A01597 Summary:

BILL NO    A01597 

SAME AS    No same as 

SPONSOR    Jeffries (MS)

COSPNSR    Jaffee, Colton, Camara, Rosenthal, Reilly, O'Donnell, Cook, Lancman,
           Barron, Perry, Pretlow, Boyland, Ramos, Rivera N, Schimel, Hooper

MLTSPNSR   Abbate, Farrell, Glick, Heastie, Meng, Millman, Peoples-Stokes,
           Pheffer, Thiele, Weisenberg, Wright

Amd S1303, add SS1309 & 1316, RPAP L; add S6-n, Bank L; add S2-c, Judy L; rpld
& add R3408, CPLR

Enacts the "foreclosure diversion act of 2011"; provides for a one-year
moratorium on foreclosures; requires a homeowner to attend a counseling
session; requires courts to meet with parties at a mandatory settlement
conference.
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A01597 Memo:

BILL NUMBER:A1597

TITLE OF BILL:  An act enacting the "foreclosure diversion act of 2011";
to  amend  the real property actions and proceedings law, in relation to
giving  notice  to  mortgagors  of  the  availability   of   foreclosure
prevention  counseling;  to amend the banking law and the civil practice
law and rules, in relation to settlement conferences; to amend the  real
property  actions  and proceedings law, in relation to availability of a
settlement conference in pending foreclosure actions; to amend the  real
property  actions  and  proceedings law, in relation to providing a one-
year postponement on  foreclosures;  to  amend  the  judiciary  law,  in
relation  to  the  assignment  of foreclosure actions; to repeal certain
provisions of the civil practice law and  rules  relating  thereto;  and
providing for the repeal of such provisions upon expiration thereof

SUMMARY  OF  PROVISIONS:   Section 1 - Titles the "foreclosure diversion
act of 2011"

Section 2 - Statement of purpose & findings

Section 3 - Definitions

Section 4 details the Education and Outreach efforts the New York  State
Banking Department will undertake as an effort to reach homeowners whose
homes are subject to foreclosure. Such efforts will include, but are not
limited  to,  public  service announcements and internet web sites main-
tained by the department.

Section 5 Subdivision 1 and 3 amends subdivisions 1  and  3  of  section
1303  of RPAPL, as amended by 472 of the laws of 2008, to include in the
notice  requirement  upon  the  commencement  of  a  foreclosure  action
mandated  counseling before any settlement conference, the hotline home-
owners must call to  receive  information  about  not-for-profits  which
administer  such  counseling and the eligibility for a foreclosure post-
ponement after participating in such counseling.

Section 6 amends the banking law by adding  an  new  section  6-n  which
assigns  responsibility  to  the  New  York  State Banking Department in
establishing the procedure by  which  homeowners  are  counseled.  If  a
resolution is reached between homeowner and the foreclosing party before
the  mandatory  settlement conference, a certificate of resolution is to
be filed with the court. If no resolution is made prior to  the  settle-
ment  conference  a certificate of participation is to be filed with the
courts.

Section 7 amends Rule 3408 of the CPLR concerning  mandatory  settlement
conferences  to  (1)  establish  the purpose of the mandatory settlement
conference; (2) include in the notice of such conference the requirement
that the homeowner participate in both the mandatory settlement  confer-
ence  and complete a counseling session with an approved counselor prior
to such conference; (3) require such counselor to  send  a  modification
proposal  reached  in the counseling session to the foreclosing party at

least 10 days prior to the settlement  conference  and  the  foreclosing
party  to  make a good faith effort to reach a settlement with the home-
owner prior to the settlement conference; (4) allow the court to appoint
counsel and adjourn the settlement conference if a homeowner appears pro
se;  (5)  allow the homeowner to be represented by counselor a represen-
tative with the authority to dispose  of  the  case  at  the  settlement
conference;  (6)  require  a  homeowner  at the settlement conference to
present proof of participation in a counseling session with an  approved
counselor  to  take advantage of the nine month postponement option; (7)
allow the court to preside over the mandatory settlement  conference  to
facilitate  a  repayment plan that allows the homeowner to stay in their
home: (8) require the court to  provide  all  approved  loan  counseling
agencies  with a list of all home-owners served with a mandatory settle-
ment conference notice; (9) require the court to detail  any  agreements
made  in  a  mandatory settlement conference into record for the action;
and (10) provide penalties for plaintiffs who  fail  to  appear  without
good  cause  or  who  are not represented by an individual authorized to
negotiate and settle the claim.

Section 8 amends RPAPL by adding a new section  1316  which  allows  any
homeowner  who  has had an action for foreclosure on a residential mort-
gage initiated prior to this act but where no final  judgment  has  been
entered the opportunity to request a settlement conference.

Section  9  amends  RPAPL  by adding a new section 1305 to (1) allow the
foreclosing party in a residential action relief  in  state  court;  (2)
postpone  a judgment of foreclosure for 90 days under this act and allow
a nine month  abeyance  of  any  foreclosure  action  if  the  homeowner
receives  counseling  and participates in a mandatory settlement confer-
ence pursuant to this act. This abeyance is solely for  the  purpose  to
come to a settlement with the foreclosing party to keep the homeowner in
their  home; (3) waive all fees associated with the filing of a foreclo-
sure action pursuant to this act; (4) establish the minimum requirements
to be met in filing a foreclosure action; (5) and (6)  allow  the  court
officer  presiding  over the settlement conference to facilitate negoti-
ation of a payment schedule by which a homeowner can continue to pay the
mortgage actionable in the foreclosure so as to preserve  the  financial
interest  of  the  homeowner  in  the property until a settlement can be
reached. This payment schedule shall last for  no  more  than  one  year
without  a re-examination of the circumstances, and failure to adhere to
such a payment schedule may result in foreclosure or  a  termination  of
the  abeyance;  (7) allow for any party to apply to the court officer or
mediator for a revision of such payment schedule based on the fact  that
the terms of the payment plan are no longer just and equitable.

