Foreclosure Strategies
May 10 2018
The best way to deal with a foreclosure is to take aggressive legal action when the foreclosure laws... [Read More...]
June 6, 2014 By
Bank Attorneys Have No Authority To Settle Cases
or Approve Mortgage Modifications
In a study provided by legal service providers, it was found in eighty percent of 252 settlement conferences which took place over a 90 day period last year, the lawyers representing the financial institutions either lacked the appropriate information concerning the cases or did not have settlement authority. Justice Barry Kamins, the Chief of Policy and Planning for the courts in New York has taken action to provide more judges at the foreclosure settlement conferences in the four counties that have the heaviest backlog of foreclosure cases for the purpose of having judges immediately available for resolving disputes that occur at the foreclosure court conferences.
New York Courts Bursting At The Seams With Foreclosures
In 2013, there were 87,000 foreclosure cases pending in the courts in New York. As of April 1, 2014, there are more than 90,000 cases now pending in the courts.
The purpose of foreclosure court conferences is to allow the homeowners and attorneys for the banks to get together for the purpose of negotiating a mortgage modification to prevent the house from being sold at foreclosure sales.
New York Law
New York Civil Practice Law and Rules section 3408(c) which governs foreclosure court conferences states “the plaintiff shall appear in person or by counsel, and if appearing by counsel, such counsel shall be fully authorized to dispose of the case.” In another section of CPLR 3408(f) it states, both sides to the legal proceeding “shall negotiate in good faith to reach a mutually agreeable resolution, including a loan modification, if possible.” Foreclosure defense lawyers are aware most financial institutions are ignoring this statute.
The large majority of attorneys who appear for banks do not have any settlement authority. It is estimated at less than ten percent of the attorneys who appear at foreclosure court conferences for financial institutions have any settlement authority. A recent report with regard to the conduct at foreclosure court conferences states the courts should “not tolerate rampant violation of the settlement conference law and should enforce the law as it is written vigorously.” The report goes on to state when the attorneys for the banks appear without the appropriate authority or do not negotiate in good faith, judges should create consequences for the lenders such as tolling or barring interest on the outstanding balance or staying actions until the financial institutions fulfill their obligations under the settlement conference law.
Conclusion
The purpose of the foreclosure court conferences were to provide an intermediate step prior to full fledged litigation to allow beleaguered homeowners to work out mortgage modifications to keep them in their homes. The statute was a step in the right direction. However, the banks are not complying with this statute. If they continue to fail to comply, judges should punish them for violation of this statute!