Is the Bank Attempting to Claim an Interest in my Property by Paying Water and Property Insurance Bills After a Failed Foreclosure?

Question: A New York State Supreme Court Judge removed the notice of pendency, determined that the bank does not to have standing in the foreclosure matter and dismissed the bank’s foreclosure efforts after I submitted my motion to dismiss. However, after the judge made her ruling the bank began to pay the DEP/ NYC Water Board and New York Property Insurance bills eight years after the purchase of the house. (All of the papers are in my name, as well as, payment agreements and contracts state that I have not missed any payments or breached the agreements.) It appears that the bank is attempting to claim an interest in my property, even after the judge has determined they are not the Rightful Holder in Due Course of my Promissory Note. What is the best course of action to take in order to regain control of my property’s bills and interest?

Response: Your problem should be analyzed in several steps. First, by winning a Motion to Dismiss, your foreclosure case got thrown out, most likely without prejudice, which means, the bank can start the foreclosure process again. In New York, the bank has 6 years from the date of default to pursue its rights in foreclosure. The bank can also appeal the Supreme Court Judge’s decision. Most of the time, banks try to fix their problems with assignment of mortgage and restart the case. Assuming you got the case dismissed with prejudice and the bank can’t restart its foreclosure action, the bank can still sue you on the money you borrowed under the note as unsecure debt, where the bank can’t foreclose but can likely get a judgment against you and record it as a lien against your property. Taxes and insurance are often escrowed when you have a mortgage but the New York City water bill is not part of your escrow. What happens is that when you stop paying your New York City water bill, you owe money to the government and government always trumps bank’s interest in terms of foreclosing on the property. When New York City forecloses on the water bill, it is known as the tax lien sale. Banks, in order to preserve their position in the property, will pay the water bill to ensure that the New York City Water Board does not foreclose and cut the bank off. You can pay your water bill yourself to avoid a tax lien sale and thus avoid the bank having to pay it. That amount then becomes part of your escrow shortage and is split over your monthly payment. It doesn’t affect the court’s ruling regarding dismissal.
 
In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

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