Section  10  amends  the  judiciary  law  by adding a new section 2-c to
ensure, as practicable under the individual assignment  system  of  each
court,  that  all  foreclosure  actions be assigned to the same judge or
pool of judges.

JUSTIFICATION:  Throughout the state, foreclosures continue  to  dramat-
ically  increase.  In  New York City, more than 1,700 homes were in some

state of foreclosure in February of 2009, an increase of more  than  44%
from January.  Statewide, Foreclosures are up more than 23% since Decem-
ber  of 2008.   Many of the homeowners facing these foreclosures are the
victims of predatory lending practices.

Although  certain lenders have voluntarily suspended foreclosures, these
statistics indicate a need for more direct intervention. This bill would
provide for a one year moratorium on  foreclosures,  and  would  promote
negotiated  settlements, helping to avoid foreclosure, and keeping work-
ing New Yorkers in their homes.

LEGISLATIVE HISTORY:  2009-2010 (A.8236-A/S.4109-B) Referred to Banks.

FISCAL IMPLICATIONS: To be determined.

EFFECTIVE DATE:  This act shall take effect on the sixtieth day after it
shall have become a law and expire 3 years  after  such  effective  date
when upon such date the provisions of this act shall be deemed repealed.

Effective  immediately,  the  superintendent of banks may promulgate any
rule or regulation necessary for the timely implementation of  this  act
on its effective date.
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A01597 Text:

                           S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________

                                         1597

                              2011-2012 Regular Sessions

                                 I N  A S S E M B L Y

                                   January 11, 2011
                                      ___________

       Introduced  by  M.  of  A.  JEFFRIES, JAFFEE, COLTON, CAMARA, ROSENTHAL,
         REILLY, O'DONNELL, COOK, LANCMAN,  BARRON,  PERRY,  PRETLOW,  BOYLAND,
         RAMOS,  N. RIVERA,  SCHIMEL,  HOOPER -- Multi-Sponsored by -- M. of A.
         ABBATE, FARRELL, GLICK, HEASTIE, MENG, MILLMAN, PEOPLES-STOKES,  PHEF-
         FER,  THIELE,  WEISENBERG,  WRIGHT  --  read  once and referred to the
         Committee on Banks

       AN ACT enacting the "foreclosure diversion act of 2011";  to  amend  the
         real  property  actions  and  proceedings  law,  in relation to giving
         notice to mortgagors of the  availability  of  foreclosure  prevention
         counseling;  to  amend  the banking law and the civil practice law and
         rules, in relation to settlement conferences; to amend the real  prop-
         erty  actions  and  proceedings  law, in relation to availability of a
         settlement conference in pending foreclosure  actions;  to  amend  the
         real  property actions and proceedings law, in relation to providing a
         one-year postponement on foreclosures; to amend the judiciary law,  in
         relation  to  the assignment of foreclosure actions; to repeal certain
         provisions of the civil practice law and rules relating  thereto;  and
         providing for the repeal of such provisions upon expiration thereof

         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:

    1    Section 1. Short title.  This act shall be known and may be  cited  as
    2  the "foreclosure diversion act of 2011".
    3    S  2.  Statement of legislative purpose and findings.  The legislature
    4  finds and declares that there is a public emergency; that the  extension
    5  of  unaffordable mortgage loans, unaffordable second mortgages and unaf-
    6  fordable home equity loans have  resulted  in  thousands  of  homeowners
    7  losing  their homes.  The problems associated with these loans adversely
    8  affect the availability of capital, the demand for housing, the value of
    9  real estate, and more importantly, the ability  of  homeowners  to  keep
   10  their homes and communities viable.  The pending reset of interest rates
   11  in many home mortgages, second mortgages and home equity loans will only

        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD04624-01-1
       A. 1597                             2

