NY State Senate Bill 2015-S5242

Senate Bill S5242

2015-2016 Legislative Session

Expands the provisions relating to mandatory settlement conferences in residential foreclosure actions

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Archive: Last Bill Status - In Senate Committee Judiciary Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2016	referred to judiciary
May 08, 2015	referred to judiciary

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2015-S5242 (ACTIVE) - Details

See Assembly Version of this Bill:: A1298
Current Committee:: Senate Judiciary
Law Section:: Civil Practice Law and Rules
Laws Affected:: Amd R3408, CPLR

2015-S5242 (ACTIVE) - Summary

Expands the provisions relating to mandatory settlement conferences in residential foreclosure actions.

2015-S5242 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S5242

TITLE OF BILL:  An act to amend the civil practice law and rules, in
relation to mandatory 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 instituted that foster the early settlement of foreclo-
sure 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 some banks sometimes 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-
saving solutions. They do this in a number of ways, including incorrect-
ly arguing that the law permits only certain types of workout options,
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 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, which results in costs
to the homeowner that make home-saving solutions difficult, if not
impossible.

This bill would provide clarification and guidance on the rights and
remedies of the parties to ensure compliance with the express provisions
of the settlement conference law and its original purpose.

LEGISLATIVE HISTORY:  New bill.

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:  None.

EFFECTIVE DATE:  Immediately and shall apply to actions pending or filed
after such date.

2015-S5242 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5242

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                               May 8, 2015
                               ___________

Introduced  by  Sen.  SAVINO -- read twice and ordered printed, and when
  printed to be committed to the Committee on Judiciary

AN ACT to amend the civil practice law and rules, in relation to  manda-
  tory settlement conferences in residential foreclosure actions

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Rule 3408 of the civil practice law and rules, as added  by
chapter  472  of the laws of 2008, subdivision (a) as amended by chapter
306 of the laws of 2013, subdivisions (d), (e),  (f),  (g)  and  (h)  as
added by chapter 507 of the laws of 2009, is amended to read as follows:
  Rule  3408. Mandatory settlement conference in residential foreclosure
actions.  (a) In any residential foreclosure  action  involving  a  home
loan  as  such  term  is defined in section thirteen hundred four of the
real property actions and proceedings law, in which the defendant  is  a
resident  of  the  property subject to foreclosure, plaintiff shall file
proof of service within twenty days of such service, however service  is
made,  and the court shall hold a mandatory conference within sixty days
after the date when proof of service upon such defendant is  filed  with
the county clerk, or on such adjourned date as has been agreed to by the
parties, for the purpose of holding settlement discussions pertaining to
the  relative  rights  and obligations of the parties under the mortgage
loan documents, including, but not limited to  determining  whether  the
parties  can reach a mutually agreeable resolution to help the defendant
avoid losing his or her home, and evaluating the potential for a  resol-
ution  in  which  payment  schedules or amounts may be modified or other
workout options may be agreed to INCLUDING, BUT  NOT  LIMITED  TO,  LOAN
MODIFICATIONS, "SHORT SALES" AND "DEEDS IN LIEU OF FORECLOSURE", and for
whatever other purposes the court deems appropriate.
  (b)  At  the  initial  conference  held  pursuant to this section, any
defendant currently appearing pro se, shall be deemed  to  have  made  a
motion  to  proceed as a poor person under section eleven hundred one of

