Senate Bill S7798

                                BILL NUMBER:S7798A              REVISED 06/11/10

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 govern-
ing 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 resi-
dential 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 fail-
ures of the plaintiff to fulfill the three obligations, in any combina-
tion, 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 settle-
ment 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 author-
ity 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 repres-
enting 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 lend-
er 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 nego-
tiate and execute settlements, as well as the ability to produce docu-
ments 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.

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