    1  exacerbate this situation for many homeowners. The expectation that many
    2  such  variable  rate mortgages will fall into foreclosure upon the reset
    3  of the interest rate compels the state to take action. State  assistance
    4  to homeowners through a counseling program is necessary in order to stem
    5  this crisis.
    6    S  3.  Definitions.  As  used in this section and section four of this
    7  act, the following words and phrases shall have the following meanings:
    8    1. "Commissioner" shall mean the commissioner of the state division of
    9  housing and community renewal.
   10    2. "Department" shall mean the banking department.
   11    3. "Division" shall mean the state division of housing  and  community
   12  renewal.
   13    4.  "Eligible  homeowners"  shall  mean  any  resident  of  this state
   14  currently residing in a home located in this state  subject  to  a  home
   15  loan  who  the  commissioner  determines,  pursuant  to  the eligibility
   16  restrictions set forth in this act, is in need of foreclosure  diversion
   17  assistance.
   18    5.  "Home loan" shall mean a residential home mortgage loan, including
   19  an open-end credit plan, other than a reverse mortgage  transaction,  in
   20  which:
   21    (a) the borrower is a natural person;
   22    (b) the debt is incurred by the borrower primarily for personal, fami-
   23  ly or household purposes;
   24    (c)  the loan is secured by a mortgage or deed of trust on real estate
   25  upon which there is located a structure or structures  intended  princi-
   26  pally for occupancy of 1 to 4 families which is occupied by the borrower
   27  as the borrower's principal dwelling; and
   28    (d) the property is located in this state.
   29    6.  "Lender"  shall mean (a) a mortgage banker as defined in paragraph
   30  (f) of subdivision 1 of section 590 of the banking law, or (b) an exempt
   31  organization as defined in paragraph (e) of subdivision 1 of section 590
   32  of the banking law, or (c) a mortgage loan servicer as defined in  para-
   33  graph (h) of subdivision 1 of section 590 of the banking law.
   34    7.  "Non-profit assistance provider" shall mean a corporation or group
   35  of corporations organized under the  provisions  of  the  not-for-profit
   36  corporation  law, including but not limited to neighborhood preservation
   37  companies as defined in section 902 of the private housing finance  law,
   38  entities  that perform housing preservation and community renewal activ-
   39  ities pursuant to article 17 of the private housing finance law, common-
   40  ly referred to  as  rural  preservation  companies,  and  legal  service
   41  providers, and municipalities.
   42    8. "Service area" shall mean the established or stated boundaries of a
   43  non-profit  assistance  provider  or, if an assistance provider does not
   44  have established boundaries for the geographic area in which it provides
   45  services, the geographic area defined in its proposal to the division to
   46  be a service provider.
   47    9. "Superintendent" shall mean the superintendent of banks.
   48    S 4. Education and outreach to homeowners.  In coordination  with  the
   49  division  and the consumer protection board, the department shall under-
   50  take outreach activities directed at  any  homeowners  whose  homes  are
   51  subject to foreclosure.  Such outreach activities shall include, but not
   52  be limited to:
   53    1.  the production and broadcast of public service announcements using
   54  electronic media to inform the general public  of  the  availability  of
   55  counseling  through  the  New  York  state foreclosure diversion program
   56  established by this act. Such public service announcements shall  inform
       A. 1597                             3

    1  the  homeowner of the nature and purpose of the counseling and provide a
    2  website and phone number for the homeowner to utilize; and