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00119-01-5

S. 5242                             2

this chapter. The court shall determine whether such permission shall be
granted pursuant to standards set forth in section eleven hundred one of
this chapter. If the court appoints defendant counsel pursuant to subdi-
vision  (a)  of  section  eleven  hundred  two of this chapter, it shall
adjourn the conference to a date certain for appearance of  counsel  and
settlement  discussions pursuant to subdivision (a) of this section, and
otherwise shall proceed with the conference.
  (c) At any conference held pursuant to  this  section,  the  plaintiff
shall appear in person or by counsel, and [if appearing by counsel, such
counsel] PLAINTIFF'S REPRESENTATIVE AT CONFERENCE shall be fully author-
ized  to dispose of the case. The defendant shall appear in person or by
counsel. If the defendant is appearing pro se, the  court  shall  advise
the  defendant  of  the  nature  of the action and his or her rights and
responsibilities as a defendant. Where appropriate, the court may permit
a representative of the plaintiff OR THE BORROWER  DEFENDANT  to  attend
the settlement conference telephonically or by video-conference.
  (d)  Upon  the  filing  of  a request for judicial intervention in any
action pursuant to this section, the court shall send either a  copy  of
such  request  or the defendant's name, address and telephone number (if
available) to a housing counseling agency or agencies on a  list  desig-
nated  by the division of housing and community renewal for the judicial
district in which the defendant resides. Such information shall be  used
by  the designated housing counseling agency or agencies exclusively for
the purpose of making the homeowner  aware  of  housing  counseling  and
foreclosure prevention services and options available to them.
  (e) The court shall promptly send a notice to parties advising them of
the  time  and  place  of  the settlement conference, the purpose of the
conference and the requirements of this section. The notice shall be  in
a  form  prescribed  by  the  office of court administration, or, at the
discretion of the office of  court  administration,  the  administrative
judge of the judicial district in which the action is pending, and shall
advise  the  parties of the documents that they [should] ARE REQUIRED TO
bring to the conference. For  the  plaintiff,  such  documents  [should]
SHALL  include, but are not limited to, the payment history, an itemiza-
tion of the amounts needed to cure and pay off the loan, [and] the mort-
gage and note, CONTACT INFORMATION FOR AN AUTHORIZED  REPRESENTATIVE  OF
THE  PLAINTIFF  FULLY AUTHORIZED TO DISPOSE OF THE CASE IF NOT APPEARING
IN PERSON, AND FORMS AND DOCUMENTATION REQUIREMENTS FOR LOSS  MITIGATION
APPLICATION  OPTIONS INCLUDING, BUT NOT LIMITED TO, A LOAN MODIFICATION,
"SHORT SALE", AND "DEED IN LIEU OF FORECLOSURE". If the plaintiff is not
the owner of the mortgage and note,  the  plaintiff  shall  provide  the
name,  address  and  telephone number of the legal owner of the mortgage
and  note.  For  the  defendant,  such  [documents]  INFORMATION  should
include, but [are] IS not limited to, [proof of] current income [such as
the  two  most  recent pay stubs, most recent tax return and most recent
property  tax  statements],  EXPENSES,  PROPERTY  TAXES  AND  PREVIOUSLY
SUBMITTED LOSS MITIGATION APPLICATIONS.
  (f)  Both the plaintiff and defendant shall negotiate in good faith to
reach a mutually agreeable resolution, including a loan modification  OR
OTHER  WORKOUT  OPTION  INCLUDING, BUT NOT LIMITED TO, "SHORT SALES" AND
"DEEDS IN LIEU OF FORECLOSURE", if possible. COMPLIANCE WITH  THE  OBLI-
GATION  TO  NEGOTIATE  IN  GOOD  FAITH PURSUANT TO THIS SECTION SHALL BE
MEASURED BY THE TOTALITY OF THE CIRCUMSTANCES INCLUDING, BUT NOT LIMITED
TO, SUCH FACTORS AS (1) COMPLIANCE WITH THE REQUIREMENTS OF THIS SECTION
AND APPLICABLE COURT RULES, COURT ORDERS AND DIRECTIVES; (2)  COMPLIANCE
WITH  MORTGAGE  SERVICING  STANDARDS APPLICABLE TO THE MORTGAGEE AND ITS

