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

                                 4109--A

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                              April 9, 2009
                               ___________

Introduced  by  Sen.  KLEIN  -- read twice and ordered printed, and when
  printed to be committed to the Committee  on  Judiciary  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN  ACT  enacting  the "foreclosure diversion act of 2009"; 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;  and  to  repeal
  certain provisions of the civil practice law and rules relating there-
  to

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

  Section 1. Short title.  This act shall be known and may be  cited  as
the "foreclosure diversion act of 2009".
  S  2.  Statement of legislative purpose and findings.  The legislature
finds and declares that there is a public emergency; that the  extension
of  unaffordable mortgage loans, unaffordable second mortgages and unaf-
fordable home equity loans have  resulted  in  thousands  of  homeowners
losing  their homes.  The problems associated with these loans adversely
affect the availability of capital, the demand for housing, the value of
real estate, and more importantly, the ability  of  homeowners  to  keep
their homes and communities viable.  The pending reset of interest rates
in many home mortgages, second mortgages and home equity loans will only
exacerbate this situation for many homeowners. The expectation that many
such  variable  rate mortgages will fall into foreclosure upon the reset

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08584-08-9
              

S. 4109--A                          2

of the interest rate compels the state to take action. State  assistance
to homeowners through a counseling program is necessary in order to stem
this crisis.
  S 3. Definitions. As used in this act, the following words and phrases
shall have the following meanings:
  1. "Commissioner" shall mean the commissioner of the state division of
housing and community renewal.
  2. "Department" shall mean the banking department.
  3.  "Division"  shall mean the state division of housing and community
renewal.
  4. "Eligible  homeowners"  shall  mean  any  resident  of  this  state
currently  residing  in  a  home located in this state subject to a home
loan who  the  commissioner  determines,  pursuant  to  the  eligibility
restrictions  set forth in this act, is in need of foreclosure diversion
assistance.
  5. "Home loan" shall mean a residential home mortgage loan,  including
an  open-end  credit plan, other than a reverse mortgage transaction, in
which:
  (a) the borrower is a natural person;
  (b) the debt is incurred by the borrower primarily for personal, fami-
ly or household purposes;
  (c) the loan is secured by a mortgage or deed of trust on real  estate
upon  which  there is located a structure or structures intended princi-
pally for occupancy of 1 to 4 families which is occupied by the borrower
as the borrower's principal dwelling; and
  (d) the property is located in this state.
  6. "Lender" shall mean (a) a mortgage banker as defined  in  paragraph
(f) of subdivision 1 of section 590 of the banking law, or (b) an exempt
organization as defined in paragraph (e) of subdivision 1 of section 590
of  the banking law, or (c) a mortgage loan servicer as defined in para-
graph (h) of subdivision 1 of section 590 of the banking law.
  7. "Non-profit assistance provider" shall mean a corporation or  group
of  corporations  organized  under  the provisions of the not-for-profit
corporation law, including but not limited to neighborhood  preservation
companies  as defined in section 902 of the private housing finance law,
entities that perform housing preservation and community renewal  activ-
ities pursuant to article 17 of the private housing finance law, common-
ly  referred  to  as  rural  preservation  companies,  and legal service
providers, and municipalities.
  8. "Service area" shall mean the established or stated boundaries of a
non-profit assistance provider or, if an assistance  provider  does  not
have established boundaries for the geographic area in which it provides
services, the geographic area defined in its proposal to the division to
be a service provider.
  9. "Superintendent" shall mean the superintendent of banks.
  S  4.  Education and outreach to homeowners.  In coordination with the
division and the consumer protection board, the department shall  under-
take  outreach  activities  directed  at  any homeowners whose homes are
subject to foreclosure.  Such outreach activities shall include, but not
be limited to:
  1. the production and broadcast of public service announcements  using
electronic  media  to  inform  the general public of the availability of
counseling through the New  York  state  foreclosure  diversion  program
established  by this act. Such public service announcements shall inform
the homeowner of the nature and purpose of the counseling and provide  a
website and phone number for the homeowner to utilize; and

S. 4109--A                          3

  2.  the inclusion of a description on the internet websites maintained
by the division, the banking  department  and  the  consumer  protection
board  of the New York state foreclosure diversion program and a listing
of those entities that provide counseling with respect to  the  program.
Such listing shall include the address and phone number of each entity.
  S 5. Subdivisions 1 and 3 of section 1303 of the real property actions
and  proceedings law, as amended by chapter 472 of the laws of 2008, are
amended to read as follows:
  1. The foreclosing party  in  a  mortgage  foreclosure  action,  which
involves  residential real property consisting of owner-occupied one-to-
four-family dwellings shall provide notice to the mortgagor  in  accord-
ance  with the provisions of this section with regard to information and
assistance about the foreclosure process.   SUCH  NOTICE  SHALL  INCLUDE
INFORMATION  ABOUT THE AVAILABILITY OF THE FORECLOSURE DIVERSION PROGRAM
AND ITS ABILITY TO ASSIST HOMEOWNERS IN  AVOIDING  FORECLOSURE  AND  THE
MANDATORY  COUNSELING  REQUIRED  FOR  PARTICIPATION  IN  THE FORECLOSURE
DIVERSION PROGRAM.  SUCH NOTICE SHALL INCLUDE THE HOTLINE ESTABLISHED BY
THE BANKING DEPARTMENT AND PROVIDED  BY  THE  DIVISION  OF  HOUSING  AND
COMMUNITY  RENEWAL PURSUANT TO SECTION FOUR OF THE FORECLOSURE DIVERSION
ACT OF 2009 AND THE NAMES AND CONTACT INFORMATION FOR ALL NOT-FOR-PROFIT
ASSISTANCE PROVIDERS AUTHORIZED BY THE  DEPARTMENT  TO  PROVIDE  HOUSING
COUNSELING SERVICES TO HOMEOWNERS.
  3. The notice required by this section shall appear as follows:
                   Help for Homeowners in Foreclosure
  New  York  State  Law  requires that we send you this notice about the
foreclosure process. Please read it carefully.
  BEFORE YOU ATTEND A SETTLEMENT CONFERENCE, YOU ARE STRONGLY  URGED  TO
SCHEDULE  AND ATTEND A COUNSELING SESSION BY CALLING THE BANKING DEPART-
MENT AT THE FOLLOWING HOTLINE NUMBER: _______________________
Summons and Complaint
  You are in danger of losing your home. If you fail to respond  to  the
summons  and  complaint  in  this  foreclosure action, you may lose your
home. Please read the summons and complaint carefully. You should  imme-
diately  contact  an  attorney  or your local legal aid office to obtain
advice on how to protect yourself.  YOU SHOULD IMMEDIATELY SEEK  OUT  AN
APPROVED  LOAN  COUNSELOR. A LIST OF APPROVED COUNSELORS CAN BE OBTAINED
BY CALLING THE HOTLINE. IF YOU DO NOT ATTEND A COUNSELING  SESSION,  YOU
WILL NOT BE ELIGIBLE TO PARTICIPATE IN THE RESIDENTIAL MORTGAGE FORECLO-
SURE  DIVERSION PROGRAM. THIS WILL NOT AFFECT YOUR RIGHT TO A SETTLEMENT
CONFERENCE, BUT WILL AFFECT YOUR ELIGIBILITY FOR A POSTPONEMENT OF FORE-
CLOSURE UNDER THE RESIDENTIAL MORTGAGE FORECLOSURE DIVERSION PROGRAM.
Sources of Information and Assistance
  The State encourages you to become  informed  about  your  options  in
foreclosure. In addition to seeking assistance from an attorney or legal
aid  office,  there are government agencies and non-profit organizations
that you may contact for information about possible  options,  including
trying to work with your lender during this process.
  To  locate  an  entity  near  you, you may call the toll-free helpline
maintained by the New York State  Banking  Department  at  _____________
(enter  number)  or  visit  the  Department's website at _______________
(enter web address).
Foreclosure rescue scams
  Be careful of people who approach you with offers to "save" your home.
There are individuals who watch for notices of  foreclosure  actions  in
order  to  unfairly  profit  from  a homeowner's distress. You should be
extremely careful about any such promises and any suggestions  that  you

