A recent investigative report published by Gothamist and New York Focus examines how interest is calculated in thousands of foreclosure cases across New York.
This summary addresses the issues raised in the report. ABW PLLC did not author the investigative analysis, and all data and factual findings referenced below come from the journalists’ work. Links to the full articles appear at the end of this post.
For background, see our April 2025 post summarizing related claims against Deutsche Bank, loan servicers, and foreclosure law firms.
For years, our firm has observed a recurring pattern in foreclosure matters: lenders and their attorneys apply interest to the judgment amount rather than to the unpaid principal balance during the period between judgment and sale.
The difference may appear technical, but the impact can be substantial. Using the higher judgment figure increases the amount of interest added, which can reduce surplus proceeds available to former homeowners or raise the remaining judgment balance recorded against them.
The reporting highlights one Brooklyn homeowner whose judgment amount was approximately $852,000, while her principal balance was about $520,000. Interest applied to the higher number increased the calculation by more than $24,000. According to the reporters, this method contradicts the court system’s own referee guidance and a 2015 appellate decision, yet it has nonetheless appeared in thousands of reports statewide.
Partner, Mark Anderson, noted in the article:
“Even when you show this to lawyers, they have no idea, even lawyers that do this area of practice. You have no way of knowing unless you go into it.”
One referee interviewed for the investigation echoed the need for accuracy in these figures:
“If something in any point in the process was incorrect and worked to the disadvantage of the defendant, then it should be fixed.”
According to Gothamist and New York Focus, certain firms used the disputed calculation method in more than 95% of post-foreclosure reports they drafted. These findings raise important questions about consistency and transparency in foreclosure proceedings throughout New York.
We appreciate the work of Gothamist and New York Focus in bringing attention to these issues, including their joint coverage in the NYC NOW Podcast, which further discusses the investigation’s findings. You can read their full investigation here:
- Gothamist Article
- New York Focus Article
- Big Banks Accused of ‘Systematic Fraud’ in New York Foreclosure Auctions on the NYC NOW Podcast
Attorney Advertising: This post is for informational purposes only and does not constitute legal advice. Prior results do not guarantee a similar outcome.