New York Law (NYLE) Practice Exam

What can a mortgage lender do upon a mortgagee's default in New York?

1. Only commence a civil action on the note

2. Commence a foreclosure action, and may commence a civil action on the note with leave of court

3. Only commence a foreclosure without any further action

4. Negotiate directly with the borrower without court involvement

The correct answer is: Commence a foreclosure action, and may commence a civil action on the note with leave of court

In New York, when a mortgagee defaults on their obligations, a mortgage lender has specific legal remedies available. The correct answer indicates that the lender can initiate a foreclosure action as a remedy to recover the amount owed under the mortgage. Foreclosure is a legal process by which a lender seeks to recover the balance of the loan from a borrower who has stopped making payments, typically through a court proceeding that allows the lender to sell the property securing the loan to satisfy the debt. Furthermore, the option allows for the possibility of commencing a civil action on the note, which is the formal promissory note that embodies the borrower's promise to repay the loan. However, the lender must seek permission from the court to do so. This approach reflects that while the lender has various options for recourse, starting with foreclosure is a standard legal remedy available without any prerequisites, while pursuing a monetary judgment on the note requires court involvement. In contrast, other alternatives presented do not fully encapsulate the correct legal process in New York. For example, simply commencing a civil action on the note without addressing foreclosure would not suffice, as foreclosure is typically the more direct route to remedy a default. Initiating foreclosure without any further actions does not reflect the lender's ability to also