S. 4109--A                          4

pay  them a fee or sign over your deed. State law requires anyone offer-
ing such services for profit  to  enter  into  a  contract  which  fully
describes  the services they will perform and fees they will charge, and
which  prohibits  them  from  taking  any money from you until they have
completed all such promised services.
  S 6.  The banking law is amended by adding a new section 6-n  to  read
as follows:
  S  6-N.  COUNSELING OF MORTGAGEES. 1. THE DEPARTMENT SHALL ESTABLISH A
PROCEDURE TO COUNSEL HOMEOWNERS WHOSE PROPERTY IS SUBJECT TO OR ABOUT TO
BECOME SUBJECT TO FORECLOSURE.
  2. A COUNSELOR FROM A NOT-FOR-PROFIT ASSISTANCE PROVIDER  APPROVED  BY
THE  DEPARTMENT  SHALL MEET WITH ALL HOMEOWNERS PRIOR TO THEIR SCHEDULED
SETTLEMENT CONFERENCE.  THE COUNSELOR SHALL ALSO CONSULT WITH THE  FORE-
CLOSING  PARTY OR SUCH PARTY'S REPRESENTATIVE AND ATTEMPT TO FORMULATE A
REPAYMENT SCHEDULE THAT IS ACCEPTABLE TO  BOTH  THE  HOMEOWNER  AND  THE
FORECLOSING  PARTY.  IF THE PARTIES AGREE, THEY SHALL FILE A CERTIFICATE
OF RESOLUTION WITH THE COURT OF JURISDICTION.
  3. IF THE COUNSELOR IS UNABLE TO NEGOTIATE AN  ACCEPTABLE  RESOLUTION,
THE  PARTIES SHALL FILE A CERTIFICATE OF PARTICIPATION WITH THE COURT OF
JURISDICTION AND THE SCHEDULED SETTLEMENT CONFERENCE SHALL PROCEED.
  S 7. Rule 3408 of the civil practice law and rules is REPEALED  and  a
new rule 3408 is added to read as follows:
  RULE 3408.  MANDATORY SETTLEMENT CONFERENCE IN RESIDENTIAL FORECLOSURE
ACTIONS. 1. IN ANY RESIDENTIAL FORECLOSURE ACTION IN WHICH THE DEFENDANT
IS  A  RESIDENT  OF THE PROPERTY SUBJECT TO FORECLOSURE, THE COURT SHALL
HOLD A MANDATORY CONFERENCE WITHIN NINETY DAYS AFTER THE DATE WHEN PROOF
OF SERVICE IS FILED WITH THE COUNTY CLERK, OR ON SUCH ADJOURNED DATE  AS
HAS BEEN AGREED TO BY THE PARTIES, FOR THE PURPOSE OF HOLDING SETTLEMENT
DISCUSSIONS  PERTAINING  TO  THE  RELATIVE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THE MORTGAGE LOAN DOCUMENTS, INCLUDING, BUT NOT LIMITED TO
DETERMINING WHETHER THE PARTIES CAN REACH A  MUTUALLY  AGREEABLE  RESOL-
UTION TO HELP THE DEFENDANT AVOID LOSING HIS OR HER HOME, AND EVALUATING
THE POTENTIAL FOR A RESOLUTION IN WHICH PAYMENT SCHEDULES OR AMOUNTS MAY
BE  MODIFIED OR OTHER WORKOUT OPTIONS MAY BE AGREED TO, AND FOR WHATEVER
OTHER PURPOSES THE COURT DEEMS APPROPRIATE.
  2. THE COURT SHALL CAUSE A NOTICE TO BE SENT TO THE PARTIES BY  CERTI-
FIED  MAIL INFORMING THEM OF THE DATE, TIME, AND LOCATION OF THE CONFER-
ENCE, AND INFORMING THE HOMEOWNER OF HIS OR HER OPTION OF  PARTICIPATION
IN  THE  RESIDENTIAL  MORTGAGE FORECLOSURE DIVERSION PROGRAM ESTABLISHED
PURSUANT TO THE FORECLOSURE DIVERSION ACT  OF  2009.  THE  NOTICE  SHALL
INCLUDE  THE  HOTLINE  ESTABLISHED BY THE BANKING DEPARTMENT PURSUANT TO
THE FORECLOSURE DIVERSION ACT OF 2009 AND A STATEMENT THAT THE HOMEOWNER
MUST COMPLETE A COUNSELING SESSION PRIOR TO HIS OR HER SCHEDULED SETTLE-
MENT CONFERENCE IN ORDER TO  PARTICIPATE  IN  THE  RESIDENTIAL  MORTGAGE
FORECLOSURE DIVERSION PROGRAM.
  3.    IF THE HOMEOWNER COMPLETES A COUNSELING SESSION WITH A COUNSELOR
FROM A NOT-FOR-PROFIT ASSISTANCE PROVIDER APPROVED  BY  THE  DEPARTMENT,
SUCH  COUNSELOR SHALL SEND A LOAN MODIFICATION PROPOSAL TO THE FORECLOS-
ING PARTY AT LEAST TEN DAYS PRIOR TO THE  SETTLEMENT  CONFERENCE.    THE
FORECLOSING  PARTY SHALL, PRIOR TO THE SETTLEMENT CONFERENCE, REVIEW THE
MODIFICATION PROPOSAL AND MAKE A GOOD FAITH EFFORT TO REACH A RESOLUTION
WITH THE HOMEOWNER.
  4. AT THE INITIAL  CONFERENCE  HELD  PURSUANT  TO  THIS  SECTION,  ANY
DEFENDANT  CURRENTLY  APPEARING  PRO  SE, SHALL BE DEEMED TO HAVE MADE A
MOTION TO PROCEED AS A POOR PERSON UNDER SECTION ELEVEN HUNDRED  ONE  OF
THE CIVIL PRACTICE LAW AND RULES. THE COURT SHALL DETERMINE WHETHER SUCH

