There are 3 phases to the foreclosure process.

1. Mortgage Default (Preforeclosure)
2. Foreclosure Auction
3. REO.

Most states are non judicial foreclosure states. This means that there is no lawsuit and that the courts have no involvement in the foreclosure process. This makes the foreclosure process relatively quick. Sometimes it can be as quick as 90 days.

New York is a judicial foreclosure state. This means that there must be a lawsuit filed and that this must go through the court system before a property can be sold at auction.

In New York this filing is known as a Lis Pendens (also known as Notice of Default) and must be filed in order for a foreclosure to take place. All the parties named in the lawsuit, all mortgage holders, tenants, lien holders and others associated with this property must be informed and served. As a result this makes the foreclosure process in NY State quite long. It can take anywhere from 12 – 24 months to move through the courts after the lawsuit has been filed. This spells opportunity for the real estate investor. It also gives the homeowner the opportunity to attempt to cure the default (which can be difficult but can be done. Get our Foreclosure Manual here for more details on how this can be done).

NY property is held via mortgages not Trust Deeds as it is in other states. Remember this means that information regarding Trust Deeds and Trustee Sales does not apply in NY State.

For a number of reasons we believe that the pre-foreclosure phase particularly in New York State provides the best opportunity for the persistent real estate investor to acquire properties at bargain prices.

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