2023 New York Laws › CVP - Civil Practice Law and Rules › Article 34 - Calendar Practice; Trial Preferences › R3408 - Mandatory Settlement Conference in Residential Foreclosure Actions.

Rule  3408. Mandatory settlement conference in residential foreclosure
actions. (a) 1. Except as provided in paragraph two of this subdivision,
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: (i) 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
resolution in which payment schedules or  amounts  may  be  modified  or
other workout options may be agreed to, including, but not limited to, a
loan modification, short sale, deed in lieu of foreclosure, or any other
loss  mitigation option; or (ii) whatever other purposes the court deems
appropriate.
2. (i) Paragraph one of this subdivision shall not  apply  to  a  home
loan  secured  by  a reverse mortgage where the default was triggered by
the death of the last surviving borrower unless:
(A) the last surviving borrower's spouse, if any, is a resident of the
property subject to foreclosure; or
(B) the last surviving  borrower's  successor  in  interest,  who,  by
bequest  or  through intestacy, owns, or has a claim to the ownership of
the property subject to foreclosure, and who  was  a  resident  of  such
property at the time of the death of such last surviving borrower.
(ii)  The  superintendent  of  financial  services may promulgate such
rules and regulations as he or she shall deem necessary to implement the
provisions of this paragraph.
(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
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
subdivision (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 and
the  defendant  shall  appear  in person or by counsel, and each party's
representative at the conference shall be fully authorized to dispose of
the case. 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  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
designated  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  shall bring to the
conference.
1. For the plaintiff,  such  documents  shall  include,  but  are  not
limited  to, (i) the payment history; (ii) an itemization of the amounts
needed to cure and pay off the loan; (iii)  the  mortgage  and  note  or
copies of the same; (iv) standard application forms and a description of
loss  mitigation  options,  if  any,  which  may  be  available  to  the
defendant; and (v) any other documentation  required  by  the  presiding
judge.  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 cases in which the lender or
its servicing agent has evaluated or is evaluating eligibility for  home
loan modification programs or other loss mitigation options, in addition
to  the  documents  listed above, the plaintiff shall bring a summary of
the status of the lender's or  servicing  agent's  evaluation  for  such
modifications   or  other  loss  mitigation  options,  including,  where
applicable, a list of outstanding items required  for  the  borrower  to
complete any modification application, an expected date of completion of
the lender's or servicer agent's evaluation, and, if the modification(s)
was  denied,  a  denial  letter  or  any  other  document explaining the
reason(s) for denial and the data input fields and values  used  in  the
net  present  value  evaluation.   If the modification was denied on the
basis  of  an  investor  restriction,  the  plaintiff  shall  bring  the
documentary  evidence which provides the basis for the denial, such as a
pooling and servicing agreement.
2. For the defendant,  such  documents  shall  include,  but  are  not
limited  to,  if  applicable, information on current income tax returns,
expenses, property taxes and previously submitted applications for  loss
mitigation;  benefits  information; rental agreements or proof of rental
income; and any other documentation relevant to the proceeding  required
by the presiding judge.
(f)  Both the plaintiff and defendant shall negotiate in good faith to
reach a mutually agreeable resolution, including but not  limited  to  a
loan modification, short sale, deed in lieu of foreclosure, or any other
loss   mitigation,  if  possible.  Compliance  with  the  obligation  to
negotiate in good faith pursuant to this section shall  be  measured  by
the  totality  of  the  circumstances,  including but not limited to the
following factors:
1. Compliance with the requirements of this rule and applicable  court
rules,  court  orders,  and  directives  by  the  court  or its designee
pertaining to the settlement conference process;
2.  Compliance  with  applicable  mortgage  servicing   laws,   rules,
regulations,  investor  directives,  and  loss  mitigation  standards or
options concerning loan modifications, short sales, and deeds in lieu of
foreclosure; and
3. Conduct consistent with  efforts  to  reach  a  mutually  agreeable
resolution,  including  but not limited to, avoiding unreasonable delay,
appearing at the settlement conference with authority to  fully  dispose
of  the case, avoiding prosecution of foreclosure proceedings while loss

mitigation applications are pending, and providing accurate  information
to the court and parties.
Neither  of the parties' failure to make the offer or accept the offer
made by the  other  party  is  sufficient  to  establish  a  failure  to
negotiate in good faith.
(g)  The plaintiff must file a notice of discontinuance and vacatur of
the lis pendens within ninety days after  any  settlement  agreement  or
loan modification is fully executed.
(h)  A  party  to  a  foreclosure  action  may  not charge, impose, or
otherwise 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) The court may determine whether either party fails to comply  with
the  duty to negotiate in good faith pursuant to subdivision (f) of this
section, and order remedies pursuant to subdivisions (j) and (k) of this
section, either on motion of any party or sua sponte on  notice  to  the
parties, in accordance with such procedures as may be established by the
court or the office of court administration. A referee, judicial hearing
officer,  or  other  staff  designated  by  the  court  to  oversee  the
settlement conference process may hear and report findings of  fact  and
conclusions  of law, and may make reports and recommendations for relief
to the court concerning any party's failure to negotiate in  good  faith
pursuant to subdivision (f) of this section.
(j) Upon a finding by the court that the plaintiff failed to negotiate
in  good  faith  pursuant  to subdivision (f) of this section, and order
remedies pursuant to  this  subdivision  and  subdivision  (k)  of  this
section  the  court  shall,  at  a  minimum,  toll  the accumulation and
collection of interest, costs, and fees during any undue delay caused by
the plaintiff, and where appropriate, the court may also impose  one  or
more of the following:
1.  Compel production of any documents requested by the court pursuant
to subdivision (e) of this section or the court's  designee  during  the
settlement conference;
2.  Impose  a civil penalty payable to the state that is sufficient to
deter repetition  of  the  conduct  and  in  an  amount  not  to  exceed
twenty-five thousand dollars;
3.  The  court may award actual damages, fees, including attorney fees
and expenses to the defendant as a  result  of  plaintiff's  failure  to
negotiate in good faith; or
4. Award any other relief that the court deems just and proper.
(k) Upon a finding by the court that the defendant failed to negotiate
in  good  faith  pursuant  to subdivision (f) of this section, the court
shall, at a minimum, remove the case from the  conference  calendar.  In
considering  such a finding, the court shall take into account equitable
factors including,  but  not  limited  to,  whether  the  defendant  was
represented by counsel.
(l)  At the first settlement conference held pursuant to this section,
if the defendant has not filed an answer or made a pre-answer motion  to
dismiss, the court shall:
1. advise the defendant of the requirement to answer the complaint;
2. explain what is required to answer a complaint in court;
3.  advise  that if an answer is not interposed the ability to contest
the foreclosure action and assert defenses may be lost; and
4. provide  information  about  available  resources  for  foreclosure
prevention assistance.
At the first conference held pursuant to this section, the court shall
also  provide  the  defendant with a copy of the Consumer Bill of Rights

provided for in section thirteen hundred  three  of  the  real  property
actions and proceedings law.
(m)  A  defendant  who  appears  at  the settlement conference but who
failed to file a timely answer,  pursuant  to  rule  320  of  the  civil
practice  law  and  rules, shall be presumed to have a reasonable excuse
for the default and shall be permitted to  serve  and  file  an  answer,
without  any  substantive  defenses  deemed  to  have been waived within
thirty days of initial appearance  at  the  settlement  conference.  The
default shall be deemed vacated upon service and filing of an answer.
(n)  Any motions submitted by the plaintiff or defendant shall be held
in abeyance while the settlement conference process is  ongoing,  except
for  motions  concerning  compliance with this rule and its implementing
rules.