S T A T E O F N E W Y O R K
________________________________________________________________________
1298
2015-2016 Regular Sessions
I N A S S E M B L Y
January 9, 2015
___________
Introduced by M. of A. WEINSTEIN -- read once and referred 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
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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
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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,
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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.