    3    2.  the inclusion of a description on the internet websites maintained
    4  by the division, the department and the consumer protection board of the
    5  New York state foreclosure diversion program  and  a  listing  of  those
    6  entities  that  provide  counseling  with respect to the program.   Such
    7  listing shall include the address and phone number of each entity.
    8    S 5. Subdivisions 1 and 3 of section 1303 of the real property actions
    9  and proceedings law, as amended by chapter 507 of the laws of 2009,  are
   10  amended to read as follows:
   11    1.  The  foreclosing party in a mortgage foreclosure action, involving
   12  residential real property shall provide notice to:
   13    (a) any mortgagor if the action relates to an  owner-occupied  one-to-
   14  four family dwelling; and
   15    (b) any tenant of a dwelling unit in accordance with the provisions of
   16  this section. SUCH NOTICE SHALL INCLUDE INFORMATION ABOUT THE AVAILABIL-
   17  ITY OF THE FORECLOSURE DIVERSION PROGRAM AND ITS ABILITY TO ASSIST HOME-
   18  OWNERS IN AVOIDING FORECLOSURE AND THE MANDATORY COUNSELING REQUIRED FOR
   19  PARTICIPATION  IN  THE FORECLOSURE DIVERSION PROGRAM.  SUCH NOTICE SHALL
   20  INCLUDE THE HOTLINE ESTABLISHED BY THE BANKING DEPARTMENT  AND  PROVIDED
   21  BY  THE  DIVISION  OF  HOUSING AND COMMUNITY RENEWAL PURSUANT TO SECTION
   22  FOUR OF THE FORECLOSURE DIVERSION ACT OF 2011 AND THE NAMES AND  CONTACT
   23  INFORMATION  FOR  ALL  NOT-FOR-PROFIT ASSISTANCE PROVIDERS AUTHORIZED BY
   24  THE DEPARTMENT TO PROVIDE HOUSING COUNSELING SERVICES TO HOMEOWNERS.
   25    3. The notice to any mortgagor required by paragraph (a)  of  subdivi-
   26  sion one of this section shall appear as follows:
   27                     Help for Homeowners in Foreclosure
   28    New  York  State  Law  requires that we send you this notice about the
   29  foreclosure process. Please read it carefully.
   30    BEFORE YOU ATTEND A SETTLEMENT CONFERENCE, YOU ARE STRONGLY  URGED  TO
   31  SCHEDULE  AND ATTEND A COUNSELING SESSION BY CALLING THE BANKING DEPART-
   32  MENT AT THE FOLLOWING HOTLINE NUMBER: _______________________
   33  Summons and Complaint
   34    You are in danger of losing your home. If you fail to respond  to  the
   35  summons  and  complaint  in  this  foreclosure action, you may lose your
   36  home. Please read the summons and complaint carefully. You should  imme-
   37  diately  contact  an  attorney  or your local legal aid office to obtain
   38  advice on how to protect yourself.  YOU SHOULD IMMEDIATELY SEEK  OUT  AN
   39  APPROVED  LOAN  COUNSELOR. A LIST OF APPROVED COUNSELORS CAN BE OBTAINED
   40  BY CALLING THE HOTLINE. IF YOU DO NOT ATTEND A COUNSELING  SESSION,  YOU
   41  WILL NOT BE ELIGIBLE TO PARTICIPATE IN THE RESIDENTIAL MORTGAGE FORECLO-
   42  SURE  DIVERSION PROGRAM. THIS WILL NOT AFFECT YOUR RIGHT TO A SETTLEMENT
   43  CONFERENCE, BUT WILL AFFECT YOUR ELIGIBILITY FOR A POSTPONEMENT OF FORE-
   44  CLOSURE UNDER THE RESIDENTIAL MORTGAGE FORECLOSURE DIVERSION PROGRAM.
   45  Sources of Information and Assistance
   46    The State encourages you to become  informed  about  your  options  in
   47  foreclosure. In addition to seeking assistance from an attorney or legal
   48  aid  office,  there are government agencies and non-profit organizations
   49  that you may contact for information about possible  options,  including
   50  trying to work with your lender during this process.
   51    To  locate  an  entity  near  you, you may call the toll-free helpline
   52  maintained by the New York State Banking Department at (enter number) or
   53  visit the Department's website at (enter web address).
   54  Foreclosure rescue scams
   55    Be careful of people who approach you with offers to "save" your home.
   56  There are individuals who watch for notices of  foreclosure  actions  in
       A. 1597                             4

