Enacts the "foreclosure diversion act of 2009"; repealer

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 maintained 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 postponement 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 settlement 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 conference 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 homeowner 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 representative 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 settlement 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 mortgage 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 conference 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 foreclosure 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 negotiation 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

The purpose of this bill is to put forth a foreclosure prevention act that will establish: up to (1) year postponement on all foreclosure actions- which will give homeowners time to work with their lenders and stay in their homes. The one-year postponement will be structured to give homeowners an automatic ninety (90) day postponement once the foreclosure action has commenced and an additional nine (9) months once the homeowners has participated in counseling with a certified HUD loan Counselor.

The legislation also provides education and outreach to homeowners in order to notify the homeowners of counseling and provide them with the referral hotline number.

Legislative history

None. This is new legislation.

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.