New York County Short Sale Settlement

In September 2019, Erin was brought in as a consultant in a New York County case where the bank recently failed to make a timely motion for summary judgment as ordered by the court. Bank attorneys’ failure to meet court deadlines is a common reason for foreclosure cases to be dismissed.

When a foreclosure case is dismissed, this causes one of two things: (1) if the Statute of Limitations has run, the borrower can file a lawsuit to extinguish the mortgage (the so-called “free house” scenario); or (2) the bank either has to file papers to try to get the case reinstated or file a brand new foreclosure action. Each of these scenarios benefits the borrower and/or any potential buyer in a short sale.

In this particular case, the bank approved a short sale in January 2020 and settled the case , thus avoiding the cost of paying its lawyers to try to keep the case alive and also reducing its investor’s out-of-pocket expenses.