    1  order  to  unfairly  profit  from  a homeowner's distress. You should be
    2  extremely careful about any such promises and any suggestions  that  you
    3  pay  them a fee or sign over your deed. State law requires anyone offer-
    4  ing  such  services  for  profit  to  enter  into a contract which fully
    5  describes the services they will perform and fees they will charge,  and
    6  which  prohibits  them  from  taking  any money from you until they have
    7  completed all such promised services.
    8    S 6. The banking law is amended by adding a new section 6-n to read as
    9  follows:
   10    S 6-N. COUNSELING OF MORTGAGEES. 1. THE DEPARTMENT SHALL  ESTABLISH  A
   11  PROCEDURE TO COUNSEL HOMEOWNERS WHOSE PROPERTY IS SUBJECT TO OR ABOUT TO
   12  BECOME SUBJECT TO FORECLOSURE.
   13    2.  A  COUNSELOR FROM A NOT-FOR-PROFIT ASSISTANCE PROVIDER APPROVED BY
   14  THE DEPARTMENT SHALL MEET WITH ALL HOMEOWNERS PRIOR TO  THEIR  SCHEDULED
   15  SETTLEMENT  CONFERENCE.  THE COUNSELOR SHALL ALSO CONSULT WITH THE FORE-
   16  CLOSING PARTY OR SUCH PARTY'S REPRESENTATIVE AND ATTEMPT TO FORMULATE  A
   17  REPAYMENT  SCHEDULE  THAT  IS  ACCEPTABLE  TO BOTH THE HOMEOWNER AND THE
   18  FORECLOSING PARTY. IF THE PARTIES AGREE, THEY SHALL FILE  A  CERTIFICATE
   19  OF RESOLUTION WITH THE COURT OF JURISDICTION.
   20    3.  IF  THE COUNSELOR IS UNABLE TO NEGOTIATE AN ACCEPTABLE RESOLUTION,
   21  THE PARTIES SHALL FILE A CERTIFICATE OF PARTICIPATION WITH THE COURT  OF
   22  JURISDICTION AND THE SCHEDULED SETTLEMENT CONFERENCE SHALL PROCEED.
   23    S  7.  Rule 3408 of the civil practice law and rules is REPEALED and a
   24  new rule 3408 is added to read as follows:
   25    RULE 3408.  MANDATORY SETTLEMENT CONFERENCE IN RESIDENTIAL FORECLOSURE
   26  ACTIONS. 1. IN ANY RESIDENTIAL FORECLOSURE ACTION IN WHICH THE DEFENDANT
   27  IS A RESIDENT OF THE PROPERTY SUBJECT TO FORECLOSURE,  THE  COURT  SHALL
   28  HOLD A MANDATORY CONFERENCE WITHIN NINETY DAYS AFTER THE DATE WHEN PROOF
   29  OF  SERVICE IS FILED WITH THE COUNTY CLERK, OR ON SUCH ADJOURNED DATE AS
   30  HAS BEEN AGREED TO BY THE PARTIES, FOR THE PURPOSE OF HOLDING SETTLEMENT
   31  DISCUSSIONS PERTAINING TO THE RELATIVE RIGHTS  AND  OBLIGATIONS  OF  THE
   32  PARTIES UNDER THE MORTGAGE LOAN DOCUMENTS, INCLUDING, BUT NOT LIMITED TO
   33  DETERMINING  WHETHER  THE  PARTIES CAN REACH A MUTUALLY AGREEABLE RESOL-
   34  UTION TO HELP THE DEFENDANT AVOID LOSING HIS OR HER HOME, AND EVALUATING
   35  THE POTENTIAL FOR A RESOLUTION IN WHICH PAYMENT SCHEDULES OR AMOUNTS MAY
   36  BE MODIFIED OR OTHER WORKOUT OPTIONS MAY BE AGREED TO, AND FOR  WHATEVER
   37  OTHER PURPOSES THE COURT DEEMS APPROPRIATE.
   38    2.  THE COURT SHALL CAUSE A NOTICE TO BE SENT TO THE PARTIES BY CERTI-
   39  FIED MAIL INFORMING THEM OF THE DATE, TIME, AND LOCATION OF THE  CONFER-
   40  ENCE,  AND INFORMING THE HOMEOWNER OF HIS OR HER OPTION OF PARTICIPATION
   41  IN THE RESIDENTIAL MORTGAGE FORECLOSURE  DIVERSION  PROGRAM  ESTABLISHED
   42  PURSUANT  TO  THE  FORECLOSURE  DIVERSION  ACT OF 2011. THE NOTICE SHALL
   43  INCLUDE THE HOTLINE ESTABLISHED BY THE BANKING  DEPARTMENT  PURSUANT  TO
   44  THE FORECLOSURE DIVERSION ACT OF 2011 AND A STATEMENT THAT THE HOMEOWNER
   45  MUST COMPLETE A COUNSELING SESSION PRIOR TO HIS OR HER SCHEDULED SETTLE-
   46  MENT  CONFERENCE  IN  ORDER  TO  PARTICIPATE IN THE RESIDENTIAL MORTGAGE
   47  FORECLOSURE DIVERSION PROGRAM.
   48    3.  IF THE HOMEOWNER COMPLETES A COUNSELING SESSION WITH  A  COUNSELOR
   49  FROM  A  NOT-FOR-PROFIT  ASSISTANCE PROVIDER APPROVED BY THE DEPARTMENT,
   50  SUCH COUNSELOR SHALL SEND A LOAN MODIFICATION PROPOSAL TO THE  FORECLOS-
   51  ING  PARTY  AT  LEAST  TEN DAYS PRIOR TO THE SETTLEMENT CONFERENCE.  THE
   52  FORECLOSING PARTY SHALL, PRIOR TO THE SETTLEMENT CONFERENCE, REVIEW  THE
   53  MODIFICATION PROPOSAL AND MAKE A GOOD FAITH EFFORT TO REACH A RESOLUTION
   54  WITH THE HOMEOWNER.
   55    4.  AT  THE  INITIAL  CONFERENCE  HELD  PURSUANT  TO THIS SECTION, ANY
   56  DEFENDANT CURRENTLY APPEARING PRO SE, SHALL BE DEEMED  TO  HAVE  MADE  A
       A. 1597                             5

