homeowner that, in essence, stresses the fact that a legal proceeding has been commenced that can result in the loss of his/her home. In addition, in the case of a defendant who is a natural person in a residential foreclosure who has failed to file an answer, a copy of the summons must be mailed to the individual at least twenty days before entry of a default judgment.

Presumably, homes that are sold in foreclosure actions where these new rules apply but are not complied with may be subject to being voided after the sale has taken place, thereby:

1. creating new opportunities for attack by attorneys representing New York homeowners whose homes have been foreclosed,
2. creating more paperwork for the New York attorneys (and their staff) representing foreclosing mortgage lenders, and
3. creating a new source of headaches for overworked New York title examiners who now have two more issues to consider when passing judgment on the condition of the title to a home in which a referee's deed (ie. the type of deed used in a NY foreclosure sale) appears in the chain of title (as if New York's Home Equity Theft Prevention Act hasn't caused enough headaches for them!).

For more, see New Requirements for Residential Mortgage Foreclosures (published on the Real Property Law Section Blog - New York State Bar Association).

For links to several online articles on some other legal requirements in connection with New York foreclosures, see Overview Of The New York State Home Equity Theft Prevention Act.

Thanks to Bill Collins at Crossroads Abstract - Rochester, NY for bringing the new law to my attention.