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Attorney 1
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Category: Real Estate Law
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I was going into foreclosure in the state of New York, and

Customer Question

I was going into foreclosure in the state of New York, and we hired an attorney to help stop the foreclosure proceedings, sell our house to payoff the loan, and act as settlement agent. The title company did a search and requested a payoff amount. Instead, the lender provided a reinstatement letter which our attorney/settlement agent mistook as a payoff letter. We sold the house and paid off what we thought was the payoff amount but what was, it appears in actuality, a reinstatement amount. The lender has filed another foreclosure case with the court for the shortage, which is now, one year later, in the amount of $58K. Because we hired this attorney/settlement agent to navigate the complexities of the transaction and because the title company also mistook the reinstatement amount as a payoff amount, we are in deep trouble. To make matters worse, the new owners are also being sued are now in danger of losing their new home! Who is liable for this error and what recourse do we have? The HUD-1 clearly indicated to us and to all parties what the "payoff" on our mortgage was at that time last year. We had no way of knowing that it was for more than what our attorney/closing agent and the borrower's title company told us it was. What can we do? We have once again been summoned to court on this matter, and we are terrified.
Submitted: 4 months ago.
Category: Real Estate Law
Expert:  Attorney 1 replied 4 months ago.

Hello, and welcome. I am a licensed attorney and happy to assist.

I'm sorry to hear of your situation, but happy to say that you do have recourse if appropriate steps are taken. It sounds like the person ultimately responsible for this chaos is the attorney who gave you the wrong information and negligently misrepresented the agreement. That said, you've been summoned to court and the judge will not simply absolve you if you point to the attorney. You will need to properly respond to the summons and complaint and also file a counterclaim against the attorney for indemnification and damages.

It is important to respond to the summons within the allocated period of f time so you do not end up with a default judgment, so that's the first thing to be done. A counterclaim against the attorney must be filed at the same time as your answer, or you may lose the right to have the appropriate person held responsible. You (or better yet, an attorney acting on your behalf) can also contact the attorney and let him/her know your anticipated course of action, requesting that he present this matter to his malpractice carrier.

This is clearly a complex matter with a lot of parties and facts involved, so it is best to have a local attorney handle all of the filings and representation on your behalf. A good referral source will be your County Bar Association. There should be no charge for the referral and no cost for the initial consultation with the attorney to whom you are referred. If that attorney takes your case, there may be no out-of-pocket or expenses to pay, either. That attorney will be able to review all of the details pertaining to this matter and act accordingly to best protect you and give you the peace of mind to go forward without worry.

I hope this helps. If you need additional information or clarification, just let me know and I'll continue to provide assistance. If I have addressed your issue and/or pointed you in a positive direction, please let me know that, as well. Also, please remember to leave a positive rating when prompted, as that is the only way attorneys on this site are credited for the help we provide.

Good luck!

Best,

Attorney 1

Customer: replied 4 months ago.
We have answered the summons via the NYS E-filing system. Do you know if that is the appropriate place to file the counterclaim? And, if so, are you aware of a form or a letter template I can use to file the counterclaim? thank you.
Expert:  Attorney 1 replied 4 months ago.

The e-filing system sounds like the appropriate place for the counterclaim, bu there is no template or form available. Each cause of action in the counterclaim has to be very specifically drafted to be effective, and your best bet is to have this done by an attorney. Otherwise there's an extremely high chance of counterclaim dismissal and/or ultimate loss. A good attorney referral source will be your County Bar Association, and the sooner you jump on it, the better. I think you will find bringing in an attorney to be the best thing you can do here.

If you just filed the answer today and therefore need to get that counterclaim filed today, you can grab something off the Internet, make some changes and file it, just to get something on record. It will likely be entirely ineffective, but that preserves the ability to amend and gives you time to get an attorney on board to fix it.

I hope this helps. If you need additional information or clarification, just let me know and I'll continue to provide assistance. If I have addressed your issue and/or pointed you in a positive direction, please let me know that, as well. Also, please remember to leave a positive rating when prompted, as that is the only way attorneys on this site are credited for the help we provide.

Good luck!

Best,

Attorney 1

Expert:  Attorney 1 replied 4 months ago.

If there is anything else I can do for you, just let me know. I'm here to help.

Best,

Attorney 1

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