How To Vacate A Default Foreclosure Judgment And Stop A Sale

So many of my clients have already defaulted in their foreclosure action by not answering the summons that I thought I should write about it. Many do not realize what a default is. Just because you write a letter to the bank or their attorneys does not mean you are protected. You have to serve a written answer denying the allegations and asserting defenses or counterclaims and then file it with the court with an affidavit of service. If you missed your 20 or 30 days to do that, and you did not get an extension, then you are in default. To be clear, what I am talking about is where a borrower/defendant defaults in the foreclosure lawsuit, after they had already defaulted under the loan by not making payments – really two different types of default, one after the other. So, what can you do?

This depends on why you are in default. If you have a good excuse you may be able to file a motion by order to show cause to vacate (undo) the default. CPLR 5015(a) requires that you show a reasonable excuse and also a meritorious defense to the lawsuit.

I just filed such a motion in the Supreme Court and included a request for a temporary restraining notice to stay a foreclosure sale. The primary defense asserted was predatory lending because the lender and its brokers had misrepresented and concealed the loan terms, engaged in bait and switch tactics, and had made “no-doc” loans knowing that the borrower could not afford the payments and would eventually default. The Court granted a TRO. So far, the sale has been stopped and the parties may discuss settlement. Because it is an active matter, I will not disclose the names of the parties.

The moral of the story: call the lawyer fast. Avoid a default. If you are already in default in the litigation, call the lawyer now – before the sale occurs. Each case is different, but there may be hope!