NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1298
SPONSOR: Weinstein TITLE OF BILL:
An act to amend the civil practice law and rules, in relation to manda-
tory settlement conferences in residential foreclosure actions
PURPOSE OF BILL:
To clarify mandatory settlement conference provisions in residential
foreclosure actions.
SUMMARY OF PROVISIONS OF BILL:
Section 1. Subdivisions (a), (c), (e)-(g) of Rule 3408 of the civil
practice law and rules (CPLR) are amended and subdivisions (i)-(k) are
added to make some clarifications to the mandatory settlement conference
provisions in residential foreclosure actions.
Subdivision (a) is amended to clarify that all settlement options short
of judgments of foreclosure and sale, including loan modifications,
short sales and deeds in lieu of foreclosure are encompassed within the
purposes of the mandatory settlement conferences in residential foreclo-
sure actions and that all such settlement options can be considered
during these settlement conferences.
Subdivision (c) is amended to clarify that the Plaintiff's represen-
tative that appears at the mandatory settlement conferences shall be
fully authorized to dispose of the case, and that similar to the plain-
tiff, the borrower defendant may also be permitted by the court to
attend the settlement conference telephonically or by video-conference.
Subdivision (e) is amended to clarify that compliance with the document
production requirements the subdivision are not optional. The amendment
also supplements the documentation production requirements to include
contact information for an authorized representative of the plaintiff
capable of disposing the case along with documentation requirements for
loss mitigation application options.
Subdivision (f) is amended to provide clarifying guidelines relating to
good faith negotiations during the mandatory settlement conferences,
including providing guidelines to measure good faith negotiations by the
totality of the circumstances.
Subdivision (g) is amended to change the time frame to file the notice
of discontinuance and vacatur of the lis pendens to thirty days after
execution of a settlement agreement or loan modification.
Subdivision (i) is added to preserve the ability of an unrepresented
homeowner defendant who has participated in a mandatory settlement
conference to answer the complaint within thirty days following the
release of the case from the settlement conference. It also preserves
the ability of such a defendant to seek relief for violations of the
provisions of the mandatory settlement conference section.
Subdivision (j) is amended to clarify that motions shall be held in
abeyance during settlement conferences except motions for relief for
violations of the provisions of the mandatory settlement conference
section.
Subdivision (k) is amended to clarify the court's obligation to enforce
the mandatory settlement conference provisions with a list of penalties
including ones tailored to the harm occasioned by violation of the
provisions. This subdivision also authorizes a referee or judicial hear-
ing officer to ensure compliance with all provisions of the mandatory
settlement conference section and to make findings of fact relating to
good faith negotiations and violations of terms of the settlement
conference provisions.
Section 2 provides for an immediate effective date with the terms of the
act to apply to actions pending or filed after such date.
JUSTIFICATION:
New York State has implemented various laws to help avoid foreclosures
and preserve homeownership. CPLR section 3408 is among the laws insti-
tuted in New York State that foster the early settlement of foreclosure
actions as a means of preserving homeownership. A key provision of this
law requires the court to hold mandatory settlement conferences in any
residential foreclosure action involving a home loan. The purpose of
this conference is to determine whether the parties can reach a mutually
agreeable resolution to help the homeowner avoid losing his or her home,
and evaluate the potential for a resolution in which payment schedules
or amounts may be modified or other workout options may be agreed to.
(CPLR 3408(a)). In addition, CPLR 3408 requires both sides to negotiate
in good faith to reach a mutually agreeable resolution. (CPLR 3408(f)).
We have learned that banks often flout the express statutory language
and the core purpose of the settlement conference law designed to
promote negotiation of affordable loan modifications or other home-sav-
ing solutions. They do this in a number of ways including by incorrectly
arguing that the law permits only certain types of workout options, by
providing misinformation, repeatedly losing homeowner paperwork, improp-
erly denying loan modifications, commencing foreclosure actions after
promising not to do so in a loan modification offer, and by employing a
range of dilatory tactics, including sending counsel to settlement
conferences unprepared, without required information and/or without
settlement authority, and delaying the appearance at such conferences of
a bank representative with full settlement authority. This conduct frus-
trates the purpose of New York's settlement conference law, prolonging
the foreclosure process, often for over a year, that results in costs to
the homeowner that makes home-saving solutions difficult, if not impos-
sible.
This measure provides clarification and guidance on the rights and reme-
dies of the parties to ensure compliance with the express provisions of
the settlement conference law and its original purpose.
LEGISLATIVE HISTORY:
New bill, 2015.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
EFFECTIVE DATE:
Immediately and shall apply to actions pending or filed after such date.