S. 4109--A                          5

PERMISSION  SHALL  BE GRANTED PURSUANT TO STANDARDS SET FORTH IN SECTION
ELEVEN HUNDRED ONE OF THIS CHAPTER.  IF  THE  COURT  APPOINTS  DEFENDANT
COUNSEL  PURSUANT  TO  SUBDIVISION  (A) OF SECTION ELEVEN HUNDRED TWO OF
THIS  CHAPTER,  IT  SHALL  ADJOURN  THE CONFERENCE TO A DATE CERTAIN FOR
APPEARANCE OF COUNSEL AND SETTLEMENT DISCUSSIONS PURSUANT TO SUBDIVISION
ONE OF THIS SECTION, AND OTHERWISE SHALL PROCEED WITH THE CONFERENCE.
  5. AT ANY CONFERENCE HELD PURSUANT  TO  THIS  SECTION,  THE  PLAINTIFF
SHALL  APPEAR IN PERSON OR BY COUNSEL, AND IF APPEARING BY COUNSEL, SUCH
COUNSEL SHALL BE FULLY AUTHORIZED TO DISPOSE OF THE CASE.  THE DEFENDANT
SHALL APPEAR IN PERSON OR BY COUNSEL. IF THE DEFENDANT IS APPEARING  PRO
SE, THE COURT SHALL ADVISE THE DEFENDANT OF THE NATURE OF THE ACTION AND
HIS  OR  HER RIGHTS AND RESPONSIBILITIES AS A DEFENDANT. WHERE APPROPRI-
ATE, THE COURT MAY PERMIT A REPRESENTATIVE OF THE  PLAINTIFF  TO  ATTEND
THE SETTLEMENT CONFERENCE TELEPHONICALLY OR BY VIDEO-CONFERENCE.
  6.  BOTH  PARTIES  MUST HAVE ANY SUPPORTING DOCUMENTATION WITH THEM AT
THE TIME OF THE CONFERENCE.   IF THE  HOMEOWNER  ATTENDED  A  COUNSELING
SESSION  WITH  AN  APPROVED  COUNSELOR, SUCH COUNSELOR MUST HAVE GIVEN A
LOAN MODIFICATION PROPOSAL TO THE FORECLOSING PARTY AT  LEAST  TEN  DAYS
PRIOR TO THE SETTLEMENT CONFERENCE.
  7.  THE COURT SHALL PRESIDE OVER THE CONFERENCE IN AN EFFORT TO ESTAB-
LISH A REPAYMENT PLAN THAT IS ACCEPTABLE TO THE LENDER THAT  ALLOWS  THE
HOMEOWNER TO REMAIN IN THE HOME.
  8.  AFTER  THE SETTLEMENT CONFERENCE, THE COURT SHALL PRODUCE A REPORT
FINALIZING AND DETAILING ANY TERMS AND CONDITIONS THAT HAVE BEEN  AGREED
UPON  BY  THE  PARTIES. SUCH REPORT SHALL BE MADE PART OF THE RECORD FOR
THE ACTION.
  S 8. The real property actions  and  proceedings  law  is  amended  by
adding a new section 1316 to read as follows:
  S 1316. THE COURT SHALL NOTIFY THE DEFENDANT OF ANY FORECLOSURE ACTION
ON  A  RESIDENTIAL  MORTGAGE LOAN, IN WHICH THE ACTION WAS INITIATED BUT
WHERE THE FINAL ORDER OF JUDGMENT WAS NOT ISSUED PRIOR TO THE  EFFECTIVE
DATE  OF  THE FORECLOSURE DIVERSION ACT OF 2009, THAT SUCH DEFENDANT MAY
REQUEST A SETTLEMENT CONFERENCE  IN  ACCORDANCE  WITH  RULE  THIRTY-FOUR
HUNDRED EIGHT OF THE CIVIL PRACTICE LAW AND RULES.
  S  9.  The  real  property  actions  and proceedings law is amended by
adding a new section 1305 to read as follows:
  S 1305. FORECLOSURES; COURT RELIEF.  1. VENUE. IN ANY ACTION TO  FORE-
CLOSE  A  RESIDENTIAL  MORTGAGE  UNDER THIS ARTICLE A MORTGAGOR NAMED IN
SUCH ACTION MAY APPLY FOR RELIEF IN STATE SUPREME COURT PURSUANT TO THIS
SECTION.
  2. TIMING OF POSTPONEMENT. IF A MORTGAGEE  HAS  OTHERWISE  ESTABLISHED
ITS  LEGAL  RIGHT  TO  JUDGMENT  ON AN ACTION TO FORECLOSE A RESIDENTIAL
MORTGAGE PURSUANT TO THIS CHAPTER, THEN SUCH ACTION  SHALL  BE  HELD  IN
ABEYANCE  BY  THE COURT BEFORE WHICH SUCH ACTION IS PENDING FOR A PERIOD
OF NINETY DAYS. IF THE MORTGAGOR RECEIVES COUNSELING FROM A NOT-FOR-PRO-
FIT ASSISTANCE  PROVIDER  APPROVED  BY  THE  DIVISION  AND  SUBSEQUENTLY
PARTICIPATES  IN  A  SETTLEMENT  CONFERENCE, THEN THE COURT BEFORE WHICH
SUCH ACTION IS PENDING SHALL HOLD SUCH ACTION IN ABEYANCE FOR  AN  ADDI-
TIONAL  NINE  MONTHS.    SUCH  ADDITIONAL  PERIOD OF TIME IS INTENDED TO
PERMIT THE PARTIES TO SETTLE THE ACTION OUTSIDE OF COURT  AND  TO  FORE-
STALL FORECLOSURE WHEREVER POSSIBLE.
  3.  PROCESS AND FEES. IF AN ACTION TO FORECLOSE A RESIDENTIAL MORTGAGE
HAS BEEN COMMENCED PRIOR TO THE EFFECTIVE DATE OF THIS SECTION, A  MORT-
GAGOR  MAY  ASK  THE COURT BEFORE WHICH SUCH ACTION IS COMMENCED TO HOLD
SUCH ACTION IN ABEYANCE PURSUANT TO SUBDIVISION  TWO  OF  THIS  SECTION.
MOTIONS  ON  NOTICE  IN ACCORDANCE WITH THE CIVIL PRACTICE LAW AND RULES