    1  MOTION  TO  PROCEED AS A POOR PERSON UNDER SECTION ELEVEN HUNDRED ONE OF
    2  THIS CHAPTER. THE COURT SHALL DETERMINE WHETHER SUCH PERMISSION SHALL BE
    3  GRANTED PURSUANT TO STANDARDS SET FORTH IN SECTION ELEVEN HUNDRED ONE OF
    4  THIS CHAPTER. IF THE COURT APPOINTS DEFENDANT COUNSEL PURSUANT TO SUBDI-
    5  VISION  (A)  OF  SECTION  ELEVEN  HUNDRED  TWO OF THIS CHAPTER, IT SHALL
    6  ADJOURN THE CONFERENCE TO A DATE CERTAIN FOR APPEARANCE OF  COUNSEL  AND
    7  SETTLEMENT  DISCUSSIONS PURSUANT TO SUBDIVISION ONE OF THIS SECTION, AND
    8  OTHERWISE SHALL PROCEED WITH THE CONFERENCE.
    9    5.  AT ANY CONFERENCE HELD PURSUANT TO  THIS  SECTION,  THE  PLAINTIFF
   10  SHALL APPEAR IN PERSON OR BY COUNSEL. ANY PERSON REPRESENTING THE PLAIN-
   11  TIFF  SHALL  HAVE  FULL SETTLEMENT AUTHORITY, INCLUDING THE AUTHORITY TO
   12  DISPOSE OF THE CASE AND TO ENTER INTO OR APPROVE A LOAN MODIFICATION  OR
   13  WORKOUT  AGREEMENT. THE DEFENDANT-MORTGAGOR SHALL APPEAR IN PERSON OR BY
   14  COUNSEL.  SUCH APPEARANCE AND PARTICIPATION BY  THE  DEFENDANT-MORTGAGOR
   15  SHALL  NOT CONSTITUTE AN APPEARANCE IN THE ACTION NOR SHALL IT BE DEEMED
   16  TO BE A WAIVER, IN WHOLE OR IN PART, OF ANY DEFENSES, JURISDICTIONAL  OR
   17  OTHERWISE,  THAT THE DEFENDANT-MORTGAGOR MAY HAVE TO THE ACTION. ANY AND
   18  ALL STATEMENTS MADE, WHETHER ORAL OR WRITTEN, AND ANY OR ALL INFORMATION
   19  EXCHANGED AT THE CONFERENCE, SHALL BE SOLELY FOR THE PURPOSES OF  RESOL-
   20  UTION AND SETTLEMENT AND SHALL NOT BE DEEMED TO BE THE ADMISSIONS OF ANY
   21  PARTY WITH RESPECT TO THE UNDERLYING ACTION. IF THE DEFENDANT IS APPEAR-
   22  ING  PRO  SE,  THE COURT SHALL ADVISE THE DEFENDANT OF THE NATURE OF THE
   23  ACTION AND HIS OR HER RIGHTS AND RESPONSIBILITIES AS A DEFENDANT.  WHERE
   24  APPROPRIATE, THE COURT MAY PERMIT A PLAINTIFF OR THE PLAINTIFF'S  REPRE-
   25  SENTATIVE  TO  ATTEND  THE  SETTLEMENT  CONFERENCE  TELEPHONICALLY OR BY
   26  VIDEO-CONFERENCE. UNTIL ALL THE PROVISIONS AND PROCEDURES OF THE SETTLE-
   27  MENT CONFERENCE ARE CONCLUDED, THE MORTGAGEE  SHALL  BE  PRECLUDED  FROM
   28  FILING  A MOTION FOR SUMMARY JUDGMENT OR ORDER OF REFERENCE OR OTHERWISE
   29  PROCEEDING WITH THE FORECLOSURE CASE. THE FAILURE OF  THE  PLAINTIFF  TO
   30  APPEAR  AT  A SCHEDULED CONFERENCE WITHOUT GOOD CAUSE OR APPEARANCE BY A
   31  REPRESENTATIVE WITHOUT  FULL  AUTHORITY  TO  ENTER  INTO  A  SETTLEMENT,
   32  MODIFICATION  OR  WORKOUT  AGREEMENT  SHALL SUBJECT THE PLAINTIFF AND/OR
   33  COUNSEL TO APPROPRIATE REMEDIAL ACTION  INCLUDING  BUT  NOT  LIMITED  TO
   34  DEFAULT, NON-SUIT OR DISMISSAL WITH PREJUDICE.
   35    6.  BOTH  PARTIES  MUST HAVE ANY SUPPORTING DOCUMENTATION WITH THEM AT
   36  THE TIME OF THE CONFERENCE.   IF THE  HOMEOWNER  ATTENDED  A  COUNSELING
   37  SESSION  WITH  AN  APPROVED  COUNSELOR, SUCH COUNSELOR MUST HAVE GIVEN A
   38  LOAN MODIFICATION PROPOSAL TO THE FORECLOSING PARTY AT  LEAST  TEN  DAYS
   39  PRIOR TO THE SETTLEMENT CONFERENCE.
   40    7.  THE COURT SHALL PRESIDE OVER THE CONFERENCE IN AN EFFORT TO ESTAB-
   41  LISH A REPAYMENT PLAN THAT IS ACCEPTABLE TO THE LENDER THAT  ALLOWS  THE
   42  HOMEOWNER TO REMAIN IN THE HOME.
   43    8.  AFTER  THE SETTLEMENT CONFERENCE, THE COURT SHALL PRODUCE A REPORT
   44  FINALIZING AND DETAILING ANY TERMS AND CONDITIONS THAT HAVE BEEN  AGREED
   45  UPON  BY  THE  PARTIES. SUCH REPORT SHALL BE MADE PART OF THE RECORD FOR
   46  THE ACTION.
   47    S 8. The real property actions  and  proceedings  law  is  amended  by
   48  adding a new section 1316 to read as follows:
   49    S 1316. THE COURT SHALL NOTIFY THE DEFENDANT OF ANY FORECLOSURE ACTION
   50  ON  A  RESIDENTIAL  MORTGAGE LOAN, IN WHICH THE ACTION WAS INITIATED BUT
   51  WHERE THE FINAL ORDER OF JUDGMENT WAS NOT ISSUED PRIOR TO THE  EFFECTIVE
   52  DATE  OF  THE FORECLOSURE DIVERSION ACT OF 2011, THAT SUCH DEFENDANT MAY
   53  REQUEST A SETTLEMENT CONFERENCE  IN  ACCORDANCE  WITH  RULE  THIRTY-FOUR
   54  HUNDRED EIGHT OF THE CIVIL PRACTICE LAW AND RULES.
   55    S  9.  The  real  property  actions  and proceedings law is amended by
   56  adding a new section 1309 to read as follows:
       A. 1597                             6

