In New York State there is a statute known as the New York Real Property Actions and Proceedings Law section 1304. This statute, in June of this year, was extended for five additional years. This section of the law requires a financial institution provide “at least 90 days before a lender, an assignee, or a mortgage loan servicer commences legal action against the borrower…such lender, assignee or mortgage loan servicer shall give notice to the borrower”.
90 Days Notice to Homeowner
The section requires the notice to the homeowner provide a warning they are on the verge of losing their home in a foreclosure lawsuit. In addition, this notice requirement gives key information concerning how long the homeowner is in default on their mortgage and how much is due and owing on their mortgage. The law requires service of this notice be given to the homeowner and they be given a reasonable opportunity to take action to save their home such as by negotiating a mortgage modification.
Prerequisite for Foreclosure Lawsuit
The service by the financial institution and/or its representatives of the notice under this section of the law is a necessary prerequisite before a foreclosure lawsuit can be initiated. In the event the financial institution fails to fully comply with this requirement, a homeowner in a foreclosure proceeding can move to have the foreclosure case dismissed.
Settlement Court Conferences
In June of this year, the settlement court conference requirements in foreclosure lawsuits was also extended for five years. New York Civil Practice Law and Rules section 3408 had established a mandatory settlement court conference requirement in all foreclosure lawsuits. Upon the service of a summons and complaint in a foreclosure lawsuit, the Supreme Court within twenty days of proof of filing of this foreclosure lawsuit, is required to schedule a mandatory foreclosure conference. The purpose of the foreclosure court conference is to have settlement discussions between the homeowner and the representatives of the financial institution. New York Civil Practice Law and Rules section 3408 requires both the homeowner and the representative of the financial institution negotiate in good faith to reach a solution to the foreclosure case by having the mortgage modified. It is the court’s responsibility to see to it both parties negotiate in good faith and there are not unreasonable delays caused by either party.
Lenders Not Compelled To Provide Mortgage Modifications
Unfortunately, even though a lender must attend a foreclosure court conference they have no obligation other than negotiate in good faith. Simply stated, they do not have to grant a mortgage modification. They can deny it for any reasonable reason. Unfortunately for homeowners, courts cannot force a lender to grant a mortgage modification under New York law.
Elliot S. Schlissel is a foreclosure defense attorney helping homeowners stay in their homes throughout the Metropolitan New York area.
