In New York, prior to commencing a residential foreclosure action there are certain mandatory procedural requirements that a mortgage lender must comply with. Failures to properly satisfy these requirements, can serve as a basis for a homeowner to have a foreclosure action dismissed by the Court. Specifically, these notices are the 60-day default notice and the 90-day pre-foreclosure notice. Both serve as warnings that a home is at risk of foreclosure, but they are governed by different rules under New York law. Understanding the difference, and how to respond, can make a critical difference in protecting a home from foreclosure.
The 60-Day Default Notice
Most mortgages in New York contain a clause requiring the lender to send a 60-day notice of default prior to accelerating the mortgage balance and commencing a foreclosure action. While this notice is contractual rather than statutory, New York courts enforce this requirement strictly and failure to prove a proper mailing of the 60-day notice can be used to dismiss a foreclosure case.
The 90-Day Pre-Foreclosure Notice – RPAPL § 1304
The 90-day notice is specifically required by Real Property Actions and Proceedings Law (RPAPL) § 1304. Lenders are required to send this notice that gives the debtor reinstatement information at least 90 days before filing a foreclosure action in court.
The statute requires that the notice:
- Be sent by registered or certified mail, as well as by first-class mail.
- Include the exact amount needed to cure the default.
- Provide contact information for at least five approved housing counseling agencies.
Failure to strictly comply with RPAPL § 1304 can result in dismissal of the foreclosure case. New York courts have consistently held that this notice is a “condition precedent” to foreclosure, meaning the case cannot proceed unless the lender proves proper service of the notice.
In addition, RPAPL § 1306 requires that when a lender sends a 90-day notice, they must also file certain information with the New York State Department of Financial Services (DFS) within three business days of mailing. This filing requirement helps ensure that homeowners have access to state housing counseling agencies.
Procedural Protections in Foreclosure – Civil Practice Law & Rules (CPLR)
Once a foreclosure action is started, New York CPLR provides additional protections for homeowners:
- CPLR § 3012-b requires lenders to file a Certificate of Merit, affirming that the lender has reviewed the case and has the legal right to foreclose.
- CPLR § 3408 mandates settlement conferences in residential foreclosure cases, giving homeowners an opportunity to obtain a loan modification or other resolution before the case proceeds further through the legal process.
- CPLR § 3215 governs default judgments, which lenders often seek if the homeowner does not respond to the complaint.
These CPLR provisions work together with the notice requirements under RPAPL §§ 1304 and 1306 to give homeowners multiple opportunities to defend against a foreclosure action. An experienced foreclosure defense attorney can help plan a response when a homeowner is served with a pre-foreclosure notice. Alternatively, for many homeowners, chapter 13 bankruptcy may be the best option to prevent or stop a foreclosure action and reinstate their loan by paying back past due mortgage arrears in a structured court-approved payment plan.
How Chapter 13 Bankruptcy Can Help
Even if a homeowner has already received a 60-day or 90-day notice, they can still protect their home through Chapter 13 bankruptcy. Filing a Chapter 13 petition triggers an automatic stay under 11 U.S.C. § 362, which immediately prohibits the continuation of foreclosure proceedings. Chapter 13 allows a debtor to repay their mortgage arrears over a period of up to 60 months, while simultaneously allowing them to make their regular monthly mortgage payments. This Court-approved repayment plan often provides the best and most guaranteed option for a homeowner to keep a home when facing foreclosure. The payment plan is also typically interest free on most debts and will also help the homeowner resolve other debt issues, such as credit card, personal loans, water bills and tax debt. In addition, chapter 13 bankruptcy will enable a homeowner to keep a favorable interest rate on a mortgage as opposed to possibly getting a higher rate with today’s market rates. This is especially the case for homeowners who obtained mortgage rates between 2-4% from when they purchased a home, refinanced or obtained a loan modification. It rarely makes financial sense to pay a higher mortgage rate over the life of a loan versus keeping an existing low rate and parting the arrears through a chapter 13 plan.
Contact the Law Offices of David I Pankin, P.C.
The 60-day and 90-day notices are more than just correspondence from a mortgage lender; they are a lifeline that can enable a homeowner to plan against a possible foreclosure action and even have a basis for dismissal if they were not followed correctly. Lenders must strictly follow the legal requirements in RPAPL §§ 1304 and1306, and CPLR §§ 3012-b, 3408, and 3215, and failure to do so can create powerful defenses for homeowners. And even if a foreclosure action is underway, Chapter 13 bankruptcy can stop the foreclosure proceeding and provide an orderly path forward. Alternatively, foreclosure defense provides a route to contest a foreclosure case once the case is filed and served upon the homeowner.
If you have received a pre-foreclosure notice, do not wait! Contact the Law Offices of David I. Pankin, P.C. office today for a free consultation to learn how we can help protect your home from foreclosure. We can be reached at 888-529-9600 or by using our easy online contact form.
