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Mortgage Surplus Funds – How to get the money after Foreclosure?

If you had your home foreclosed and there was money left over, how do you get the mortgage surplus funds ?

First let me state, I am an attorney in New York. These rules apply to New York State only. If the property is in another state, you need to speak with an attorney from that state.

Lets say there was a mortgage on the property for $100,00. Because of family fighting or loss of a job, that property goes into foreclosure. The house is sold at auction for $300,000. The mortgagor bank gets its $100,000 but who keeps the extra $200,000. The answer is the former owner. However, so many owners leave that money with the state because they don’t know what to do.

  1. The court appointed referee files a surplus money report stating how much mortgage surplus funds are left over. Usually that amount is zero but if there is money left over, this one page form tells you how much.
  2. Those mortgage surplus funds are then deposited with the County Commissioner of Finance or equivalent.
  3. Any party who is still owed money has to now file a Notice of Claim under RPA Section 1361 with the County Clerk. This includes the former owner.
  4. Three months after step 3, you must then file a motion with the court to give you the mortgage surplus funds. The Court will appoint a referee (often the original one) to oversee the process.
  5. The referee will hold a hearing to see if anyone else is owed money.
  6. The Referee will make a report to the Court and recommend a Court Order for how much money you will receive.
  7. Once the Court signs the order, then you can get you left over funds.

There is no reason that a person who has lost there home should also lose additional money simply because the process is complicated. If you have mortgage surplus monies that you need to collect, please contact me and I will see if I can help.