N.Y. CVP Law § 3408 — New York Code / Act CVP / Article 34 / Section 3408
Mandatory settlement conference in residential foreclosure actions
Status: in_force

Rule 3408. Mandatory settlement conference in residential foreclosure\nactions. (a) 1. Except as provided in paragraph two of this subdivision,\nin any residential foreclosure action involving a home loan as such term\nis defined in section thirteen hundred four of the real property actions\nand proceedings law, in which the defendant is a resident of the\nproperty subject to foreclosure, plaintiff shall file proof of service\nwithin twenty days of such service, however service is made, and the\ncourt shall hold a mandatory conference within sixty days after the date\nwhen proof of service upon such defendant is filed with the county\nclerk, or on such adjourned date as has been agreed to by the parties,\nfor the purpose of holding settlement discussions pertaining to the\nrelative rights and obligations of the parties under the mortgage loan\ndocuments, including, but not limited to: (i) determining whether the\nparties can reach a mutually agreeable resolution to help the defendant\navoid losing his or her home, and evaluating the potential for a\nresolution in which payment schedules or amounts may be modified or\nother workout options may be agreed to, including, but not limited to, a\nloan modification, short sale, deed in lieu of foreclosure, or any other\nloss mitigation option; or (ii) whatever other purposes the court deems\nappropriate.\n  2. (i) Paragraph one of this subdivision shall not apply to a home\nloan secured by a reverse mortgage where the default was triggered by\nthe death of the last surviving borrower unless:\n  (A) the last surviving borrower's spouse, if any, is a resident of the\nproperty subject to foreclosure; or\n  (B) the last surviving borrower's successor in interest, who, by\nbequest or through intestacy, owns, or has a claim to the ownership of\nthe property subject to foreclosure, and who was a resident of such\nproperty at the time of the death of such last surviving borrower.\n  (ii) The superintendent of financial services may promulgate such\nrules and regulations as he or she shall deem necessary to implement the\nprovisions of this paragraph.\n  (b) At the initial conference held pursuant to this section, any\ndefendant currently appearing pro se, shall be deemed to have made a\nmotion to proceed as a poor person under section eleven hundred one of\nthis chapter. The court shall determine whether such permission shall be\ngranted pursuant to standards set forth in section eleven hundred one of\nthis chapter. If the court appoints defendant counsel pursuant to\nsubdivision (a) of section eleven hundred two of this chapter, it shall\nadjourn the conference to a date certain for appearance of counsel and\nsettlement discussions pursuant to subdivision (a) of this section, and\notherwise shall proceed with the conference.\n  (c) At any conference held pursuant to this section, the plaintiff and\nthe defendant shall appear in person or by counsel, and each party's\nrepresentative at the conference shall be fully authorized to dispose of\nthe case. If the defendant is appearing pro se, the court shall advise\nthe defendant of the nature of the action and his or her rights and\nresponsibilities as a defendant. Where appropriate, the court may permit\na representative of the plaintiff or the defendant to attend the\nsettlement conference telephonically or by video-conference.\n  (d) Upon the filing of a request for judicial intervention in any\naction pursuant to this section, the court shall send either a copy of\nsuch request or the defendant's name, address and telephone number (if\navailable) to a housing counseling agency or agencies on a list\ndesignated by the division of housing and community renewal for the\njudicial district in which the defendant resides. Such information shall\nbe used by the designated housing counseling agency or agencies\nexclusively for the purpose of making the homeowner aware of housing\ncounseling and foreclosure prevention services and options available to\nthem.\n  (e) The court shall promptly send a notice to parties advising them of\nthe time and place of the settlement conference, the purpose of the\nconference and the requirements of this section. The notice shall be in\na form prescribed by the office of court administration, or, at the\ndiscretion of the office of court administration, the administrative\njudge of the judicial district in which the action is pending, and shall\nadvise the parties of the documents that they shall bring to the\nconference.\n  1. For the plaintiff, such documents shall include, but are not\nlimited to, (i) the payment history; (ii) an itemization of the amounts\nneeded to cure and pay off the loan; (iii) the mortgage and note or\ncopies of the same; (iv) standard application forms and a description of\nloss mitigation options, if any, which may be available to the\ndefendant; and (v) any other documentation required by the presiding\njudge. If the plaintiff is not the owner of the mortgage and note, the\nplaintiff shall provide the name, address and telephone number of the\nlegal owner of the mortgage and note. For cases in which the lender or\nits servicing agent has evaluated or is evaluating eligibility for home\nloan modification programs or other loss mitigation options, in addition\nto the documents listed above, the plaintiff shall bring a summary of\nthe status of the lender's or servicing agent's evaluation for such\nmodifications or other loss mitigation options, including, where\napplicable, a list of outstanding items required for the borrower to\ncomplete any modification application, an expected date of completion of\nthe lender's or servicer agent's evaluation, and, if the modification(s)\nwas denied, a denial letter or any other document explaining the\nreason(s) for denial and the data input fields and values used in the\nnet present value evaluation.  If the modification was denied on the\nbasis of an investor restriction, the plaintiff shall bring the\ndocumentary evidence which provides the basis for the denial, such as a\npooling and servicing agreement.\n  2. For the defendant, such documents shall include, but are not\nlimited to, if applicable, information on current income tax returns,\nexpenses, property taxes and previously submitted applications for loss\nmitigation; benefits information; rental agreements or proof of rental\nincome; and any other documentation relevant to the proceeding required\nby the presiding judge.\n  (f) Both the plaintiff and defendant shall negotiate in good faith to\nreach a mutually agreeable resolution, including but not limited to a\nloan modification, short sale, deed in lieu of foreclosure, or any other\nloss mitigation, if possible. Compliance with the obligation to\nnegotiate in good faith pursuant to this section shall be measured by\nthe totality of the circumstances, including but not limited to the\nfollowing factors:\n  1. Compliance with the requirements of this rule and applicable court\nrules, court orders, and directives by the court or its designee\npertaining to the settlement conference process;\n  2. Compliance with applicable mortgage servicing laws, rules,\nregulations, investor directives, and loss mitigation standards or\noptions concerning loan modifications, short sales, and deeds in lieu of\nforeclosure; and\n  3. Conduct consistent with efforts to reach a mutually agreeable\nresolution, including but not limited to, avoiding unreasonable delay,\nappearing at the settlement conference with authority to fully dispose\nof the case, avoiding prosecution of foreclosure proceedings while loss\nmitigation applications are pending, and providing accurate information\nto the court and parties.\n  Neither of the parties' failure to make the offer or accept the offer\nmade by the other party is sufficient to establish a failure to\nnegotiate in good faith.\n  (g) The plaintiff must file a notice of discontinuance and vacatur of\nthe lis pendens within ninety days after any settlement agreement or\nloan modification is fully executed.\n  (h) A party to a foreclosure action may not charge, impose, or\notherwise require payment from the other party for any cost, including\nbut not limited to attorneys' fees, for appearance at or participation\nin the settlement conference.\n  (i) The court may determine whether either party fails to comply with\nthe duty to negotiate in good faith pursuant to subdivision (f) of this\nsection, and order remedies pursuant to subdivisions (j) and (k) of this\nsection, either on motion of any party or sua sponte on notice to the\nparties, in accordance with such procedures as may be established by the\ncourt or the office of court administration. A referee, judicial hearing\nofficer, or other staff designated by the court to oversee the\nsettlement conference process may hear and report findings of fact and\nconclusions of law, and may make reports and recommendations for relief\nto the court concerning any party's failure to negotiate in good faith\npursuant to subdivision (f) of this section.\n  (j) Upon a finding by the court that the plaintiff failed to negotiate\nin good faith pursuant to subdivision (f) of this section, and order\nremedies pursuant to this subdivision and subdivision (k) of this\nsection the court shall, at a minimum, toll the accumulation and\ncollection of interest, costs, and fees during any undue delay caused by\nthe plaintiff, and where appropriate, the court may also impose one or\nmore of the following:\n  1. Compel production of any documents requested by the court pursuant\nto subdivision (e) of this section or the court's designee during the\nsettlement conference;\n  2. Impose a civil penalty payable to the state that is sufficient to\ndeter repetition of the conduct and in an amount not to exceed\ntwenty-five thousand dollars;\n  3. The court may award actual damages, fees, including attorney fees\nand expenses to the defendant as a result of plaintiff's failure to\nnegotiate in good faith; or\n  4. Award any other relief that the court deems just and proper.\n  (k) Upon a finding by the court that the defendant failed to negotiate\nin good faith pursuant to subdivision (f) of this section, the court\nshall, at a minimum, remove the case from the conference calendar. In\nconsidering such a finding, the court shall take into account equitable\nfactors including, but not limited to, whether the defendant was\nrepresented by counsel.\n  (l) At the first settlement conference held pursuant to this section,\nif the defendant has not filed an answer or made a pre-answer motion to\ndismiss, the court shall:\n  1. advise the defendant of the requirement to answer the complaint;\n  2. explain what is required to answer a complaint in court;\n  3. advise that if an answer is not interposed the ability to contest\nthe foreclosure action and assert defenses may be lost; and\n  4. provide information about available resources for foreclosure\nprevention assistance.\n  At the first conference held pursuant to this section, the court shall\nalso provide the defendant with a copy of the Consumer Bill of Rights\nprovided for in section thirteen hundred three of the real property\nactions and proceedings law.\n  (m) A defendant who appears at the settlement conference but who\nfailed to file a timely answer, pursuant to rule 320 of the civil\npractice law and rules, shall be presumed to have a reasonable excuse\nfor the default and shall be permitted to serve and file an answer,\nwithout any substantive defenses deemed to have been waived within\nthirty days of initial appearance at the settlement conference. The\ndefault shall be deemed vacated upon service and filing of an answer.\n  (n) Any motions submitted by the plaintiff or defendant shall be held\nin abeyance while the settlement conference process is ongoing, except\nfor motions concerning compliance with this rule and its implementing\nrules.\n