Our firm handles many cases in which the client is being sued for foreclosure of their property. In general, a foreclosure lawsuit involves a mortgage loan which has been recorded as a lien against real property, such as a house or condominium unit. Please note that cooperative apartments involve ownership of shares in the cooperative corporation, and therefore are not subject to the judicial foreclosure process.
Due to the large volume of foreclosures in New York in recent times, and the desire to protect homeowners, a law was passed in New York State several years ago requiring mandatory settlement conferences in residential foreclosure actions. This requirement does not apply to commercial foreclosures, nor to situations where the owner of the property being foreclosed does not reside at the property.
The purpose of this law is to attempt to resolve foreclosure cases before extensive litigation occurs. The law requires that, after the party foreclosing (the lender) files proof with the Court that the borrower was served with the foreclosure lawsuit, the Court must hold a mandatory settlement conference within sixty (60) days of such filing. In general, the Court will issue a written notice to all parties advising them of the date, time, and location of the settlement conference. It is important to advise your attorney if you receive such a written notice, so that they will be able to attend the conference on your behalf.
In Westchester County, as in many counties in New York, a separate part (room in the Courthouse) has been set up to handle these conferences. In Westchester, it is called the Foreclosure Settlement Conference Part. Our firm has attended many conferences on behalf of our clients. An appearance at the Foreclosure Settlement Part usually involves a sit-down conference with all parties or their attorney present. The foreclosing institution (usually a bank) will send an attorney to represent them, and the person being foreclosed will either attend themselves or hire an attorney to represent their interests. The Court has several personnel who are Court Attorney-Referees. Their job is to meet with the parties and attempt to resolve the matter prior to extensive litigation. Often, they will discuss the possibility of a loan modification. This usually involves the borrower agreeing to provide additional financial information to the lender, so that the lender can evaluate whether a loan modification is in order. Most lenders have standard financial forms which they will provide to the borrower or their counsel.
Assuming the parties have agreed to attempt to modify the loan, the Court will usually schedule a second conference several months later, in order to give the borrower and their attorney time to complete the financial disclosure forms and provide any additional financial information, such as proof of current employment, bank statements, and income tax returns, as the lender may require. The parties will then meet again in Court, and discuss the possibility of a loan modification, based on the current financial status of the borrower. The Court may schedule several future conferences in order for all financial records to be received and reviewed by the lender and their counsel.
There may be a point in time where the lender may not agree to modify the loan. The legal requirement is that the lender negotiate in good faith to attempt to reach a resolution. If the lender has acted in good faith, and if no modification can be agreed upon, then the case may be removed from the foreclosure settlement conference part. Once this occurs, the case is assigned to the regular litigation part in the Court, and may proceed as any other case would. The borrower is still allowed to present any of their defenses to the Court, and the lender is required to provide proof of its case, as is legally required.
Our firm represents borrowers in negotiating resolutions in foreclosure actions, and welcomes all inquiries in this area.