He also argued that the six-year statute of limitations on the HPD mortgage claim had expired, and, therefore, its claim was no longer legally valid. The homeowner attempted to defeat HPD’s claim by alleging that HPD had not commenced its own foreclosure action.
#Foreclosure action surplus monies form plus
HPD claimed that, as of 2017, the homeowner owed it $148,096.30 (the unpaid balance of the mortgage, plus interest), and sought to claim the surplus funds to partially satisfy this debt. The homeowner defaulted on the HPD mortgage in April, 1997. HPD held a first mortgage on the property securing a fifteen year loan in the sum of $56,250. The other claimant was a mortgage holder on the property, the New York City Department of Housing Preservation and Development (HPD). The first claimant was the original homeowner. The Appellate Division had to determine which of two claimants was entitled to this surplus money. That is, the winning bid at the foreclosure auction exceeded the amount of the tax lien (plus costs, penalties, and interest) by $42,986.00.
When the property was sold at public auction in 2000, it resulted in a surplus of $42,986.00. As is often the case, the tax lien was sold to a third party, who brought a foreclosure action to sell the property at public auction in order to satisfy the tax lien.
In that action, a homeowner on Staten Island failed to pay his taxes, resulting in a tax lien being filed against his property. But who is legally entitled to the remaining $50,000.00?Ī recent case from the New York Appellate Division, Second Department helps answer this question. In that situation, the foreclosing lender would be paid the first $300,000.00. The property is sold at a foreclosure sale, and a third party bids and pays $350,000.00 for the property. For example, an individual defaults on his mortgage, and the Referee determines that the amount due to the mortgage holder is $300,000.00. To summarize, when a foreclosed property is sold at public auction, it is possible that the highest winning bid may exceed the sum owed to the entity foreclosing on the property.
Prior blog posts have discussed the concept of surplus monies in foreclosure proceedings.
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