    1    S 1309. FORECLOSURES; COURT RELIEF.  1. VENUE. IN ANY ACTION TO  FORE-
    2  CLOSE  A  RESIDENTIAL  MORTGAGE  UNDER THIS ARTICLE A MORTGAGOR NAMED IN
    3  SUCH ACTION MAY APPLY FOR RELIEF IN STATE SUPREME COURT PURSUANT TO THIS
    4  SECTION.
    5    2.  TIMING  OF  POSTPONEMENT. IF A MORTGAGEE HAS OTHERWISE ESTABLISHED
    6  ITS LEGAL RIGHT TO JUDGMENT ON AN  ACTION  TO  FORECLOSE  A  RESIDENTIAL
    7  MORTGAGE  PURSUANT  TO  THIS  CHAPTER, THEN SUCH ACTION SHALL BE HELD IN
    8  ABEYANCE BY THE COURT BEFORE WHICH SUCH ACTION IS PENDING FOR  A  PERIOD
    9  OF NINETY DAYS. IF THE MORTGAGOR RECEIVES COUNSELING FROM A NOT-FOR-PRO-
   10  FIT  ASSISTANCE  PROVIDER  APPROVED  BY  THE  DIVISION  AND SUBSEQUENTLY
   11  PARTICIPATES IN A SETTLEMENT CONFERENCE, THEN  THE  COURT  BEFORE  WHICH
   12  SUCH  ACTION  IS PENDING SHALL HOLD SUCH ACTION IN ABEYANCE FOR AN ADDI-
   13  TIONAL NINE MONTHS.   SUCH ADDITIONAL PERIOD  OF  TIME  IS  INTENDED  TO
   14  PERMIT  THE  PARTIES  TO SETTLE THE ACTION OUTSIDE OF COURT AND TO FORE-
   15  STALL FORECLOSURE WHEREVER POSSIBLE.
   16    3. PROCESS AND FEES. IF AN ACTION TO FORECLOSE A RESIDENTIAL  MORTGAGE
   17  HAS  BEEN COMMENCED PRIOR TO THE EFFECTIVE DATE OF THIS SECTION, A MORT-
   18  GAGOR MAY ASK THE COURT BEFORE WHICH SUCH ACTION IS  COMMENCED  TO  HOLD
   19  SUCH  ACTION  IN  ABEYANCE  PURSUANT TO SUBDIVISION TWO OF THIS SECTION.
   20  MOTIONS ON NOTICE IN ACCORDANCE WITH THE CIVIL PRACTICE  LAW  AND  RULES
   21  MADE  BY  THE  MORTGAGOR  SHALL  BE  DEEMED TO HAVE BEEN FILED BY A POOR
   22  PERSON PURSUANT TO ARTICLE ELEVEN OF THE CIVIL PRACTICE  LAW  AND  RULES
   23  AND ALL COURT FEES OTHERWISE APPLICABLE TO SUCH ACTIONS AND PAYABLE BY A
   24  MORTGAGOR  SHALL  BE  WAIVED.    IF  A  FORECLOSURE  ACTION HAS NOT BEEN
   25  COMMENCED PRIOR TO THE EFFECTIVE DATE OF THIS SECTION, A MORTGAGOR  MUST
   26  COMMENCE  AN  ACTION  IN  STATE  SUPREME  COURT  BY FILING AND SERVING A
   27  SUMMONS PURSUANT TO ARTICLE THREE OF THE CIVIL PRACTICE  LAW  AND  RULES
   28  WITH A REQUEST FOR RELIEF PURSUANT TO THE TERMS OF THIS SECTION. IN SUCH
   29  CASE,  SUCH  FILING  SHALL BE DEEMED TO HAVE BEEN FILED BY A POOR PERSON
   30  PURSUANT TO ARTICLE ELEVEN OF THE CIVIL PRACTICE LAW AND RULES  AND  ALL
   31  FILING  AND  COURT FEES OTHERWISE APPLICABLE TO SUCH ACTIONS AND PAYABLE
   32  BY A MORTGAGOR IN THE FORM OF INDEX AND MOTION FEES SHALL BE WAIVED.
   33    4. PRIMA FACIE CASE. A MORTGAGOR MUST ESTABLISH A PRIMA FACIE CASE  IN
   34  THE  MOTION  OR PLEADING. AMENDMENTS TO SUCH MOTION OR PLEADING SHALL BE
   35  LIBERALLY GRANTED. SUCH PLEADING MUST ESTABLISH THAT:
   36    A. THE MORTGAGOR IS A NATURAL PERSON; AND
   37    B. THE DEBT IS INCURRED BY THE MORTGAGOR PRIMARILY FOR PERSONAL, FAMI-
   38  LY OR HOUSEHOLD PURPOSES; AND
   39    C. THE LOAN IS SECURED BY A MORTGAGE, SECOND MORTGAGE OR  HOME  EQUITY
   40  LOAN  ON  REAL  PROPERTY  WHICH  IS IMPROVED WITH A RESIDENTIAL BUILDING
   41  CONTAINING ONE TO FOUR DWELLING UNITS; AND
   42    D. THE REAL PROPERTY SUBJECT TO FORECLOSURE IS THE PRINCIPAL RESIDENCE
   43  OF THE MORTGAGOR; AND
   44    E. THE MORTGAGOR OWNS NO OTHER REAL PROPERTY; AND
   45    F. THE REAL PROPERTY IS LOCATED IN THIS STATE.
   46    5. MONTHLY PAYMENT SCHEDULE. IF A PRIMA FACIE  CASE  HAS  BEEN  ESTAB-
   47  LISHED,  THE  COURT  OFFICER  OR  MEDIATOR PRESIDING OVER THE SETTLEMENT
   48  CONFERENCE SET FORTH IN RULE THIRTY-FOUR  HUNDRED  EIGHT  OF  THE  CIVIL
   49  PRACTICE  LAW  AND  RULES  SHALL  WORK WITH THE PARTIES TO ESTABLISH THE
   50  TERMS OF A MONTHLY PAYMENT SCHEDULE WHICH  WILL  PRESERVE  THE  RELATIVE
   51  FINANCIAL  INTERESTS OF BOTH PARTIES UNDER TERMS WHICH ARE EQUITABLE AND
   52  JUST. TOWARDS THAT END, THE COURT OFFICER OR MEDIATOR SHALL INQUIRE INTO
   53  THE FINANCES OF BOTH THE MORTGAGEE AND THE  MORTGAGOR.  THE  PURPOSE  OF
   54  SUCH INQUIRY SHALL BE TO DETERMINE THE MINIMUM AMOUNT NECESSARY TO MAIN-
   55  TAIN  THE  MORTGAGEE'S  FINANCIAL  POSITION  AND TO DETERMINE THE AMOUNT
   56  WHICH THE MORTGAGOR WILL BE ABLE TO AFFORD.  SUCH MONTHLY PAYMENTS SHALL
       A. 1597                             7

