This is when you get the "Did you Forget?" letters followed by more ominous mailers with lots of bold print, plus the phone calls. Non-institutional lenders often skip this stage.
How An Attorney Can Help: This is an ideal stage for workouts. You may be able to minimize or avoid the Lender's legal fees (which they generally want to pass on to you) . You may be able to prevent the foreclosure case from commencing and damaging your credit. Early workouts can sometimes be set up with a few phone calls and faxes. That doesn't cost much and it can save a lot later. Workouts can work at any phase, but earlier is better.
This is when they start sending out the legal papers. These typically include a Notice of Default (often called Notice of Intent to Accelerate), an RPAPL 1304 Notice (that thing with the names and addresses of housing counseling agencies), a Lis Pendens (a/k/a Notice of Pendency) and a Summons & Complaint. The precise time and manner of service of these documents can be CRUCIAL and you should note how and when you get any of these and keep any envelopes they may come in, because the postmark is evidence. Once the Notice of Pendency is filed you will usually know because you get a massive amount of marketing from people who claim they can help you with this problem.
Depending on how they serve the Summons & Complaint, you have 20 or 30 days to serve and file your Answer. The court may accept a late Answer but then the Defendant has to explain why the Answer is late. It is better to file a timely Answer. The Complaint sets forth their case against you. The Answer sets forth your defenses and any counterclaims against them. If you don't Answer, you DEFAULT. Unfortunately, many Homeowners in this situation default.
If the Homeowner has defaulted this is the calm before the storm. Suddenly the Lender gets quiet, too quiet. Maybe some freak power surge or disgruntled employee has removed all of the Lender's records of you? Don't count on it. Their lawyers are busy with various intermediate steps like getting a Referee appointed, having the Referee calculate exactly how much you owe and getting the Judgment of Foreclosure and Sale signed. Homeowners who filed Answers are routinely entitled to Notice of all such proceedings, and an opportunity to participate.. The calculation of how much you owe is an especially significant event. That is why New York State puts that calculation into the hands of the Judge and a court-appointed Referee, rather than just letting the Lender state what they think the amount should be.
You should receive a Notice of Sale telling you the time and place of the Auction. This also gets published (with your name and the property address) in the newspaper.
Technically, this isn't a stage of foreclosure at all. Bankruptcy is a whole different case. But it is a common occurrence. Bankruptcy forms are complex. Even a relatively simple Bankruptcy filing can require over 40 PAGES of Official Bankruptcy Forms. Some of the forms are complex and detailed and filling them out is an exercise in misery, unless you have the expensive software that attorneys use. But Wait, someone will inevitably tell you, you don't have to fill out all of those forms. You only NEED to file what is called a 'Bare-Bones' petition. This comes as quite a relief for most people. They are happy because the Bare-Bones Petition is just the first few pages of that scary looking pile of Official Bankruptcy Forms, AND they tend to be simple pages asking for things like name and address. If you can read and write, you can fill out a Bare-Bones Petition. Absent some prior bad history with the Bankruptcy Court this Bare-Bones filing should stop your sale.
Your property is sold at a public auction.
You still may be able to set aside the sale, even after its happened. This is much harder to do, so try not to wait so long and if you do want to try to set the sale aside, you should try to do so as soon as possible.
If you property sells for more than what is owed on it, you may be entitled to Surplus Money. If it sells for less than what was owed on it, your Lender may be entitled to a Deficiency Judgment.
If you get foreclosed for a total of $150,000 (including the Lender's extras like legal fees & foreclosure costs) and the house goes for $190,000 at auction, someone should hand you a check for $40,000, right? Wrong. Don't sit around waiting for it. You have to chase after it, in what is called a Surplus Money Proceeding. This is something that should be simple, but it's not. It gets even more complex if you have other creditors chasing after that money too. Even if you don't have other creditors, there is still a lot of red tape. The Deficiency Judgment is the reverse situation. They took your house but they are still chasing you for more money. Legal representation can help in this situation too.
The foreclosure sale meant that you don't own the place anymore. The new owner, either the Lender or some investor, will eventually try to get you to physically vacate the property. Usually they'll send you a Notice to Quit and then you may wind up in Housing Court (in New York City), District Court (on Long Island) or other local Courts.
The eviction case may have been improperly started and maybe it can be dismissed, although they may start another. Alternatively, an attorney can negotiate the terms of your exit by asking for more time to leave. This may allow your children to finish up the school year in their current school before you have to move. Such deals may or may not require you to pay rent for the period you're staying. Sometimes the new owner is willing to offer 'Cash for Keys', that usually requires you get out quickly but you get some cash to find a new place to live. How much time or money you can get is a subject for negotiation. An attorney can negotiate such terms on your behalf.