Learn the New York Foreclosure Processes:

An Overview of the Process and Procedures

When property goes into foreclosure, state law dictates the foreclosure process.

In most states, properties are held by deeds of trust. In these "trust states", the foreclosure process is much faster than in New York. Foreclosures are auctioned off at the County level via Trustee Sales arranged by the lender without the involvement of the State Courts. These are "non-judicial foreclosures" (meaning that the court is not involved). Therefore, the time between a Lis Pendens of Mortgage Default and the Foreclosure Auction can be as quick as 104 days.

In New York, loans for real property are secured through mortgages rather than through deeds of trust. New York, unlike trust states, is a judicial foreclosure state. Only 10 states, Maine, New York, Connecticut, New Jersey, Pennsylvania, Ohio, Indiana, South Carolina, Florida, and Louisiana and North Dakota are judicial foreclosure states. Simply put, most foreclosure proceedings in New York must go through the courts before a property can be sold at public auction. On average, it takes 12-18 months after a lis pendens (notice of mortgage default) has been filed for a foreclosure proceeding to move through the court system and the property to end up on the auction block.

What is the reason it takes 12-18 months (sometimes longer!) for a foreclosure proceeding to move through the courts? In a nutshell, all parties named in the action (including other mortgage holders, creditors, tenants of the owner, etc.) must be served with papers.

Why is it important to know the difference between judicial and non-judicial foreclosures? Because, you need to know the laws of YOUR state when educating yourself about the foreclosure process and investment strategies. Many books, foreclosure seminars and infomercials provide information that focus exclusively on deed trust states and Trustee Sales. Therefore much of the information provided is useless or may confuse New York property investors.

Three Steps to Foreclosure Investing:

Foreclosure investing can be broken down into three steps. They are:

• Lis Pendens
• Foreclosure Auction
• R.E.O.

During each step, different opportunities are available to savvy investors, buyers and others in the real estate industry and related professions. It is best for you to review these different steps, determine your risk tolerance, and evaluate what step is best for your individual situation.