S. 5242                             3

AGENTS, WHETHER ESTABLISHED BY STATUTE, REGULATION, SETTLEMENT OR OTHER-
WISE; AND (3) CONDUCT NOT DEMONSTRATING CONSTRUCTIVE EFFORTS TO REACH  A
MUTUALLY  AGREEABLE RESOLUTION PRIOR TO, DURING AND AFTER THE RELEASE OF
THE  CASE  FROM  THE  SETTLEMENT  CONFERENCE  PROCESS INCLUDING, BUT NOT
LIMITED TO, CAUSING UNREASONABLE DELAY, FAILING TO APPEAR AT THE SETTLE-
MENT CONFERENCE WITH AUTHORITY TO DISPOSE OF THE PROCEEDING, PROSECUTION
OF FORECLOSURE PROCEEDINGS WHILE LOSS MITIGATION APPLICATIONS ARE  PEND-
ING ("DUAL TRACKING"), OR PROVIDING INACCURATE INFORMATION.
  (g)  The  plaintiff  [must]  SHALL file a notice of discontinuance and
vacatur of the lis pendens within [one hundred fifty] THIRTY days  after
any settlement agreement or loan modification is fully executed.
  (h)  A party to a foreclosure action may not charge, impose, or other-
wise require payment from the other party for any  cost,  including  but
not  limited  to  attorneys' fees, for appearance at or participation in
the settlement conference.
  (I) A DEFENDANT WHO APPEARS AT A  SETTLEMENT  CONFERENCE  PURSUANT  TO
THIS  SECTION,  BUT  WHO  FAILED  TO  FILE A TIMELY ANSWER OR PRE-ANSWER
MOTION TO DISMISS OR TO ENTER A FORMAL APPEARANCE, SHALL BE PRESUMED  TO
HAVE A REASONABLE EXCUSE FOR THE DEFAULT AND SHALL BE PERMITTED TO SERVE
AND  FILE  AN  ANSWER, OR TO MAKE A PRE-ANSWER MOTION TO DISMISS WITHOUT
ANY SUBSTANTIVE DEFENSES DEEMED TO HAVE BEEN WAIVED, WITHIN THIRTY  DAYS
FOLLOWING  THE RELEASE OF THE CASE FROM SETTLEMENT CONFERENCES. ANY NON-
ANSWERING DEFENDANT SHALL BE PERMITTED TO SEEK RELIEF FOR VIOLATIONS  OF
THIS  SECTION,  AND  SHALL NOT BE BARRED FROM SEEKING SUCH RELIEF ON THE
GROUNDS THAT SUCH DEFENDANT HAS NOT APPEARED OR  HAS  DEFAULTED  IN  THE
ACTION.
  (J) MOTIONS SHALL BE HELD IN ABEYANCE WHILE SETTLEMENT CONFERENCES ARE
BEING  HELD PURSUANT TO THIS SECTION, EXCEPT THAT MOTIONS FOR RELIEF FOR
VIOLATIONS OF THIS SECTION, OR ANY IMPLEMENTING COURT RULES, MAY BE MADE
WHILE SETTLEMENT CONFERENCES ARE ONGOING.
  (K)(1) COURTS ARE AUTHORIZED TO ENSURE COMPLIANCE  WITH  THE  REQUIRE-
MENTS  OF  THIS  SECTION, AND ARE AUTHORIZED TO GRANT APPROPRIATE RELIEF
WHEN PARTIES VIOLATE THIS SECTION.  PENALTIES  FOR  VIOLATIONS  OF  THIS
SECTION  MAY  BE IMPOSED CONSISTENT WITH THE COURT'S EQUITY JURISDICTION
IN FORECLOSURE ACTIONS AND WITH SUBDIVISION (E) OF SECTION  THREE  THOU-
SAND  TWELVE-B  AND SUBDIVISION (A) OF SECTION FIVE THOUSAND ONE OF THIS
CHAPTER.  REMEDIES FOR VIOLATIONS OF THE REQUIREMENTS  OF  THIS  SECTION
MAY  INCLUDE, WITHOUT LIMITATION, (I) COMPELLING IN-PERSON ATTENDANCE OF
A PARTY REPRESENTATIVE WITH FULL AUTHORITY TO RESOLVE THE  MATTER;  (II)
COMPELLING  PRODUCTION  OF  DOCUMENTS INCLUDING BUT NOT LIMITED TO DOCU-
MENTS SUBSTANTIATING DECISIONS ON LOAN MODIFICATIONS OR RESTRICTIONS  ON
MODIFICATION ASSERTED BY PLAINTIFFS AS GROUNDS FOR DENIAL; (III) TOLLING
AND/OR  BARRING COLLECTION OF INTEREST, COSTS AND FEES ACCRUED DURING OR
PRIOR TO THE SETTLEMENT CONFERENCE PROCESS;  (IV)  AWARDING  DEFENDANTS'
COSTS,  ATTORNEYS'  FEES AND DAMAGES; (V) STAYING THE PROCEEDING PENDING
COMPLIANCE WITH THE REQUIREMENTS OF THIS SECTION; (VI) DENYING PLAINTIFF
JUDGMENT PENDING COMPLIANCE WITH THE REQUIREMENTS OF THIS  SECTION;  AND
(VII)  ANY  OTHER RELIEF THE COURT DEEMS APPROPRIATE AND TAILORED TO THE
HARM OCCASIONED BY VIOLATION OF THE REQUIREMENTS OF THIS SECTION.
  (2) ANY REFEREE OR JUDICIAL HEARING OFFICER SHALL BE AUTHORIZED BY THE
COURT REFERRING THE MATTER TO SUCH REFEREE OR JUDICIAL  HEARING  OFFICER
TO  (A)  ENSURE COMPLIANCE WITH ALL PROVISIONS OF THIS SECTION; (B) MAKE
APPROPRIATE FACT FINDINGS, INCLUDING  BUT  NOT  LIMITED  TO  DETERMINING
WHETHER  A PARTY FAILED TO APPEAR WITH THE REQUIRED AUTHORITY, FAILED TO
NEGOTIATE IN GOOD FAITH, OR OTHERWISE ENGAGED IN ACTIVITY  IN  VIOLATION
OF THIS SECTION; AND (C) MAKE REPORTS AND/OR RECOMMENDATIONS FOR RELIEF,

S. 5242                             4

SUBJECT TO CONFIRMATION PURSUANT TO ARTICLE FORTY-TWO OF THIS CHAPTER BY
MOTION  AND WITHOUT NEED FOR AN EVIDENTIARY HEARING BEFORE AN INDIVIDUAL
ASSIGNMENT SYSTEM OR SUPERVISING JUDGE.
  S 2. This act shall take effect immediately and shall apply to actions
pending or filed after such date; provided that the amendments to subdi-
vision  (a)  of  rule  3408 of the civil practice law and rules, made by
section one of this act, shall not affect the expiration  and  reversion
of such subdivision, and shall expire therewith.

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Senate Bill S5242

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Sponsored By

Diane J. Savino