S. 4109--A                          6

MADE BY THE MORTGAGOR SHALL BE DEEMED TO  HAVE  BEEN  FILED  BY  A  POOR
PERSON  PURSUANT  TO  ARTICLE ELEVEN OF THE CIVIL PRACTICE LAW AND RULES
AND ALL COURT FEES OTHERWISE APPLICABLE TO SUCH ACTIONS AND PAYABLE BY A
MORTGAGOR  SHALL  BE  WAIVED.    IF  A  FORECLOSURE  ACTION HAS NOT BEEN
COMMENCED PRIOR TO THE EFFECTIVE DATE OF THIS SECTION, A MORTGAGOR  MUST
COMMENCE  AN  ACTION  IN  STATE  SUPREME  COURT  BY FILING AND SERVING A
SUMMONS PURSUANT TO ARTICLE THREE OF THE CIVIL PRACTICE  LAW  AND  RULES
WITH A REQUEST FOR RELIEF PURSUANT TO THE TERMS OF THIS SECTION. IN SUCH
CASE,  SUCH  FILING  SHALL BE DEEMED TO HAVE BEEN FILED BY A POOR PERSON
PURSUANT TO ARTICLE ELEVEN OF THE CIVIL PRACTICE LAW AND RULES  AND  ALL
FILING  AND  COURT FEES OTHERWISE APPLICABLE TO SUCH ACTIONS AND PAYABLE
BY A MORTGAGOR IN THE FORM OF INDEX AND MOTION FEES SHALL BE WAIVED.
  4. PRIMA FACIE CASE. A MORTGAGOR MUST ESTABLISH A PRIMA FACIE CASE  IN
THE  MOTION  OR PLEADING. AMENDMENTS TO SUCH MOTION OR PLEADING SHALL BE
LIBERALLY GRANTED. SUCH PLEADING MUST ESTABLISH THAT:
  A. THE MORTGAGOR IS A NATURAL PERSON; AND
  B. THE DEBT IS INCURRED BY THE MORTGAGOR PRIMARILY FOR PERSONAL, FAMI-
LY OR HOUSEHOLD PURPOSES; AND
  C. THE LOAN IS SECURED BY A MORTGAGE, SECOND MORTGAGE OR  HOME  EQUITY
LOAN  ON  REAL  PROPERTY  WHICH  IS IMPROVED WITH A RESIDENTIAL BUILDING
CONTAINING ONE TO FOUR DWELLING UNITS; AND
  D. THE REAL PROPERTY SUBJECT TO FORECLOSURE IS THE PRINCIPAL RESIDENCE
OF THE MORTGAGOR; AND
  E. THE MORTGAGOR OWNS NO OTHER REAL PROPERTY; AND
  F. THE REAL PROPERTY IS LOCATED IN THIS STATE.
  5. MONTHLY PAYMENT SCHEDULE. IF A PRIMA FACIE  CASE  HAS  BEEN  ESTAB-
LISHED,  THE  COURT  OFFICER  OR  MEDIATOR PRESIDING OVER THE SETTLEMENT
CONFERENCE SET FORTH IN RULE 3408 OF THE CIVIL PRACTICE  LAW  AND  RULES
SHALL  WORK WITH THE PARTIES TO ESTABLISH THE TERMS OF A MONTHLY PAYMENT
SCHEDULE WHICH WILL PRESERVE THE RELATIVE FINANCIAL  INTERESTS  OF  BOTH
PARTIES  UNDER TERMS WHICH ARE EQUITABLE AND JUST. TOWARDS THAT END, THE
COURT OFFICER OR MEDIATOR SHALL INQUIRE INTO THE FINANCES  OF  BOTH  THE
MORTGAGEE  AND  THE  MORTGAGOR.  THE PURPOSE OF SUCH INQUIRY SHALL BE TO
DETERMINE THE MINIMUM  AMOUNT  NECESSARY  TO  MAINTAIN  THE  MORTGAGEE'S
FINANCIAL  POSITION AND TO DETERMINE THE AMOUNT WHICH THE MORTGAGOR WILL
BE ABLE TO AFFORD.  SUCH MONTHLY PAYMENTS SHALL BE APPLIED TO THE  PRIN-
CIPAL AND INTEREST UPON THE INDEBTEDNESS.  IF THE FINANCIAL CONDITION OF
THE  MORTGAGOR  EXCEEDS  THE  MINIMUM  AMOUNT  NECESSARY TO MAINTAIN THE
FINANCIAL  POSITION  OF  THE  MORTGAGEE,  SUCH  MONTHLY  AMOUNT  MAY  BE
INCREASED  BEYOND THE MINIMUM AMOUNT AS DETERMINED WITHIN THE DISCRETION
OF THE COURT OFFICER OR MEDIATOR.  IT IS WITHIN THE COURT  OFFICER'S  OR
MEDIATOR'S  DISCRETION  TO  DETERMINE  WHETHER THE ESTABLISHMENT OF SUCH
PAYMENT SCHEDULE IS POSSIBLE UNDER TERMS WHICH ARE EQUITABLE  AND  JUST.
THE  PURPOSE OF SUCH MONTHLY PAYMENTS IS TO PRESERVE THE RELATIVE FINAN-
CIAL INTERESTS OF BOTH PARTIES UNTIL A SETTLEMENT CAN BE REACHED BUT  IN
NO  EVENT  SHALL  SUCH  ORDER  GOVERN FOR MORE THAN ONE YEAR. FAILURE TO
ADHERE TO THE TERMS OF SUCH SCHEDULE MAY ALSO RESULT IN  FORECLOSURE  OR
LIFTING OF THE ABEYANCE.
  6. POSTPONEMENT ORDER. ONCE THE COURT DETERMINES THAT AN EQUITABLE AND
JUST  PAYMENT SCHEDULE CAN BE ESTABLISHED, IT SHALL ISSUE AN ORDER WHICH
SETS FORTH THE TERMS OF SUCH PAYMENT SCHEDULE  AND  SERVE  IT  UPON  ALL
PARTIES  TO THE PROCEEDING. SUCH ORDER SHALL SET FORTH A RETURN DATE FOR
THE RE-EXAMINATION OF SUCH MATTER AFTER PASSAGE OF THE POSTPONEMENT TIME
PERIOD AT A FORMAL HEARING ON NOTICE  TO  THE  PARTIES.  THE  COURT  MAY
TAILOR  RELIEF  AS  REQUIRED BY THE FACTS OF EACH CASE THAT FALLS WITHIN
THE PURVIEW OF THIS SECTION. HOWEVER, IN NO EVENT SHALL SUCH ORDER POST-

