Mandatory foreclosure settlement conferences in New York.
If you are facing a foreclosure filing, New York has instituted a law that ensures lenders and homeowners meet to try to come up with solutions. A mandatory settlement conference, which is similar to other state’s mediation programs, may help both parties come to some type of arrangement, such as a loan modification, short sale, or another option that will stop the foreclosure process from proceeding.
How does the foreclosure settlement law work?
The law requires that any court that is involved in a residential foreclosure filing, no matter what part of New York state in which the filing may occur, needs to set up a mediation type session. The court, lenders, and homeowner need to schedule a settlement conference within a maximum of 60 days of when the plaintiff files a proof of service of the complaint. You can either ask your local court to set up the conference, or contact a New York HUD housing counselor.
All parties need to attend this conference. The plaintiff (who will be the lender or bank) or the plaintiff’s attorney need to appear with the authority to dispose of the legal matter. These representatives of the lender may attend the session in person, via video-conference, or by a telephone conference call. Many homeowners who are struggling with their mortgage payment and who are facing a foreclosure can’t afford to bring their own attorney to the meeting. The state recognized this, so as part of the the New York mandatory foreclosure settlement conference process, the state will provide an attorney for those homeowners who can’t afford their own. This is offered at no cost to the borrower. One of the goals of the attorney is to help mediate a solution to the problem.
During the conference the various parties will try to come up with some type of solution. The homeowners financial situation will be reviewed, including their total expenses and income. The homeowners current assets will need to be reviewed as well. Any possible outcome from the foreclosure settlement conference will be based upon what the homeowner can afford to pay towards their current, or new, mortgage. Any assistance provided will also depend on what type of loan currently exists, and how far behind they are on their payments.
Does the law apply for all mortgages?
Yes. At one time the conference only provided assistance for people with a subprime mortgage. However, the program has been expanded to include all types of home loans and mortgages, and not just subprime. This expansion of the program will assist tens of thousands of additional individuals and families across New York State. In addition, be sure to ask your attorney or HUD counselor about other government mortgage programs as you go through this process.
What may result from the foreclosure settlement conference?
The New York foreclosure settlement process may help mediate a loan modification or other solution that will stop the foreclosure. Some results may include the options below.
The lender may offer a forbearance agreement. This type of arrangement will often result in a reduction or suspension of the homeowners monthly payment for a period of time, oftentimes several months. The suspension of the monthly payment, or lower payments provided, will allow the borrower time to repay a delinquency on their mortgage over time.
A mediation session may result in a short sale, which is a sale for less than what the homeowners owes on the mortgage. The bank or lenders may allow a home to be sold for less than the outstanding principal on the mortgage in some cases. This is always a better option than a foreclosure, if the lender allows it.
Another result may be a repayment plan, which is an agreement that the homeowner and lender will enter into. This type of solution will allow the homeowner to resume making regular monthly payments, plus a portion of the past due payments, each and every month until they are caught up and back on track.
Mortgage or loan modification. This can also be the result of the foreclosure settlement conference. It is an agreement that changes some of the mortgage terms. It can lower the interest rate, waive fees, extend the length of the loan, or convert a subprime loan into a fixed rate mortgage.
The New York foreclosure settlement conference is a right entitled to all residents who are facing a foreclosure. Insist upon this right if you receive a foreclosure notice.