Hard money lenders in New York: usury, licensing, foreclosure speed and costs

New York is simultaneously one of the largest hard money markets and one of the slowest to foreclose — eighteen months to four years — so lenders rely on entity borrowers, loan sizes above the usury thresholds and personal guarantees, and accept that a default is a negotiation, not a sale. The sections below give the usury, licensing, foreclosure and cost details that follow from it.

Foreclosure process	Judicial
Typical time to sale	18 to 48 months from first notice or filing
Post-sale redemption	A New York homeowner may redeem by paying the full amount due at any time up to the foreclosure sale.
Deficiency judgment	Allowed
Usury	New York’s civil usury cap is 16% and its criminal usury ceiling 25%; loans of $250,000 or more are exempt from civil usury, loans of $2.5 million or more from criminal usury, and corporate borrowers cannot raise civil usury as a defense — so New York hard money is made to entities, typically at $250,000 and up, and priced under 25% all-in.
Transfer tax	New York’s state transfer tax is $2 per $500 (0.4%), paid by the seller; New York City adds 1% to 1.425% (seller), and buyers pay the “mansion tax” of 1% and up on purchases of $1 million or more.
Median home price (approx.)	$480,000 · property tax about 1.4%

Interest rate limits in New York

New York’s civil usury cap is 16% and its criminal usury ceiling 25%; loans of $250,000 or more are exempt from civil usury, loans of $2.5 million or more from criminal usury, and corporate borrowers cannot raise civil usury as a defense — so New York hard money is made to entities, typically at $250,000 and up, and priced under 25% all-in.

The exemptions turn on details — entity borrower, loan amount, documented business purpose — and on how courts read them. A state-licensed attorney should bless the structure before funding.

Do hard money lenders need a license in New York?

New York requires a mortgage banker license for residential mortgage loans to consumers; business-purpose loans to entities on non-owner-occupied property are generally exempt, and the Department of Financial Services administers licensing. Loans to individuals on one-to-four family property are scrutinized. Verify a lender or originator on NMLS Consumer Access, and read how to vet a lender.

Foreclosure speed: what a lender faces in New York

New York’s foreclosure process is judicial, and that single word sets the default timeline a lender here must carry. All New York foreclosures are lawsuits in Supreme Court. At least 90 days before filing, the lender must send the statutory pre-foreclosure notice (RPAPL 1304) listing housing counselors. After filing and service, the court schedules a mandatory settlement conference within 60 days for home loans; only after the conference process ends can the case proceed to a referee’s computation, judgment of foreclosure and sale, and a public auction. A typical sale comes 18 to 48 months after the first notice or filing, longer if contested.

A New York homeowner may redeem by paying the full amount due at any time up to the foreclosure sale. There is no statutory right of redemption after the sale.

A New York lender may obtain a deficiency judgment, but the court credits the borrower with the higher of the sale price or the property’s fair market value as of the sale date, based on an appraisal submitted with the motion. See what happens when a hard money loan defaults and the New York foreclosure process for the complete timeline.

Costs on the way in and out

New York’s state transfer tax is $2 per $500 (0.4%), paid by the seller; New York City adds 1% to 1.425% (seller), and buyers pay the “mansion tax” of 1% and up on purchases of $1 million or more. Buyers also pay mortgage recording tax of about 0.8% to 1.925% of the loan depending on the county. A flip pays this twice — once buying, once selling — so it belongs in the deal budget from the first spreadsheet. Property taxes run about 1.4% of value a year in New York (roughly $6,720 on the $480,000 median) and accrue through the holding period.

New York buyers face the mortgage recording tax, attorney fees, title insurance and, in the city, high closing costs all around — commonly 3% to 5% of the price downstate, 2% to 3% upstate. Co-op purchases avoid the mortgage recording tax and title insurance.

Where investors are active in New York

New York City (Brooklyn, Queens, the Bronx), Long Island and Westchester are high-dollar investor markets; Buffalo, Rochester, Syracuse and Albany offer very low prices, strong rental yields and a growing out-of-state investor presence.

Market notes describe where activity concentrates, not where profits are guaranteed; margins change with rates, inventory and competition. Underwrite each deal on its own comps.

Frequently asked questions

Is hard money lending legal in New York?

Yes. New York’s civil usury cap is 16% and its criminal usury ceiling 25%; loans of $250,000 or more are exempt from civil usury, loans of $2.5 million or more from criminal usury, and corporate borrowers cannot raise civil usury as a defense — so New York hard money is made to entities, typically at $250,000 and up, and priced under 25% all-in. New York requires a mortgage banker license for residential mortgage loans to consumers; business-purpose loans to entities on non-owner-occupied property are generally exempt, and the Department of Financial Services administers licensing.

How fast can a hard money lender foreclose in New York?

18 to 48 months is the usual range from first notice to sale; New York uses a judicial process. A New York homeowner may redeem by paying the full amount due at any time up to the foreclosure sale.

What does a typical hard money loan cost in New York?

Roughly 9% to 14% plus 1 to 4 points, as everywhere; the state changes the lender’s risk, not the formula. Example: $408,000 at 11% and 2 points for nine months ≈ $41,820 in interest and points. See rates, points and LTV.