S. 4109--A                          7

PONE FINAL ACTION BEYOND  ONE  YEAR  WITHOUT  A  RE-EXAMINATION  OF  THE
PARTIES'  FINANCIAL  CIRCUMSTANCES AFTER FORMAL HEARING ON NOTICE TO THE
PARTIES. THE TIME PERIOD OF SUCH ORDER SHALL RUN FROM THE  DATE  OF  THE
ENTRY  OF  SUCH ORDER.  SUCH ABEYANCE SHALL NOT BEGIN UNTIL THE FORECLO-
SURE PROCESS HAS REACHED THE POINT WHERE A FINAL DETERMINATION IS POSSI-
BLE BUT SHALL BE WITHHELD UNTIL THE  POSTPONEMENT  PERIOD  HAS  ELAPSED.
ENTITLEMENT  TO  SUCH ABEYANCE MAY BE ESTABLISHED AT ANY TIME REGARDLESS
OF WHETHER FORECLOSURE IS BEING SOUGHT BY THE MORTGAGEE. MULTIPLE  POST-
PONEMENTS  MAY BE GRANTED IN THE DISCRETION OF THE COURT IF WARRANTED BY
THE FACTS OF A GIVEN CASE AND THE ECONOMIC CONDITIONS ACROSS THE STATE.
  7. CONTINUING JURISDICTION. THE COURT SHALL MAINTAIN CONTINUING JURIS-
DICTION OF THE MATTER UNTIL IT REACHES FINAL RESOLUTION. UPON THE APPLI-
CATION OF EITHER PARTY, PRIOR TO  THE  EXPIRATION  OF  THE  POSTPONEMENT
PERIOD,  UPON PRESENTATION OF EVIDENCE THAT THE TERMS FIXED BY THE COURT
ARE NO LONGER JUST AND EQUITABLE, THE COURT MAY REVISE  AND  ALTER  SUCH
TERMS  IN  SUCH  MANNER  AS THE CHANGED CIRCUMSTANCES AND CONDITIONS MAY
REQUIRE.
  S 10. The judiciary law is amended by adding a new section 2-c to read
as follows:
  S 2-C. INDIVIDUAL ASSIGNMENTS. THE UNIFIED COURT SYSTEM, IN ACCORDANCE
WITH THEIR INDIVIDUAL ASSIGNMENT SYSTEM, SHALL ENSURE THAT ALL CAUSES OF
ACTION TO FORECLOSE ON REAL PROPERTY SHALL BE ASSIGNED TO THE SAME JUDGE
OR JUDGES, TO THE EXTENT PRACTICABLE.
  S 11. Notwithstanding the ninety day provision  in  subdivision  1  of
rule  3408  of  the civil practice law and rules, a judge shall schedule
settlement conferences pursuant to  such  section  for  any  foreclosure
proceeding currently on their calendar.
  S  12.  This  act shall take effect on the sixtieth day after it shall
have become a law. Effective immediately, the  superintendent  of  banks
may promulgate any rule or regulation necessary for the timely implemen-
tation of this act on its effective date.

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

                                 4109--B

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                              April 9, 2009
                               ___________

Introduced  by  Sens.  KLEIN, ADAMS, DIAZ, HASSELL-THOMPSON, C. JOHNSON,
  MONTGOMERY, ONORATO -- read twice and ordered printed, and when print-
  ed to  be  committed  to  the  Committee  on  Judiciary  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to  said  committee  --  reported  favorably  from  said committee and
  committed to the Committee on  Codes  --  committee  discharged,  bill
  amended,  ordered reprinted as amended and recommitted to said commit-
  tee

AN ACT enacting the "foreclosure diversion act of 2009";  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:

  Section 1. Short title.  This act shall be known and may be  cited  as
the "foreclosure diversion act of 2009".
  S  2.  Statement of legislative purpose and findings.  The legislature
finds and declares that there is a public emergency; that the  extension
of  unaffordable mortgage loans, unaffordable second mortgages and unaf-
fordable home equity loans have  resulted  in  thousands  of  homeowners
losing  their homes.  The problems associated with these loans adversely
affect the availability of capital, the demand for housing, the value of
real estate, and more importantly, the ability  of  homeowners  to  keep

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08584-11-9
              

S. 4109--B                          2

their homes and communities viable.  The pending reset of interest rates
in many home mortgages, second mortgages and home equity loans will only
exacerbate this situation for many homeowners. The expectation that many
such  variable  rate mortgages will fall into foreclosure upon the reset
of the interest rate compels the state to take action. State  assistance
to homeowners through a counseling program is necessary in order to stem
this crisis.
  S 3. Definitions. As used in this act, the following words and phrases
shall have the following meanings:
  1. "Commissioner" shall mean the commissioner of the state division of
housing and community renewal.
  2. "Department" shall mean the banking department.
  3.  "Division"  shall mean the state division of housing and community
renewal.
  4. "Eligible  homeowners"  shall  mean  any  resident  of  this  state
currently  residing  in  a  home located in this state subject to a home
loan who  the  commissioner  determines,  pursuant  to  the  eligibility
restrictions  set forth in this act, is in need of foreclosure diversion
assistance.
  5. "Home loan" shall mean a residential home mortgage loan,  including
an  open-end  credit plan, other than a reverse mortgage transaction, in
which:
  (a) the borrower is a natural person;
  (b) the debt is incurred by the borrower primarily for personal, fami-
ly or household purposes;
  (c) the loan is secured by a mortgage or deed of trust on real  estate
upon  which  there is located a structure or structures intended princi-
pally for occupancy of 1 to 4 families which is occupied by the borrower
as the borrower's principal dwelling; and
  (d) the property is located in this state.
  6. "Lender" shall mean (a) a mortgage banker as defined  in  paragraph
(f) of subdivision 1 of section 590 of the banking law, or (b) an exempt
organization as defined in paragraph (e) of subdivision 1 of section 590
of  the banking law, or (c) a mortgage loan servicer as defined in para-
graph (h) of subdivision 1 of section 590 of the banking law.
  7. "Non-profit assistance provider" shall mean a corporation or  group
of  corporations  organized  under  the provisions of the not-for-profit
corporation law, including but not limited to neighborhood  preservation
companies  as defined in section 902 of the private housing finance law,
entities that perform housing preservation and community renewal  activ-
ities pursuant to article 17 of the private housing finance law, common-
ly  referred  to  as  rural  preservation  companies,  and legal service
providers, and municipalities.
  8. "Service area" shall mean the established or stated boundaries of a
non-profit assistance provider or, if an assistance  provider  does  not
have established boundaries for the geographic area in which it provides
services, the geographic area defined in its proposal to the division to
be a service provider.
  9. "Superintendent" shall mean the superintendent of banks.
  S  4.  Education and outreach to homeowners.  In coordination with the
division and the consumer protection board, the department shall  under-
take  outreach  activities  directed  at  any homeowners whose homes are
subject to foreclosure.  Such outreach activities shall include, but not
be limited to:
  1. the production and broadcast of public service announcements  using
electronic  media  to  inform  the general public of the availability of

S. 4109--B                          3

counseling through the New  York  state  foreclosure  diversion  program
established  by this act. Such public service announcements shall inform
the homeowner of the nature and purpose of the counseling and provide  a
website and phone number for the homeowner to utilize; and
  2.  the inclusion of a description on the internet websites maintained
by the division, the banking  department  and  the  consumer  protection
board  of the New York state foreclosure diversion program and a listing
of those entities that provide counseling with respect to  the  program.
Such listing shall include the address and phone number of each entity.
  S 5. Subdivisions 1 and 3 of section 1303 of the real property actions
and  proceedings law, as amended by chapter 472 of the laws of 2008, are
amended to read as follows:
  1. The foreclosing party  in  a  mortgage  foreclosure  action,  which
involves  residential real property consisting of owner-occupied one-to-
four-family dwellings shall provide notice to the mortgagor  in  accord-
ance  with the provisions of this section with regard to information and
assistance about the foreclosure process.   SUCH  NOTICE  SHALL  INCLUDE
INFORMATION  ABOUT THE AVAILABILITY OF THE FORECLOSURE DIVERSION PROGRAM
AND ITS ABILITY TO ASSIST HOMEOWNERS IN  AVOIDING  FORECLOSURE  AND  THE
MANDATORY  COUNSELING  REQUIRED  FOR  PARTICIPATION  IN  THE FORECLOSURE
DIVERSION PROGRAM.  SUCH NOTICE SHALL INCLUDE THE HOTLINE ESTABLISHED BY
THE BANKING DEPARTMENT AND PROVIDED  BY  THE  DIVISION  OF  HOUSING  AND
COMMUNITY  RENEWAL PURSUANT TO SECTION FOUR OF THE FORECLOSURE DIVERSION
ACT OF 2009 AND THE NAMES AND CONTACT INFORMATION FOR ALL NOT-FOR-PROFIT
ASSISTANCE PROVIDERS AUTHORIZED BY THE  DEPARTMENT  TO  PROVIDE  HOUSING
COUNSELING SERVICES TO HOMEOWNERS.
  3. The notice required by this section shall appear as follows:
                   Help for Homeowners in Foreclosure
  New  York  State  Law  requires that we send you this notice about the
foreclosure process. Please read it carefully.
  BEFORE YOU ATTEND A SETTLEMENT CONFERENCE, YOU ARE STRONGLY  URGED  TO
SCHEDULE  AND ATTEND A COUNSELING SESSION BY CALLING THE BANKING DEPART-
MENT AT THE FOLLOWING HOTLINE NUMBER: _______________________
Summons and Complaint
  You are in danger of losing your home. If you fail to respond  to  the
summons  and  complaint  in  this  foreclosure action, you may lose your
home. Please read the summons and complaint carefully. You should  imme-
diately  contact  an  attorney  or your local legal aid office to obtain
advice on how to protect yourself.  YOU SHOULD IMMEDIATELY SEEK  OUT  AN
APPROVED  LOAN  COUNSELOR. A LIST OF APPROVED COUNSELORS CAN BE OBTAINED
BY CALLING THE HOTLINE. IF YOU DO NOT ATTEND A COUNSELING  SESSION,  YOU
WILL NOT BE ELIGIBLE TO PARTICIPATE IN THE RESIDENTIAL MORTGAGE FORECLO-
SURE  DIVERSION PROGRAM. THIS WILL NOT AFFECT YOUR RIGHT TO A SETTLEMENT
CONFERENCE, BUT WILL AFFECT YOUR ELIGIBILITY FOR A POSTPONEMENT OF FORE-
CLOSURE UNDER THE RESIDENTIAL MORTGAGE FORECLOSURE DIVERSION PROGRAM.
Sources of Information and Assistance
  The State encourages you to become  informed  about  your  options  in
foreclosure. In addition to seeking assistance from an attorney or legal
aid  office,  there are government agencies and non-profit organizations
that you may contact for information about possible  options,  including
trying to work with your lender during this process.
  To  locate  an  entity  near  you, you may call the toll-free helpline
maintained by the New York State  Banking  Department  at  _____________
(enter  number)  or  visit  the  Department's website at _______________
(enter web address).
Foreclosure rescue scams

