Many states have mediation programs to assist borrowers in finding ways to avoid foreclosure. New York has implemented a program where borrowers attend a face-to-face meeting with their lender at what's called a foreclosure "settlement conference."
Read on to learn more about how New York’s settlement conference program works and how you might be able to benefit from the process.
A foreclosure settlement conference is a meeting with your lender’s representative and someone from the court, like a judge, court referee, or court attorney. The settlement conference provides an opportunity to work out a deal with your lender before the foreclosure is completed.
At the settlement conference, the parties discuss your financial situation and try to negotiate a way for you to keep the home or give up the property without going through a foreclosure. By working together, the parties are often able to reach an agreement.
Potential outcomes of a settlement conference include a:
In New York, foreclosures are judicial, which means the lender must foreclose through the state court system. The lender initiates the foreclosure by filing a complaint and having it served on the borrower, along with a summons to appear in court. (To learn more about the difference between judicial and nonjudicial foreclosure, and the procedures for each, see Will Your Foreclosure Take Place In or Out of Court?)
New York law requires the court to hold a mandatory settlement conference within 60 days of the filing of the proof of service with the court clerk. (N.Y. Civ. Prac. Laws & Rules, Rule 3408).
Homeowners in danger of foreclosure are entitled to participate in a court settlement conference with their lender if the property is:
Borrowers with a reverse mortgage are also usually entitled to a settlement conference, thanks to a state law that went into effect May 12, 2018. (To learn more, see Foreclosure Protections in New York for Reverse Mortgage Borrowers.)
The court will send a notice to the parties advising them of:
At the settlement conference, the court will:
Both the lender and borrower are required to negotiate in good faith to reach a mutually agreeable way to avoid foreclosure.
For more information on settlement conferences in New York, go to the New York State Unified Court System website.
Even though participating in a New York foreclosure settlement conference doesn't guarantee that you can avoid foreclosure, it won't hurt to participate. The lender might be more likely to agree to a nonforeclosure solution at the settlement conference than if you approach it outside of the program. Or you might qualify for a loss mitigation option that you hadn’t previously considered.
Hiring a lawyer to represent you at a settlement conference is often helpful. A lawyer can help you prepare for your settlement conference, assist with the negotiation process, protect your legal rights in the foreclosure process, and advise you about potential defenses to the foreclosure. You might also consider consulting with a HUD-approved housing counselor to learn more about potential foreclosure avoidance options.