Legal Question in Real Estate Law in New York

Re: Forclosure

Atty Connolly's response was good. And, I have little to add, Except:

IF, the Lenders Mortgage was for more than what the premises' value was, on the Mortgage date; or there was fraud or misrepresentation re the mortgage LTV (the Lender could be penalized, as a "predatory lender," that could inure to your mother's benefit.

Negotiating with the Mortgage Co., for a "Deed in Lieu," along with money for your mother,...say $10,000, should therefore definitely be investigated. Your mother's "equity"* (actual or what she "should" have), in the house, may still be recoverable.

So,... Assume and give up nothing w/o a fight. This matter should be "handled" before trying to walk away. Get a Lawyer, ASAP!!!

Good luck,

Phroska L. McAlister,ESQ

Re: Forclosure

At a foreclosre, the house will be sold and costs of the sale added on. If the house sells for the 'upset' price, all is good. If there is more , she will get it, if there is less, a deficiency judgment will be entered but her SS assets will be protected. You should discuss this wil an attorney..perhaps a deed in lieu of foreclosure will help her.

Good Luck

RRG

Re: Forclosure

One would, first of all, have to look at the pension plan documents. If the pension is qualified under Sec. 408A of the Internal Revenue code, then the principal in the plan is exempt, CPLR Sec. 5205. However, the judgment creditor can attach ten per cent of the income from the pension.

Now we come to the foreclosure angle. There is a procedure known as "Deed in lieu of foreclosure" under which you do not make the lender go through the nuisance of a foreclosure lawsuit. Even if your mother has no valid defense to the foreclosure suit, there are ways to torment the lender. For example, most parties in a foreclosure lawsuit who do not have a defense put in a paper known as a notice of appearance and waiver. This allows the creditor to process the foreclosure very quickly, since it doesn't have to notify your mother of anything until the property is sold. By putting in just a notice of appearance, the creditor has to give notice of each and every step it takes in the foreclosure, and there are LOTS of steps. Putting in a notice of appearance without a waiver will slow the foreclosure down by at least six months and more likely a year.

If they do not accept the deed in lieu of foreclosure, then when the property is sold, the creditor has a fairly short period of time in which to have the property appraised (this costs money) and the creditor has to credit your mother with the value of the property as appraised, or the highest bid at the auction. By the way, if you're wrong about the value of the property and the high bid exceeds more than the mortgage balance, your mother is entitled to the surplus. But if the bid or appraisal is less than the mortgage balance, the creditor has a short period of time to bring on a "deficiency proceeding." This is a major big deal and the potential gain is usually too small for creditors to bother.

Because the creditor is unlikely to bring a deficiency proceeding (the time periods are very short and if the creditor misses a date, its right to a deficiency judgment is lost) you can bargain with the creditor to the effect that your mom will give them a deed in lieu of foreclosure if they waive their right to a deficiency judgment.

In the worst case scenario, the creditor's right to anything is pretty slim, so in all likelihood, they will take a deed ih lieu. When doing so, the lender should gove your mother (and anyone else who signed the note or the mortgage) a general release.

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