S. 4109--B                          4

  Be careful of people who approach you with offers to "save" your home.
There are individuals who watch for notices of  foreclosure  actions  in
order  to  unfairly  profit  from  a homeowner's distress. You should be
extremely careful about any such promises and any suggestions  that  you
pay  them a fee or sign over your deed. State law requires anyone offer-
ing such services for profit  to  enter  into  a  contract  which  fully
describes  the services they will perform and fees they will charge, and
which prohibits them from taking any money  from  you  until  they  have
completed all such promised services.
  S  6.   The banking law is amended by adding a new section 6-n to read
as follows:
  S 6-N. COUNSELING OF MORTGAGEES. 1. THE DEPARTMENT SHALL  ESTABLISH  A
PROCEDURE TO COUNSEL HOMEOWNERS WHOSE PROPERTY IS SUBJECT TO OR ABOUT TO
BECOME SUBJECT TO FORECLOSURE.
  2.  A  COUNSELOR FROM A NOT-FOR-PROFIT ASSISTANCE PROVIDER APPROVED BY
THE DEPARTMENT SHALL MEET WITH ALL HOMEOWNERS PRIOR TO  THEIR  SCHEDULED
SETTLEMENT  CONFERENCE.  THE COUNSELOR SHALL ALSO CONSULT WITH THE FORE-
CLOSING PARTY OR SUCH PARTY'S REPRESENTATIVE AND ATTEMPT TO FORMULATE  A
REPAYMENT  SCHEDULE  THAT  IS  ACCEPTABLE  TO BOTH THE HOMEOWNER AND THE
FORECLOSING PARTY. IF THE PARTIES AGREE, THEY SHALL FILE  A  CERTIFICATE
OF RESOLUTION WITH THE COURT OF JURISDICTION.
  3.  IF  THE COUNSELOR IS UNABLE TO NEGOTIATE AN ACCEPTABLE RESOLUTION,
THE PARTIES SHALL FILE A CERTIFICATE OF PARTICIPATION WITH THE COURT  OF
JURISDICTION AND THE SCHEDULED SETTLEMENT CONFERENCE SHALL PROCEED.
  S  7.  Rule 3408 of the civil practice law and rules is REPEALED and a
new rule 3408 is added to read as follows:
  RULE 3408.  MANDATORY SETTLEMENT CONFERENCE IN RESIDENTIAL FORECLOSURE
ACTIONS. 1. IN ANY RESIDENTIAL FORECLOSURE ACTION IN WHICH THE DEFENDANT
IS A RESIDENT OF THE PROPERTY SUBJECT TO FORECLOSURE,  THE  COURT  SHALL
HOLD A MANDATORY CONFERENCE WITHIN NINETY DAYS AFTER THE DATE WHEN PROOF
OF  SERVICE IS FILED WITH THE COUNTY CLERK, OR ON SUCH ADJOURNED DATE AS
HAS BEEN AGREED TO BY THE PARTIES, FOR THE PURPOSE OF HOLDING SETTLEMENT
DISCUSSIONS PERTAINING TO THE RELATIVE RIGHTS  AND  OBLIGATIONS  OF  THE
PARTIES UNDER THE MORTGAGE LOAN DOCUMENTS, INCLUDING, BUT NOT LIMITED TO
DETERMINING  WHETHER  THE  PARTIES CAN REACH A MUTUALLY AGREEABLE RESOL-
UTION TO HELP THE DEFENDANT AVOID LOSING HIS OR HER HOME, AND EVALUATING
THE POTENTIAL FOR A RESOLUTION IN WHICH PAYMENT SCHEDULES OR AMOUNTS MAY
BE MODIFIED OR OTHER WORKOUT OPTIONS MAY BE AGREED TO, AND FOR  WHATEVER
OTHER PURPOSES THE COURT DEEMS APPROPRIATE.
  2.  THE COURT SHALL CAUSE A NOTICE TO BE SENT TO THE PARTIES BY CERTI-
FIED MAIL INFORMING THEM OF THE DATE, TIME, AND LOCATION OF THE  CONFER-
ENCE,  AND INFORMING THE HOMEOWNER OF HIS OR HER OPTION OF PARTICIPATION
IN THE RESIDENTIAL MORTGAGE FORECLOSURE  DIVERSION  PROGRAM  ESTABLISHED
PURSUANT  TO  THE  FORECLOSURE  DIVERSION  ACT OF 2009. THE NOTICE SHALL
INCLUDE THE HOTLINE ESTABLISHED BY THE BANKING  DEPARTMENT  PURSUANT  TO
THE FORECLOSURE DIVERSION ACT OF 2009 AND A STATEMENT THAT THE HOMEOWNER
MUST COMPLETE A COUNSELING SESSION PRIOR TO HIS OR HER SCHEDULED SETTLE-
MENT  CONFERENCE  IN  ORDER  TO  PARTICIPATE IN THE RESIDENTIAL MORTGAGE
FORECLOSURE DIVERSION PROGRAM.
  3.  IF THE HOMEOWNER COMPLETES A COUNSELING SESSION WITH  A  COUNSELOR
FROM  A  NOT-FOR-PROFIT  ASSISTANCE PROVIDER APPROVED BY THE DEPARTMENT,
SUCH COUNSELOR SHALL SEND A LOAN MODIFICATION PROPOSAL TO THE  FORECLOS-
ING  PARTY  AT  LEAST  TEN DAYS PRIOR TO THE SETTLEMENT CONFERENCE.  THE
FORECLOSING PARTY SHALL, PRIOR TO THE SETTLEMENT CONFERENCE, REVIEW  THE
MODIFICATION PROPOSAL AND MAKE A GOOD FAITH EFFORT TO REACH A RESOLUTION
WITH THE HOMEOWNER.

