Residential Foreclosure Actions Consumer Bill of Rights

This Residential Foreclosure Actions Consumer Bill of Rights provides guidance to homeowners facing foreclosure in New York. A foreclosure is a lawsuit, and homeowners should seek assistance from an attorney or housing counselor in exploring potential legal defenses to the suit. Homeowners should also know their general rights and obligations highlighted below.

Throughout the Foreclosure Process

You have the right to stay in your home and the duty to maintain your property unless and until a court orders you to vacate. If you abandon your home, the plaintiff (bank or mortgage servicer) may be able to foreclose on your property through an expedited process in court. To prevent this outcome, stay in your home and carefully review and respond to documents you receive from the plaintiff or the court in your foreclosure case. A failure to respond or appear in court when required to do so could make it easier for the plaintiff to show that your property is vacant and abandoned, which could put you at risk of an expedited foreclosure.

You have a right to be represented by an attorney and may be eligible for free legal or housing counseling services.

You have a right to be free from harassment or foreclosure scams. Strongly consider consulting with an attorney or housing counselor, if available, before signing any papers. If you are the target of harassment or fraud, contact DFS by calling our Consumer Hotline at (800) 342-3736.

You have a right to avoid foreclosure if you repay your loan in full at any time prior to the sale of your home, or if you negotiate a settlement with the plaintiff.

Before a Foreclosure Action Begins in Court

You have a right to be notified at least 90 days before a foreclosure suit is filed informing you that you are in default and at risk of foreclosure. You have the right to explore “loss mitigation” options that may allow you to keep your home and avoid litigation. The bank or mortgage servicer is required to help you understand your loss mitigation options. If you have submitted a completed loss mitigation application, your bank or mortgage servicer must finish its review of your application before proceeding with the foreclosure suit.

RPAPL § 1303 has been amended to require plaintiffs in foreclosure actions to provide a more specific and helpful notice to borrowers regarding their rights and obligations during the foreclosure process. Specifically, the notice must indicate that homeowners have the right to remain in their homes until a foreclosure sale occurs and the obligation to maintain their property and pay applicable taxes until such time. This section is intended to help prevent properties from becoming vacant in the first place. Read the specific language required by RPAPL § 1303.

RPAPL §1304 requires mortgage creditors to give borrowers at least ninety days’ notice before commencing a foreclosure action. Currently, this Pre-Foreclosure Notice (“PFN”) must include the following language: “As of ___, your home loan is ___ days in default…You can cure this default by making the payment of ___ dollars by ___.” Unfortunately, borrowers often interpreted this provision to mean that as long as the borrower provided the stated amount by the date specified, the loan would be reinstated. Quite often, the “cure date” specified in the PFN is the earliest date on which the creditor can start a foreclosure action, which is 90 days after sending the PFN. When the borrower waits a full 90 days to provide the amount specified, any missed payments and associated interest and fees from the intervening months would be added to the deficiency. In such a case, the borrower who submits the amount set forth in the PFN would remain in default due to intervening accruals, despite his or her good-faith efforts to address the default specified in the PFN.

The new law addresses this issue by amending the first line of the notice to read "As of ____ your home loan is ____ days and ___ dollars in default.” Similarly, it adds language to RPAPL § 1304 which highlights the borrower’s ongoing rights and responsibilities throughout the foreclosure process. Read the new pre-foreclosure notice language.

Once a Foreclosure Action Begins

You have the right to receive a copy of the legal papers in the foreclosure lawsuit when it begins. This is known as “service” of the Summons and Complaint. You must respond to the Summons and Complaint with an “Answer” within 20 days after you have been personally served, and within 30 days if served on you by other means. The Answer is your opportunity to state your defenses.

You should consult with an attorney or housing counselor for help in this process.

You have an obligation to appear at all scheduled court appearances. If you fail to appear, you risk losing important rights, which could lead to the loss of the case and your home.

You have a right to request court permission to proceed without paying court costs.

At a Mandatory Settlement Conference

You have a right to an explanation of the nature of the foreclosure action against you.

Both parties have an obligation to bring all necessary documents to the settlement conference. For a general list of required documents, visit the Mandatory Settlement Conference information page.

Both parties must negotiate in “good faith”, which means honestly and fairly. If you fail to do so, you may lose the opportunity to pursue a court-supervised settlement. If the bank or mortgage servicer fails to do so, the court may impose similarly significant penalties. Negotiating in good faith does not require either party to settle.

If you previously failed to submit an Answer, you will be given an extra 30 days to do so at the settlement conference.

After Settlement Agreement or Fully Executed Loss Mitigation Agreement

Within 90 days of finalizing a settlement, the lis pendens designation on your property, which warns people that title to your property is in dispute, must be lifted.

You may be responsible for additional taxes if you reach a settlement that includes debt forgiveness. Seek advice from a tax professional about any resulting tax consequences.

After Judgment of Foreclosure and Sale

Upon a judgment of foreclosure and sale, the new owner can seek to evict you from the property.

If the home is resold for more than what you owe, you have a right to file an application with the court for the surplus funds, subject to certain deadlines. It is important to seek help from a legal service provider if you believe you are owed a surplus.

If the home is sold for less than what you owe, the lender may file an application for a judgment against you for the difference, known as a deficiency judgment. You may have the right to contest the amount of any deficiency judgment, including interest and penalties.

Get Help! Contact a Not-for-Profit Housing Counselor

Housing counselors that handle foreclosure-related issues can give you advice on your options and resources at little or no cost. They may also be able to negotiate with your lender for free and help you find free legal services in your area.

Housing counseling resources for New Yorkers include:

  • New York’s Homeowner Protection Program (HOPP), which connects with housing counselors and legal services at no cost. Call the HOPP hotline at (855) 466-3456 or visit homeownerhelpny.com.
  • You can find a list of approved non-profit housing counselors by county here, on the DFS website.
  • 24-Hour assistance is available toll-free on the HOPE NOW hotline at 888-995-HOPE (888-995-4673). HOPE NOW is an alliance of HUD approved counseling agents, servicers, and investors that provide free assistance.
  • If you live in New York City, you can also call 311.

If you are in a foreclosure court case, you should consult an attorney.

Seek Legal Assistance

Contact a lawyer and review your mortgage documents. Make sure your loan is not in violation of any laws. If you do not have an attorney, the New York State Bar Association may be able to refer you to an appropriate attorney for your situation.

If you cannot afford a private attorney, resources for free or low-cost legal assistance include:

If you are in a foreclosure court case, you should consult an attorney.

File A Complaint

Learn how how to file a complaint with DFS.

Foreclosure Bill of Rights in Other Languages

The Residential Foreclosure Action Consumer Bill of Rights is available in the following languages: