If you fall far enough behind on your mortgage payments in New York, the bank (or the servicer on behalf of the bank) will start a judicial foreclosure. Judicial foreclosures go through the state court system, similar to any other type of lawsuit.
At the end of the process, assuming you don’t successfully fight the foreclosure or work out a way to avoid it, your home is sold to a new owner at a foreclosure sale. The sale proceeds go towards repaying the money you borrowed.
While that explanation probably sounds pretty simple, New York’s foreclosure laws are quite complicated, and you have rights throughout the process. Here’s a step-by-step description of what usually happens in a New York foreclosure so that you know what’s supposed to happen and what you can do if you want to try to save your home.
When Can a New York Foreclosure Start?
If the property is your principal residence, in most cases, federal law requires the servicer to wait until you’re more than 120 days overdue on the loan before officially starting the foreclosure by filing suit. In some limited situations, though, the foreclosure can start earlier, like if you violated a due-on-sale clause or if the servicer is joining the foreclosure action of a superior or subordinate lienholder. (12 C.F.R. § 1024.41 (2025).)
The 120-day preforeclosure period is a good time to apply for loss mitigation if you want to try to prevent a foreclosure.
Preforeclosure Notice Required in New York
Under New York law, if the property is an owner-occupied, one-to-four-family dwelling, or a condominium unit, the bank must send a notice by registered or certified mail and also by first-class mail at least 90 days before starting the foreclosure. This notice must include, among other things, information about the default and government-approved housing counseling agencies located near you. (N.Y. Real Prop. Acts. Law § 1304 (2025).)
In the case of Bank of America v. Kessler, the New York Court of Appeals held that the servicer may include additional concise, relevant information in a 90-day preforeclosure notice. This additional information doesn't void the notice nor prevent a foreclosure action. So, the servicer may include information such as:
- a disclaimer that the notice is not an attempt to collect a debt if the borrower is already in bankruptcy proceedings or
- a recommendation that military members or spouses contact the lender’s military assistance team, if it has one.
The 90-day period generally runs at the same time as the 120-day preforeclosure period discussed above.
If the lender or servicer doesn't send the 90-day notice at all or doesn't strictly comply with notice requirements, you might have a defense that could result in a dismissal of the foreclosure action. If you think the lender or servicer didn't follow the 90-day notice law, consider talking to a lawyer to get specific advice about your situation.
What Is the Foreclosure Process in New York?
Again, New York foreclosures go through a judicial process. The foreclosing bank initiates the process by filing a lawsuit in court and serving you with a summons and complaint, along with information about how homeowners facing foreclosure can avoid scams and get assistance. (N.Y. Real Prop. Acts. Law § 1303, § 1320 (2025).)
What Happens If You Do (or Don’t) File an Answer to the Foreclosure Lawsuit in New York
Generally, you get 20 days to file an answer with the court if the complaint and summons are served in person or 30 days if service is by mail or another method. If you don’t respond to the suit, then the bank will ask for, and probably get, a default judgment (an automatic win).
If you decide to file a response (called an "answer"), you’ll need to admit the allegations in the complaint that you know are true, deny those allegations that you think are incorrect, or say you don’t have sufficient information to admit or deny (and therefore you deny) certain allegations. You shouldn't admit to any of the bank's allegations or statements unless you're sure they're correct. You’ll also need to raise any defenses, affirmative defenses, and counterclaims you have.
If your answer raises potentially legitimate defenses to the foreclosure, then a trial will likely take place. To win the case, the bank must put on evidence to the court’s satisfaction.
But if your answer was insufficient (for example, the main facts of the case aren’t in dispute, any defenses you’ve raised lack merit, or you didn’t show that the bank or servicer violated the law), the bank will probably file a motion asking the court to grant summary judgment. Even if your answer does raise valid issues, the bank might still try for summary judgment. It’s best to hire an attorney to help you if you want to file an answer to the suit so that you can avoid summary judgment.
What Happens If the Bank Gets a Foreclosure Judgment in New York
If the bank gets a default judgment, is granted summary judgment, or wins at trial, the court will enter a judgment permitting the bank to sell the home at a foreclosure sale. Notice of the sale is published in a newspaper and posted publicly (in some cases). (N.Y. Real Prop. Acts. Law § 231 (2025).)
The bank usually bids on the property at the foreclosure sale using a credit bid. Sometimes the bank bids the full amount of the debt owed, but sometimes it bids less than the full amount. If the bank's credit bid is the highest bid at the sale, the bank becomes the property's new owner.
If a third party outbids the bank with a cash bid, that party becomes the new owner of the property, and the sale proceeds go towards repaying the mortgage loan.
Lender Must Assert Standing When Starting a New York Foreclosure
As of January 1, 2022, SB 5785 amended New York's foreclosure laws. Under the amended law, any foreclosure complaint initiated on a residential mortgage covering a one- to four-family dwelling after the law's effective date must contain an affirmative allegation that the plaintiff (the party initiating the lawsuit, which is usually the lender or loan servicer in a foreclosure) has "standing."
Specifically, New York's amended law requires the plaintiff to say in the complaint for foreclosure that it is the owner and holder of the subject mortgage and promissory note, or that it has been delegated the authority to start a mortgage foreclosure action by the owner and holder of the mortgage and note. (N.Y. Real Prop. Acts. Law § 1302 (2025).)
SB 5785 also requires the plaintiff to state in the complaint that it has complied with certain provisions of New York's existing foreclosure laws.
Your Right to Participate in a Foreclosure Settlement Conference in New York
After the foreclosure begins, for an owner-occupied property that’s a one-to-four-family dwelling, or a condominium unit, the court schedules a foreclosure settlement conference to take place within 60 days after the service of the lawsuit paperwork. (N.Y. Civil Practice Rule 3408 (2025).)
At the settlement conference, the court will review the rights and obligations of the borrower and the bank and evaluate potential workout options. You might get extra time to answer the complaint if you didn't file an answer. It’s generally a good idea to have a foreclosure lawyer represent you at a settlement conference, though it’s not required that you have one. In some cases, the court may appoint counsel for unrepresented defendants. (N.Y. Civil Practice Rule 3408 (2025).)
If you appear at the settlement hearing without an attorney, the court is supposed to consider your pro se (unrepresented) status as a motion to proceed as "a poor person." The presiding judge must then determine whether you can continue through the foreclosure process without a lawyer or if it should appoint a lawyer to help you. But a class action lawsuit filed on June 7, 2023, claimed that courts regularly failed to do this. This case settled, and the New York State Office of Court Administration (OCA) agreed to implement the state law's protections for homeowners across New York State.
Options Available for New York Borrowers During Foreclosure
New York law gives you the right to reinstate the loan at any time before the sale. If you reinstate prior to final judgment, the court will then dismiss the lawsuit. If you reinstate the loan after the judgment, but before the sale, then the court will stay (postpone) the suit. If you don't subsequently default, the foreclosure is stayed indefinitely. But if you default again, the court can order enforcement of the judgment, which means the foreclosure goes forward. (N.Y. Real Prop. Acts. Law § 1341 (2025).)
Or you might qualify for an alternative to foreclosure after applying for a loss mitigation option.
You might also consider filing for bankruptcy. Filing for Chapter 7 bankruptcy can delay the foreclosure for a couple of months and eliminate other debts, including a foreclosure deficiency judgment. But if you're behind in mortgage payments when you file, you probably will have to give up the home. If you want to keep your home and you're behind in payments, filing for Chapter 13 bankruptcy might allow you to keep it through a repayment plan. To find out about the options available, speak with a local bankruptcy attorney.
Does New York Allow Deficiency Judgments?
When a foreclosure sale fails to bring in enough to repay the mortgage debt, including fees and costs, the difference between the sale price and the total debt amount is called a “deficiency balance.” Many states, including New York, allow the bank to get a “deficiency judgment” for this sum against the borrower.
In New York, a deficiency judgment is allowed if:
- the bank personally served you the summons and complaint (or you appeared in the case voluntarily), and
- the bank files a motion with the court within 90 days after the new owner receives the deed (“sale consummation”). (N.Y. Real Prop. Acts. Law § 1371 (2025).)
But New York law limits the deficiency amount to the difference between the total mortgage debt and the higher of either the fair market value or the sale price. (N.Y. Real Prop. Acts. Law § 1371 (2025).)
What Is the Statute of Limitations for Foreclosure in New York?
In New York, the statute of limitations for a foreclosure is six years. (N.Y. C.P.L.R. § 213 (2025).) The Foreclosure Abuse Prevention Act (FAPA) in New York significantly limited the circumstances under which the statute of limitations for a mortgage foreclosure case may be reset or extended. Effective December 30, 2022, this law addresses common lender practices that previously allowed repeated delays in foreclosure proceedings.
Under FAPA, a lender’s unilateral voluntary discontinuance of a foreclosure action, voluntary dismissal, or issuance of a de-acceleration letter no longer pauses or resets the six-year statute of limitations period. (N.Y. C.P.L.R. § 203(h) (2025).) This means that once a loan is accelerated, lenders typically have only six years to initiate foreclosure regardless of any later action to pause or cancel the proceedings. However, borrowers should be aware that mortgage workout agreements, including loan modifications, may include terms that reset or extend the statute of limitations.
This law applies retroactively to foreclosure cases in New York filed before December 30, 2022, provided a final judgment and order of sale hasn't yet been enforced.
Talk to a New York Foreclosure Lawyer
While this article provides an overview of a typical New York foreclosure, remember that state and federal foreclosure laws are complicated, and cases can proceed differently depending on the circumstances. Servicers and banks sometimes make mistakes or skip steps, but most foreclosure errors go uncontested.
If the servicer or foreclosing bank omitted a required step, made an error, or violated state or federal foreclosure laws, you could have a defense that could force it to start the foreclosure over, or you might have leverage to work out an alternative.
So, consider talking to an experienced foreclosure attorney to learn about different options. If you want to learn about different ways to avoid a foreclosure, like with a loan modification, a HUD-approved housing counselor can provide helpful information.