Since their inception in 2009, settlement conferences under New York’s judicial residential foreclosure conference process, the mandatory mediation program New York enacted in response to the foreclosure crisis, have allowed thousands of New York homeowners to achieve settlements and loan modifications, thereby averting foreclosures and sparing New York’s communities their adverse effects. But many homes have been needlessly lost to foreclosure because of unproductive settlement conferences, with erratic implementation of the law leading to dramatic variations in the efficacy of the conferences (see Divergent Paths: The Need For More Uniform Standards and Practices in New York State’s Residential Foreclosure Conference Process (New Yorkers for Responsible Lending), available at http://www.legalservicesnyc.org/storage/PDFs/divergent paths.pdf).
Legislation enacted in the waning hours of the 2016 session included significant changes to the foreclosure conference process. These amendments fill many of the gaps that the original legislation left open, so there is now hope that the settlement conference law will be more rigorously implemented in all jurisdictions, with uniform consequences to deter its violation, and the legislature’s intent to prevent avoidable foreclosures and encourage home-saving loan modification solutions more effectively implemented across New York State. The amendments clarify the courts’ obligation to ensure a meaningful negotiation process that prevents avoidable foreclosures by clarifying the obligations to appear with required information and authority, defining the good faith negotiation standard, detailing the remedies when the negotiation process is subverted, and preserving homeowners’ ability to defend foreclosure actions on the merits, among other changes.
