Can You Do a Short Sale During Foreclosure in New York?

Getting a foreclosure summons can make it feel like the decision has already been made for you. It hasn’t. In New York, many homeowners can still pursue a short sale after the foreclosure has started, and doing so can mean leaving on your own terms instead of through an auction and eviction.

This guide explains when a short sale is still possible during a New York foreclosure, what can stop it, and how to move quickly.

Yes, you can usually do a short sale during foreclosure

A foreclosure case and a short sale can run at the same time. Until the home is sold at the foreclosure auction, you still own it, and your lender can still agree to accept less than you owe. Many lenders prefer a short sale to an auction because it is often faster and they recover more money.

Because New York uses a court process for foreclosures, the timeline is usually longer than in many other states. That gives homeowners a real window to arrange a short sale, but the window does close.

Where you are in the foreclosure matters

• Before a case is filed. If you’ve received a 90-day pre-foreclosure notice but no court papers, you have the most time. This is the best moment to start.
• After the summons and complaint. The case has started, but a short sale is still very possible. Don’t ignore the court papers. Responding protects your rights while you work on the sale.
• During settlement conferences. For many owner-occupied homes, New York requires settlement conferences where you and the lender discuss alternatives. A short sale can be raised there.
• After a judgment of foreclosure and sale. Time is short, but a short sale may still close before the auction if the lender agrees to postpone the sale date.
• After the auction. Once the home is sold at auction, a short sale is no longer an option.

What can get in the way

• More than one lien. If you have a second mortgage or home equity line, every lienholder must agree to the short sale.
• A missed auction date. Lenders don’t always postpone automatically. Someone has to ask, with a pending offer in hand.
• Incomplete paperwork. Short sale approval depends on a full hardship package. Missing documents are one of the most common reasons sales stall.
• Waiting too long. Every month you wait shortens the time left to find a buyer and get bank approval.

Steps to take this week

• Gather your mortgage statements, any foreclosure papers, and recent income documents.
• Write down every loan or lien on the home.
• Note any court dates, including settlement conferences and an auction date if one has been set.
• Talk to a free, nonprofit advisor before you sign anything with anyone.

Be careful of anyone who asks for an upfront fee to “save” your home or asks you to sign over your deed. Read our guide to foreclosure rescue scams and deed theft in New York.

A short sale can come with help to move

One of the hardest parts of a short sale is the move itself, often with little money saved. If you go through the short sale program at Abraxas Foundation, you are eligible to apply for our Short Sale Relocation Grant. It can help cover movers, a security deposit or first month’s rent, storage, utility hookups or temporary housing, and it is not a loan.

Still deciding between options? Compare them in Short Sale vs. Foreclosure in New York.

Get free help from Abraxas Foundation

Abraxas Foundation is a New York nonprofit. Our help is free from start to finish, with no fees to homeowners. We meet homeowners at their homes, explain every option in plain language, and refer you to free legal assistance when you need it.

If a short sale is the right path, our short sale program works directly with your bank. And everyone in our short sale program is eligible to apply for our Short Sale Relocation Grant, financial help with moving costs that you never pay back.

Call (929) 346-5734 or contact us online for a free, confidential consultation.

Helpful official resources: NY Courts CourtHelp: Foreclosure and NY DFS Foreclosure Consumer Bill of Rights.

Abraxas Foundation Inc is a nonprofit organization. We are not a lender, real estate broker, home buyer or law firm, and this article is general information, not legal or tax advice. Relocation grants depend on eligibility and available funding, and applying does not guarantee approval.