The Brian Lehrer Show The ‘Systematic Fraud’ Behind New York’s Foreclosure Process
Dec 5, 2025
David Brand, a dedicated housing reporter for WNYC and Gothamist, joins Chris Bragg, Albany bureau chief at New York Focus, to unravel the complexities of New York's foreclosure auction process. They share the story of Barbara Small, who lost her home due to flawed calculations on auction proceeds. The duo delves into systemic issues, revealing that 95% of foreclosure cases apply misleading interest calculations. They also discuss proposed legislation aimed at standardizing these practices and highlight the racial disparities tied to foreclosures in the city.
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Homeowner's Loss Became Investigation Catalyst
- Barbara Small lost a three-family Flatbush home after her tenant stopped paying and her father got sick.
- She received about $100,000 from the auction but may have been owed roughly $24,000 more due to disputed interest calculations.
Two Competing Bases For Interest Accrue
- Lawyers submitted a proposed judgment amount to the court but judges can take months to sign it, during which interest accrues.
- Many firms calculated interest on the higher judgment amount instead of the unpaid principal, raising owed sums significantly.
Compound Interest Rule Changes The Math
- New York law bars compound interest on one- and two-family residential loans, creating legal tension with some calculation methods.
- The judgment-based method produces much larger totals than principal-only calculations and often benefits investors over homeowners.