You have missed several mortgage payments, and there is a real possibility of facing foreclosure. Home buyers often need to pay more attention to their ability to make monthly payments. Financial hardship doesn’t come with a warning. Homeowners sometimes want to know the answer to questions like, “can I sell my home if it is in foreclosure?”
You can sometimes stop a foreclosure by selling your house, but what if the foreclosure process has already begun? Can you still sell your house? Yes, but you will have to follow New York’s regulations for your home sale. Keep reading to learn more, especially if you are looking to sell a house fast in New York City.
Foreclosure Process in New York
New York’s foreclosure process is complicated and can take up to three years. Once a borrower has three missed payments, and the lender has sent all the required notices, the lender can file a lis pendens in court. It is the official start of the lawsuit challenging ownership of the house.
The mortgage lender must send a summons and complaint to the homeowner. A borrower has 20 days to respond if the summons was delivered in person and 30 days if delivered by mail. Homeowners must answer, as doing otherwise could lead to an automatic ruling for the lender.
A homeowner can respond by showing why they have been delinquent. Working with a foreclosure attorney at this point in the foreclosure process is best. They can represent you in court detailing your financial hardship, and can ask for the case to be dismissed or for an extension.
In New York, the lender and borrower must attend a settlement conference within 60 days of receiving the summons and complaint notice. Again, working with a foreclosure lawyer for successful negotiations is best.
The borrower and the mortgage company will discuss the mortgage debt. They will consider the remaining balance along with the total amount of any late charges. The borrower will explain their financial situation and ask for a loan modification. Borrowers will have to show their proof of income and tax returns.
A borrower might qualify for government programs that will help their financial situation. Home Affordable Refinance Program (HARP) can help qualified homeowners with government assistance with foreclosure.
If the two parties agree, the lender will drop the lawsuit within 150 days of the settlement. However, if a borrower doesn’t respond to the summary and complaint notice, a default court judgment will result in an automatic loss for the borrower.
In New York, a delinquent borrower can pay late mortgage payments and fees after a court ruling against them. When the homeowner brings all late charges up to date, it is called reinstatement, which will stop foreclosure. The homeowner must fulfill the reinstatement before the notice of foreclosure sale.
The foreclosed home will be sold at a public foreclosure auction, where it gets sold to the highest bidder. A sale price at auction is typically lower than the mortgage debt or the property’s fair market value. The mortgage company can ask the court for a deficiency judgment making the borrower responsible for the difference.
Borrowers have to leave a property after the sale. They can agree to a cash-for-keys agreement, which is a financial incentive to leave the property. The second option is eviction, but the new owner must give the former owner ten days’ notice.
Foreclosures in New York
The foreclosure process in New York is lengthy, allowing many homeowners to save their homes. Wondering, “can I sell my home before it gets to court? You can ask your mortgage company if they will allow a short sale. That could allow you to sell your home to a real estate investor that buys houses in danger of foreclosure.
A real estate investor will make a cash offer, and you will not have the hassle of closing costs. Quick sales are sometimes the best solution when facing a foreclosure notice.
Another option is to hand over the deed in lieu of foreclosure. With this route, you hand over the deed and take the loss of any equity you have built up in the home. That allows the borrower to walk away without having a foreclosure sale on their credit report.
Filing for bankruptcy is also a way to stop foreclosure, but there are usually opportunities during the pre-foreclosure process to avoid losing your home. Lenders will work with you to negotiate a plan for your financial situation.
Pre-foreclosure in New York
When considering “can I sell my home if it is in foreclosure?” it’s important to factor in the matter of pre-foreclosure. In New York, a lender cannot start foreclosure proceedings before 120 days of the first missed payment, and borrowers can use the pre-foreclosure period to catch up on missed payments.
The state requires lenders to send borrowers a letter to give a borrower 30 days to pay outstanding payments and late fees. You should contact your lender and discuss the possibility of forbearance, which is a temporary postponement of your monthly mortgage payments. Then, the lender will add these amounts to the end of your mortgage.
In addition, lenders under New York state law must send another 90-day foreclosure to homeowners before the foreclosure process can begin. It must include the days the mortgage has been delinquent, the late amount owed, the lender’s telephone number, and the contact information for HUD, the U.S. Department of Housing and Urban Development.
You will only have to pay a late fee if you miss one payment. Homeowners who miss several payments face the foreclosure loss mitigation period. This time frame is crucial for negotiating with your lender for a loan modification or short sale.
It is best to negotiate a financial plan that you can afford so you can protect your credit score. A loan modification can include a different interest rate or a more extended period. You could negotiate a lower monthly payment for a longer term than you can afford.
Selling a House if It’s in Foreclosure in New York
A homeowner can sell their home rather than go through the foreclosure process, including through a realtor. Unfortunately, this route might take more time than you have. Still, you can put your house on the real estate market to see how quickly you can sell it.
If your home has yet to sell and the foreclosure auction date is looming, you may have to consider alternatives.
For example, you could sell to a real estate investor who will give you a cash offer and close quickly. These offers are usually lower than you would get from selling through a real estate agent. Quick sales appeal to homeowners wanting to pay off their debt and don’t have to worry about the real estate market or showing their home to potential buyers.
You can sell your home until the foreclosure auction date, and you will lose all property rights once the sale is final.
Homeowners who are selling their homes should communicate their plans to their lenders. Most lenders would prefer a total sale price to a loss at auction. Often, they will delay the foreclosure proceedings if they know that the house is being sold and the mortgage debt will be paid.
Foreclosure House Selling Laws in N.Y.
The wisest time to sell your home is in the pre-foreclosure period. You still have time to make repairs and prepare the house for sale. Moreover, you’ll be able to determine your home’s market value, mortgage debt, and outstanding fees. Your realtor can set the price so it’s attractive to buyers but still covers your debt.
If you’re looking at selling a house underwater, you could consider a short sale. You can ask your lender for permission to sell your property to a real estate investor. Lenders will sometimes forgive the remaining balance. This option might be best for people that want to sell their homes and move on. After all, you protect your credit score and have a fresh start.
Many homeowners often panic when they read a notice of default but remember the foreclosure process takes so long that there are many options to save your home. Your lender will recommend a housing counselor to guide you through the process. A housing counselor will give you the best advice for your financial situation.
Homeowners with enough home equity may find that the cash offer process on a house might improve their financial situation. They can sell and downsize to a smaller home or rent an affordable apartment.
Moreover, you might sell for a profit that could pay your mortgage and other outstanding debt rather than have to file for bankruptcy.
Conclusion
Every homeowner faces financial challenges at some point in their life. The thought of foreclosure might be terrifying, but it doesn’t have to be. If you’ve been wondering, “can i sell my home if it is in foreclosure?” know there is a solution to every problem. Lenders will work with homeowners to ensure that every option to save their home is covered. Homeowners must take immediate action if foreclosure is a possibility.
If you’re looking for cash home buyers in New York, then you’re at the right place. We buy houses Brooklyn and Manhattan homeowners know will be taken off their hands quickly. So, no matter where you are in the state, contact us today to find out more!