    1  BE APPLIED TO THE PRINCIPAL AND INTEREST UPON THE INDEBTEDNESS.  IF  THE
    2  FINANCIAL  CONDITION  OF THE MORTGAGOR EXCEEDS THE MINIMUM AMOUNT NECES-
    3  SARY TO MAINTAIN THE FINANCIAL POSITION OF THE MORTGAGEE,  SUCH  MONTHLY
    4  AMOUNT  MAY  BE INCREASED BEYOND THE MINIMUM AMOUNT AS DETERMINED WITHIN
    5  THE DISCRETION OF THE COURT OFFICER OR MEDIATOR.  IT IS WITHIN THE COURT
    6  OFFICER'S OR MEDIATOR'S DISCRETION TO DETERMINE WHETHER  THE  ESTABLISH-
    7  MENT  OF SUCH PAYMENT SCHEDULE IS POSSIBLE UNDER TERMS WHICH ARE EQUITA-
    8  BLE AND JUST. THE PURPOSE OF SUCH MONTHLY PAYMENTS IS  TO  PRESERVE  THE
    9  RELATIVE  FINANCIAL  INTERESTS OF BOTH PARTIES UNTIL A SETTLEMENT CAN BE
   10  REACHED BUT IN NO EVENT SHALL SUCH ORDER GOVERN FOR MORE THAN ONE  YEAR.
   11  FAILURE TO ADHERE TO THE TERMS OF SUCH SCHEDULE MAY ALSO RESULT IN FORE-
   12  CLOSURE OR LIFTING OF THE ABEYANCE.
   13    6. POSTPONEMENT ORDER. ONCE THE COURT DETERMINES THAT AN EQUITABLE AND
   14  JUST  PAYMENT SCHEDULE CAN BE ESTABLISHED, IT SHALL ISSUE AN ORDER WHICH
   15  SETS FORTH THE TERMS OF SUCH PAYMENT SCHEDULE  AND  SERVE  IT  UPON  ALL
   16  PARTIES  TO THE PROCEEDING. SUCH ORDER SHALL SET FORTH A RETURN DATE FOR
   17  THE RE-EXAMINATION OF SUCH MATTER AFTER PASSAGE OF THE POSTPONEMENT TIME
   18  PERIOD AT A FORMAL HEARING ON NOTICE  TO  THE  PARTIES.  THE  COURT  MAY
   19  TAILOR  RELIEF  AS  REQUIRED BY THE FACTS OF EACH CASE THAT FALLS WITHIN
   20  THE PURVIEW OF THIS SECTION. HOWEVER, IN NO EVENT SHALL SUCH ORDER POST-
   21  PONE FINAL ACTION BEYOND  ONE  YEAR  WITHOUT  A  RE-EXAMINATION  OF  THE
   22  PARTIES'  FINANCIAL  CIRCUMSTANCES AFTER FORMAL HEARING ON NOTICE TO THE
   23  PARTIES. THE TIME PERIOD OF SUCH ORDER SHALL RUN FROM THE  DATE  OF  THE
   24  ENTRY  OF  SUCH ORDER.  SUCH ABEYANCE SHALL NOT BEGIN UNTIL THE FORECLO-
   25  SURE PROCESS HAS REACHED THE POINT WHERE A FINAL DETERMINATION IS POSSI-
   26  BLE BUT SHALL BE WITHHELD UNTIL THE  POSTPONEMENT  PERIOD  HAS  ELAPSED.
   27  ENTITLEMENT  TO  SUCH ABEYANCE MAY BE ESTABLISHED AT ANY TIME REGARDLESS
   28  OF WHETHER FORECLOSURE IS BEING SOUGHT BY THE MORTGAGEE. MULTIPLE  POST-
   29  PONEMENTS  MAY BE GRANTED IN THE DISCRETION OF THE COURT IF WARRANTED BY
   30  THE FACTS OF A GIVEN CASE AND THE ECONOMIC CONDITIONS ACROSS THE STATE.
   31    7. CONTINUING JURISDICTION. THE COURT SHALL MAINTAIN CONTINUING JURIS-
   32  DICTION OF THE MATTER UNTIL IT REACHES FINAL RESOLUTION. UPON THE APPLI-
   33  CATION OF EITHER PARTY, PRIOR TO  THE  EXPIRATION  OF  THE  POSTPONEMENT
   34  PERIOD,  UPON PRESENTATION OF EVIDENCE THAT THE TERMS FIXED BY THE COURT
   35  ARE NO LONGER JUST AND EQUITABLE, THE COURT MAY REVISE  AND  ALTER  SUCH
   36  TERMS  IN  SUCH  MANNER  AS THE CHANGED CIRCUMSTANCES AND CONDITIONS MAY
   37  REQUIRE.
   38    S 10. The judiciary law is amended by adding a new section 2-c to read
   39  as follows:
   40    S 2-C. INDIVIDUAL ASSIGNMENTS. THE UNIFIED COURT SYSTEM, IN ACCORDANCE
   41  WITH THEIR INDIVIDUAL ASSIGNMENT SYSTEM, SHALL ENSURE THAT ALL CAUSES OF
   42  ACTION TO FORECLOSE ON REAL PROPERTY SHALL BE ASSIGNED TO THE SAME JUDGE
   43  OR JUDGES, TO THE EXTENT PRACTICABLE.
   44    S 11. Notwithstanding the ninety day provision  in  subdivision  1  of
   45  rule  3408  of  the civil practice law and rules, a judge shall schedule
   46  settlement conferences pursuant to  such  section  for  any  foreclosure
   47  proceeding currently on their calendar.
   48    S  12.  This  act shall take effect on the sixtieth day after it shall
   49  have become a law and shall expire 3 years  after  such  effective  date
   50  when upon such date the provisions of this act shall be deemed repealed.
   51  Effective  immediately,  the  superintendent of banks may promulgate any
   52  rule or regulation necessary for the timely implementation of  this  act
   53  on its effective date.
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