Steps a lender is expected to follow
New York forecloses residential mortgages through the courts, so a lender must bring an action in State Supreme Court and prove its case rather than simply schedule a sale. Before filing, the state requires specific notices to homeowners, and courts have treated defects in those notices seriously. For many owner-occupied home loans, the case also passes through mandatory settlement conferences, where both sides are expected to negotiate in good faith over alternatives to foreclosure. Federal servicing rules add another layer, limiting when a servicer may begin foreclosure and how it must handle a complete loss mitigation application. Whether the plaintiff actually holds the note or otherwise has standing is a separate question that is often worth examining.
Records that show what happened
Keep every letter and envelope from the lender, the servicer, and any law firm, since the dates and addresses on them can matter. Copies of loan modification applications, the confirmations you received, and any denial letters show how the servicer handled your requests. Payment records, bank statements, and escrow statements help test the amount the lender says is owed. If you have spoken with the servicer by phone, a list of dates and names prepared together with your lawyer is more useful than memory alone. An answer to the complaint is due within a short time after service, and missing it can lead to a default, so note the date the papers were served right away.
Where Chapter 13 enters the picture
Contesting a foreclosure and filing for bankruptcy are different tools, and sometimes they are used together. A Chapter 13 filing halts a foreclosure sale through the automatic stay and can allow missed payments to be caught up over the life of a plan while regular payments continue. It requires regular income and a plan the court can confirm, and a recent prior bankruptcy filing can weaken or remove the stay. In an early meeting we look at the stage the case has reached, whether the required steps appear to have been followed, and whether a modification, a defense, a bankruptcy filing, or a combination makes sense. A sale date that is close changes the order in which everything happens.
