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The answer to the most commonly asked question

If you read my first two posts, here and here, you know how I feel about waiting to confront your foreclosure problem. Don’t do it. It will end up costing you in ways you’re not even thinking about yet.

So that brings me to the question I hear the most from people facing foreclosure: how much time do I have?

It’s a reasonable question, after all. You know that you took out a loan to buy a house, or that you refinanced your original mortgage along the way. Maybe you wanted to pull out some equity to pay off credit card bills, or care for a loved one who got sick, or start your business, or buy a boat, or go all-in on this hot penny stock tip that you got from your cousin. Whatever it was, it doesn’t matter now. You borrowed some money and now you can’t pay it back. You realize this is a bad situation.

You’ve seen on television or in the movies what happens to people who can’t pay their mortgage. When you miss your payment due on March 1st, bank representatives will call you on March 2nd to demand payment, and if you don’t pay, they break your door down and throw you and your family out on the street on March 3rd. Right?

All right, maybe not. You’ve probably heard about the 90 day notice requirement before a lender can commence a foreclosure action. It’s a statute here in New York (RPAPL 1304). This is one of the toughest foreclosure defenses that a foreclosure attorney can face, because it’s the lender’s attorney that has to prove compliance with it. More on that in another post.

So if you’ve missed a mortgage payment, New York state law says that you have a minimum of 90 days after you receive that notice before an action is even commenced.

There’s also this federal regulation under the CFPB (Consumer Financial Protection Bureau), Regulation X, which prohibits servicers from initiating a foreclosure action prior to 120 days after the default. That’s four months before an action can even be started.

In reality, 120 days passes before a lender refers a matter to a foreclosure attorney. The attorney can’t file a summons and complaint that same day – they have to order a title search (takes a few days to 2 weeks), the complaint has to be prepared, the complaint has to be sent back to the client for review and verification, the attorney has to communicate with a representative for the plaintiff, who will ensure that the complaint is accurate (CPLR 3012-b). The most efficient foreclosure law firms and servicers will take about a month from the time the referral is received until the summons and complaint is filed. That’s being generous.

It’s probably going to be between 6-8 months after you missed your first payment to the time the summons and complaint are filed. You’ll probably be served within one month after the summons and complaint are filed.

Now think back to my first two posts and think about what I just said here. I told you not to stick your head in the sand after you miss your first payment and I told you that this thing will get out of hand before you know it. Here, I told you that you will miss 6-8 payments before an action is going to begin.

Let’s do some quick math: say you have a mortgage payment that’s around $2500/month. That’s on the lower end if you live in New York City or Long Island. You will owe the bank $20,000 before the action starts, not counting attorneys’ fees and legal expenses. It’s probably already out of hand at this point. After all, if you had an extra twenty grand laying around, you would have been paying your mortgage.

Back to the original question, though: how much time do you have?

The short answer is that it depends. Here’s a rough guide. After the action is commenced, it should take about a month or two for the plaintiff to file a request for judicial intervention (“RJI”) and it’ll take the court another month or two to schedule a settlement conference (CPLR 3408). If you don’t go to the settlement conference, the plaintiff can advance its case faster. If you go to the first settlement conference, you’re virtually guaranteed to have a second settlement conference. If you’re doing what the court-attorney referee (who presides over the settlement conference) is telling you to do, you’ll probably get a third or even a fourth. These settlement conferences are likely to be about two months apart from each other. Now you could very well be looking at about 18-24 months from your first missed payment. At $2500/month, that’s $45,000 - $60,000. That escalated quickly.

Maybe you got a modification through those settlement conferences. Great! Your case is over, and as long as you can make those modified payments in full and on time for the next 30-40 years or however long your new term is, you’ll be fine.

If you don’t get a modification, the plaintiff is going to move for an order of reference. If you answered the complaint, they’ll make a motion for summary judgment and an order of reference. Depending on the strength of your answer and the amount of pressure a lender places on its attorney, this may take a few months longer. You may have a court appearance or two. If you have a lawyer, your lawyer will probably ask for the first court appearance to be adjourned so that you can put in opposition, and then on the next return date 2-3 months later, the plaintiff will ask for an adjournment to put in a reply. You could be spending a year before this motion is submitted for decision.

Being submitted for decision doesn’t mean decided. The courts are supposed to take 60 days to render a decision, but in New York City and Long Island, the judges take from 6 months to a year or more to render a decision. Where are we now? I’ve lost count, but we’re probably in the 3-and-a-half year vicinity.

Since you do actually owe the money, the plaintiff will probably win the motion for summary judgment, and a referee is appointed to compute how much you owe the bank. The bank’s attorneys will submit evidence and a proposed report to the referee, who will likely sign it and return it to the plaintiff’s attorney unchanged.

The bank will then make a motion for judgment of foreclosure and sale and to confirm that referee’s report, and you might be stuck for another year or 18 months in that motion. We’re almost done though. It’s been 5 or 6 years since you missed that first mortgage payment.

A judgment is finally entered, and the bank can schedule an auction of your home. That will take a minimum of 5 weeks, but if you want, you can make it last longer.

There are other things you can do to prolong this process. You’re so far in the hole at this point; you might as well just extract as much time without making a mortgage payment as possible. I really hope you’ve been saving the money you haven’t been paying back to the lender. You can file an order to show cause, which can buy you two or three months, or you can declare bankruptcy, which will buy you a few more months than that. If you know how to be strategic about your bankruptcy filing, you can drag that out for a few more years if things break your way.

Even after a foreclosure auction occurs, you still don’t have to leave! Can you believe that? There’s going to be a closing that occurs after the auction. It’s supposed to be within 30 days of the auction, but that will happen if the bank is the successful bidder. If there’s a third-party bidder who won the auction, it’ll probably take a few more months.

Once the closing happens, the new owner of the property has to then evict you. In the boroughs, that can be another year. On Long Island, it will probably be closer to 6 months. Upstate, it’ll be shorter than that. The new owner has to go to court, get the city marshal or sheriff to give you notice, and then the marshal or sheriff will come to the house and get the police to physically throw you out if necessary. Of course, there are ways to delay an eviction proceeding. You might even want to go next level and try to re-open the foreclosure action.

All right, so when you’ve missed your first mortgage payment, you’re not going to be out on the street the next day. If you fight the whole way, you can make this last for years and years and years if you want. There are a lot of variables along the way, but most foreclosures that go all the way through to the end without settling go for about 3-5 years.

This doesn’t mean you should ignore your problems. The scenario I’ve painted here relies first on getting a lawyer early on in the process who will adequately represent your interests. If you default (you don’t appear; you ignore the proceedings; you fail to attend the settlement conference, etc.) in the beginning, that will rapidly accelerate the process of your belongings being left on the curb after the city marshal comes.

I currently have a case that was started in 2006. It is now 2018. The borrowers defaulted on their loan in 2004. That's 14 years ago. I started law school in 2004. These borrowers had a mortgage for like $250,000. They now owe $850,000. If you're having trouble sleeping, call me and ask me to tell you the story of this case. I promise I'll bore you to sleep with the story. My 2006 case is going to trial at the end of the year. If you're reading this sometime in the future, ask me how it went.

Jason Sackoor is a real estate attorney in Queens, New York concentrating on foreclosure and real estate litigation. You can check out his website, e-mail him, or call his office at (718) 767-3333 to set up a consultation.

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