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The Foreclosure Settlement Conference – Part II

foreclosure defense attorney on Long IslandPressuring Banks to Grant Mortgage Modifications

The negotiations that take place in the foreclosure settlement conference courtrooms, put pressure on the lending institutions to grant mortgage modifications to homeowners. At the first conference meeting, the attorneys for each of the parties introduce themselves and the court referee or magistrate handling the conferences take into consideration each of the parties’ desires to work out non-foreclosure alternatives through negotiations.

After the first foreclosure court conference takes place, the matter is usually adjourned for several months to allow the homeowners to submit a new mortgage modification package. At the adjourned date, the referee looks into whether all the requirements of the mortgage modification submission have been met and/or whether the financial institution seeks more information. This will usually require a second adjournment for several months. These settlement court conference appearances add a significant amount of time to the foreclosure process. Cases can be in the foreclosure conference part for as long as four months to a year.

If the foreclosure conferences do not result in a mortgage modification or other resolution of the underlying issues in the foreclosure case, the court will refer the case out to a regular court part where the litigation will continue.

Conclusion

Foreclosure court conferences give a homeowner another chance to obtain a mortgage modification. It also slows the court procedures down and allows the families who are not going to get mortgage modifications to remain in their homes for longer periods of time.foreclosure defense attorney

The Foreclosure Settlement Conference – Part I

foreclosure on Long IslandGovernor Cuomo, a number of years ago, established foreclosure settlement conferences as a requirement for all foreclosure lawsuits in the State Of New York. An extremely important area in foreclosure defense involves an attorney representing the homeowner at foreclosure settlement conferences. At these conferences, there are meetings between the foreclosing institution’s attorneys, and the attorneys for the homeowner. These meetings are supervised by court appointed referees. It is the referee’s duties to see if he or she can get the parties together to work out a loan modification to allow the homeowners to continue to reside in their homes and have the foreclosure proceedings withdrawn.

Submission of Documents

Besides attending the foreclosure court conference, it is necessary for the homeowners to submit detailed mortgage modification packages through their counsel. The submission at the foreclosure court conference is different than the submissions made by homeowners outside of court supervision.

Complaints Regarding The Home Affordable Mortgage Program (HAMP)

There are numerous complaints with regard to the Home Affordable Mortgage Program (HAMP). Homeowners, rightfully so, complain the banks jerk them around, lose their documents, don’t respond to their communications and that the program simply doesn’t work.

One of the purposes of the mandatory foreclosure settlement conferences is to put pressure on the financial institutions to properly underwrite the mortgage modification applications and act in good faith. There are penalties potentially available for financial institutions who fail to act in good faith and properly underwrite mortgage modification applications submitted pursuant to the mandatory foreclosure conference parts.foreclosure defense attorney

Bank’s Failure to Negotiate in Good Faith

To watch today’s video blog, please click on the link below:

http://youtu.be/vdPBvNifXM4

Elliot S. Schlissel is a foreclosure defense lawyer.  He can be reached at 516-561-6645, 718-350-2802 or by email to schlissel.law@att.net.

Court Bars Collection of Interest and Fees on Loan For Failure of Mortgage Company to Negotiate in Good Faith

foreclosure settlement attorneysJustice Kenneth Sherman sitting in the Supreme Court Foreclosure Part in Kings County recently had a case before him involving what he felt was the bank’s failure to negotiate in good faith at the mandatory foreclosure settlement conferences. A special referee had written a report requesting all interest be tolled on a loan provided by American Home Mortgage Servicing (hereinafter referred to as “AHMS”) and they be further barred from collecting attorney’s fees related to their initiating a foreclosure legal action. Judge Sherman acknowledged receipt of the report and scheduled the matter for a hearing to decide if American Home Mortgage Servicing had engaged in bad faith negotiations at the mandatory foreclosure settlement conferences.

Statute Requires Good Faith Negotiations

Judge Sherman noted mandatory settlement conferences were required with regard to all foreclosure lawsuits brought concerning residential mortgages. In this case, the defendant was a resident of the property that was being foreclosed on. The enabling statutes creating the mandatory residential foreclosure conference parts mandated all parties negotiate in good faith at these foreclosure settlement conferences. Judge Sherman stated in his decision American Home Mortgage Servicing was represented by an attorney at the settlement conferences. However, the attorney for American Home Mortgage Servicing did not have the appropriate contractual authority to negotiate a loan modification in good faith which would resolve this foreclosure proceeding. The court specifically stated in its decision that on April 23, 2009, and on October 5, 2010, the attorneys for American Home Mortgage Servicing failed to appear by an attorney who had actual knowledge, ability and authority to negotiate a mortgage modification in a meaningful manner. Therefore the Judge ruled AMHS did not comply with New York Civil Practice Law and Rules Section 3408(c). This statute requires all parties to foreclosure court conferences negotiate in good faith. The court therefore barred AHMS from collecting any claimed interest, penalties and attorneys’ fees or costs incurred from the loan from April 23, 2009 to October 5, 2010.

Conclusion

Financial institutions are legally obligated under New York law to negotiate in good faith for the purpose of working out mortgage modifications at the mandatory foreclosure court conferences. Financial institutions who are represented by attorneys who have no real authority to work out reasonable loan modifications can be considered to have acted in bad faith, and in violation of New York State law.

foreclosure advocate for homeownersElliot Schlissel is one of the leading foreclosure defense attorneys in the Metropolitan New York area. For more than 20 years he has helped his clients fight foreclosure proceedings, obtain mortgage modifications and continue to live in their homes. He offers free consultations to all prospective clients.

Foreclosure Court Conference Denied

foreclosure defense lawyerIn a case of first impression, Justice Cohen sitting in the Appellate Division, Second Department (an appeals court) recently wrote a decision that stated a residential foreclosure lawsuit which was caused by a default on a commercial loan is not entitled to participate in the mandatory settlement court conference program. Justice Cohen stated in his decision “while it is unfortunate that here a primary residence may be lost in foreclosure not everyone under every circumstance is entitled to reap the protections afforded to victims of the mortgage crisis by the New York State Legislature.”

History of the Case

Roz Valt Corp. took out a loan from Independence Bank in December 2006. It borrowed $230,000. The purpose of the loan was to provide funds to enable the corporation to acquire various types of equipment, to pay construction costs and to be utilized as funds to set up a “Quiznos” submarine shop in Brooklyn.

The president of Roz Valt Corporation was Roslyn Valentine. She was personally liable for the payment of the loan. In addition, she executed a collateral mortgage to Independence Bank for $230,000. This was a second mortgage on her home in Queens County. Unfortunately, Roz didn’t make the payments under the loan. Independence Bank brought a foreclosure action on the second mortgage on her home. In her pleadings, Ms. Valentine argued she was entitled to the mandatory settlement court conference pursuant to New York Civil Practice and Law Rule Section 3408.

Court of Appeals Ruling

The New York Court of Appeals ruled New York Civil Practice Law and Rule Section 3408 applies to settlement conferences for “any residential foreclosure action involving a home loan.” Judge Cohen agreed with Ms. Valentine’s argument that the settlement court conferences were designed to help homeowners avoid their homes being taken from them in foreclosure. However, he also found, in this case, she was not entitled to a foreclosure settlement court conference. He took this position because this case involved a commercial loan. The loan was made to Roz Valt Corporation which was not a natural person. The money loaned was not utilized for housing purposes. He also found Ms. Valentine was a guarantor of the loan not the borrower.

Conclusion

Unfortunately, Judge Cohen’s decision may cause Ms. Valentine to lose her home.homeowner advocates

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