BILL NUMBER:S442

TITLE OF BILL:
An act
to amend the judiciary law and the civil practice law and rules, in
relation to dismissal of residential mortgage foreclosure
actions for repeated failure by
plaintiff to appear with authority to negotiate
or to negotiate in good faith or meet other deadlines

SUMMARY OF SPECIFIC PROVISIONS:
Subdivision 2 of the Judiciary law section 212 is amended by adding a
new paragraph (s) which provides for the adoption of court rules
governing instances where the plaintiff in a residential foreclosure
action twice fails to appear at a settlement conference without the
authority to execute a settlement with the defendant or to negotiate
in good faith or to meet any deadline for the production of documents
or evidence. A new subdivision (i) is added to Rule 2408 of the civil
Practice Law and Rules which states that upon a second failure by a
plaintiff in a residential foreclosure action to appear with the
authority to execute a settlement with the defendant or to negotiate
in good faith or to meet any deadline for the production of documents
or evidence, the defendant shall be deemed to make a motion for an
order dismissing such action, unless the defendant waives the making
of such motion in writing by advice of counsel. Upon the third such
failure by a plaintiff, the court shall grant the defendant's motion
              

except on good cause shown by the plaintiff. The subdivision sets
forth three obligations of a plaintiff at a settlement conference: to
appear with the authority to execute a settlement with the defendant,
to negotiate in good
faith, and to meet any deadline for the production of documents or
evidence. Repeated failures of the plaintiff to fulfill the three
obligations, in any combination, will give rise to the making and
granting of the motion.

JUSTIFICATION:
The New York State Foreclosure Prevention and Responsible Lending Act
of 2008 created a court-based mandatory settlement conference process
for all homeowners with sub-prime mortgages facing foreclosure. In
November 2009, additional legislation was enacted which expands the
mandatory settlement conference process to all homeowners facing
foreclosure, requires the parties to bring key documents to the
mandatory settlement conference, and obliges both parties to
negotiate in good faith to reach a mutually agreeable resolution.

The mandatory settlement conference process was created and expanded
with the express goal of reducing foreclosures and enabling more fami-
lies to remain in their homes. Unfortunately, all too often the
settlement conference process has not lived up to the legislature's
intentions. While the settlement conference process was created to
provide homeowners a chance to negotiate directly with their lenders
and reach a workable solution, numerous reports from homeowners,
court personnel, and foreclosure prevention organizations indicate
that many lenders frequently fail to comply with the law. All too
often, lenders repeatedly send subcontracted attorneys to settlement
conferences and foreclosure proceedings who have neither the


preparation nor the authority to negotiate with homeowners. According
to a study conducted by the Center for New York City Neighborhoods,
of the nearly 800 settlement conferences they studied in 2009 in New
York City courts, only 3% resulted in any kind of settlement. The
study found that lawyers representing lenders only had a copy of an
offer already made by the homeowner to the lender 3% of the time,
knew the status of an offer with the lender 6% of the time, and only
had a phone number to call someone with authority to settle in 13% of
the conferences.

The failure of many lenders to send representatives to settlement
conferences and foreclosure proceedings who have the authority to
negotiate and execute settlements, as well as the ability to produce
documents requested by the court, is an enormous waste of the court's
and homeowners' time. Moreover, it undermines the ability of many
residents facing foreclosure to negotiate an agreement that would
enable them to stay in their homes.

This legislation directs the courts to adopt rules governing
foreclosure proceedings that will provide a strong incentive for
plaintiffs to appear at settlement conferences with the proper
authority, required knowledge and documents, and willingness to
negotiate in good faith as required by law.

FISCAL IMPLICATIONS TO STATE AND LOCAL GOVERNMENT:
None.

LEGISLATIVE HISTORY:
2010:  S.7798A

EFFECTIVE DATE:
Immediately; provided, that section two of this act shall take effect
ninety days after it shall become a law.