S. 4109--B                          5

  4.  AT  THE  INITIAL  CONFERENCE  HELD  PURSUANT  TO THIS SECTION, ANY
DEFENDANT CURRENTLY APPEARING PRO SE, SHALL BE DEEMED  TO  HAVE  MADE  A
MOTION  TO  PROCEED AS A POOR PERSON UNDER SECTION ELEVEN HUNDRED ONE OF
THIS CHAPTER. THE COURT SHALL DETERMINE WHETHER SUCH PERMISSION SHALL BE
GRANTED PURSUANT TO STANDARDS SET FORTH IN SECTION ELEVEN HUNDRED ONE OF
THIS CHAPTER. IF THE COURT APPOINTS DEFENDANT COUNSEL PURSUANT TO SUBDI-
VISION  (A)  OF  SECTION  ELEVEN  HUNDRED  TWO OF THIS CHAPTER, IT SHALL
ADJOURN THE CONFERENCE TO A DATE CERTAIN FOR APPEARANCE OF  COUNSEL  AND
SETTLEMENT  DISCUSSIONS PURSUANT TO SUBDIVISION ONE OF THIS SECTION, AND
OTHERWISE SHALL PROCEED WITH THE CONFERENCE.
  5.  AT ANY CONFERENCE HELD PURSUANT TO  THIS  SECTION,  THE  PLAINTIFF
SHALL APPEAR IN PERSON OR BY COUNSEL. ANY PERSON REPRESENTING THE PLAIN-
TIFF  SHALL  HAVE  FULL SETTLEMENT AUTHORITY, INCLUDING THE AUTHORITY TO
DISPOSE OF THE CASE AND TO ENTER INTO OR APPROVE A LOAN MODIFICATION  OR
WORKOUT  AGREEMENT. THE DEFENDANT-MORTGAGOR SHALL APPEAR IN PERSON OR BY
COUNSEL.  SUCH APPEARANCE AND PARTICIPATION BY  THE  DEFENDANT-MORTGAGOR
SHALL  NOT CONSTITUTE AN APPEARANCE IN THE ACTION NOR SHALL IT BE DEEMED
TO BE A WAIVER, IN WHOLE OR IN PART, OF ANY DEFENSES, JURISDICTIONAL  OR
OTHERWISE,  THAT THE DEFENDANT-MORTGAGOR MAY HAVE TO THE ACTION. ANY AND
ALL STATEMENTS MADE, WHETHER ORAL OR WRITTEN, AND ANY OR ALL INFORMATION
EXCHANGED AT THE CONFERENCE, SHALL BE SOLELY FOR THE PURPOSES OF  RESOL-
UTION AND SETTLEMENT AND SHALL NOT BE DEEMED TO BE THE ADMISSIONS OF ANY
PARTY WITH RESPECT TO THE UNDERLYING ACTION. IF THE DEFENDANT IS APPEAR-
ING  PRO  SE,  THE COURT SHALL ADVISE THE DEFENDANT OF THE NATURE OF THE
ACTION AND HIS OR HER RIGHTS AND RESPONSIBILITIES AS A DEFENDANT.  WHERE
APPROPRIATE, THE COURT MAY PERMIT A PLAINTIFF OR THE PLAINTIFF'S  REPRE-
SENTATIVE  TO  ATTEND  THE  SETTLEMENT  CONFERENCE  TELEPHONICALLY OR BY
VIDEO-CONFERENCE. UNTIL ALL THE PROVISIONS AND PROCEDURES OF THE SETTLE-
MENT CONFERENCE ARE CONCLUDED, THE MORTGAGEE  SHALL  BE  PRECLUDED  FROM
FILING  A MOTION FOR SUMMARY JUDGMENT OR ORDER OF REFERENCE OR OTHERWISE
PROCEEDING WITH THE FORECLOSURE CASE. THE FAILURE OF  THE  PLAINTIFF  TO
APPEAR  AT  A SCHEDULED CONFERENCE WITHOUT GOOD CAUSE OR APPEARANCE BY A
REPRESENTATIVE WITHOUT  FULL  AUTHORITY  TO  ENTER  INTO  A  SETTLEMENT,
MODIFICATION  OR  WORKOUT  AGREEMENT  SHALL SUBJECT THE PLAINTIFF AND/OR
COUNSEL TO APPROPRIATE REMEDIAL ACTION  INCLUDING  BUT  NOT  LIMITED  TO
DEFAULT, NON-SUIT OR DISMISSAL WITH PREJUDICE.
  6.  BOTH  PARTIES  MUST HAVE ANY SUPPORTING DOCUMENTATION WITH THEM AT
THE TIME OF THE CONFERENCE.   IF THE  HOMEOWNER  ATTENDED  A  COUNSELING
SESSION  WITH  AN  APPROVED  COUNSELOR, SUCH COUNSELOR MUST HAVE GIVEN A
LOAN MODIFICATION PROPOSAL TO THE FORECLOSING PARTY AT  LEAST  TEN  DAYS
PRIOR TO THE SETTLEMENT CONFERENCE.
  7.  THE COURT SHALL PRESIDE OVER THE CONFERENCE IN AN EFFORT TO ESTAB-
LISH A REPAYMENT PLAN THAT IS ACCEPTABLE TO THE LENDER THAT  ALLOWS  THE
HOMEOWNER TO REMAIN IN THE HOME.
  8.  AFTER  THE SETTLEMENT CONFERENCE, THE COURT SHALL PRODUCE A REPORT
FINALIZING AND DETAILING ANY TERMS AND CONDITIONS THAT HAVE BEEN  AGREED
UPON  BY  THE  PARTIES. SUCH REPORT SHALL BE MADE PART OF THE RECORD FOR
THE ACTION.
  S 8. The real property actions  and  proceedings  law  is  amended  by
adding a new section 1316 to read as follows:
  S 1316. THE COURT SHALL NOTIFY THE DEFENDANT OF ANY FORECLOSURE ACTION
ON  A  RESIDENTIAL  MORTGAGE LOAN, IN WHICH THE ACTION WAS INITIATED BUT
WHERE THE FINAL ORDER OF JUDGMENT WAS NOT ISSUED PRIOR TO THE  EFFECTIVE
DATE  OF  THE FORECLOSURE DIVERSION ACT OF 2009, THAT SUCH DEFENDANT MAY
REQUEST A SETTLEMENT CONFERENCE  IN  ACCORDANCE  WITH  RULE  THIRTY-FOUR
HUNDRED EIGHT OF THE CIVIL PRACTICE LAW AND RULES.

S. 4109--B                          6

  S  9.  The  real  property  actions  and proceedings law is amended by
adding a new section 1305 to read as follows:
  S  1305. FORECLOSURES; COURT RELIEF.  1. VENUE. IN ANY ACTION TO FORE-
CLOSE A RESIDENTIAL MORTGAGE UNDER THIS ARTICLE  A  MORTGAGOR  NAMED  IN
SUCH ACTION MAY APPLY FOR RELIEF IN STATE SUPREME COURT PURSUANT TO THIS
SECTION.
  2.  TIMING  OF  POSTPONEMENT. IF A MORTGAGEE HAS OTHERWISE ESTABLISHED
ITS LEGAL RIGHT TO JUDGMENT ON AN  ACTION  TO  FORECLOSE  A  RESIDENTIAL
MORTGAGE  PURSUANT  TO  THIS  CHAPTER, THEN SUCH ACTION SHALL BE HELD IN
ABEYANCE BY THE COURT BEFORE WHICH SUCH ACTION IS PENDING FOR  A  PERIOD
OF NINETY DAYS. IF THE MORTGAGOR RECEIVES COUNSELING FROM A NOT-FOR-PRO-
FIT  ASSISTANCE  PROVIDER  APPROVED  BY  THE  DIVISION  AND SUBSEQUENTLY
PARTICIPATES IN A SETTLEMENT CONFERENCE, THEN  THE  COURT  BEFORE  WHICH
SUCH  ACTION  IS PENDING SHALL HOLD SUCH ACTION IN ABEYANCE FOR AN ADDI-
TIONAL NINE MONTHS.   SUCH ADDITIONAL PERIOD  OF  TIME  IS  INTENDED  TO
PERMIT  THE  PARTIES  TO SETTLE THE ACTION OUTSIDE OF COURT AND TO FORE-
STALL FORECLOSURE WHEREVER POSSIBLE.
  3. PROCESS AND FEES. IF AN ACTION TO FORECLOSE A RESIDENTIAL  MORTGAGE
HAS  BEEN COMMENCED PRIOR TO THE EFFECTIVE DATE OF THIS SECTION, A MORT-
GAGOR MAY ASK THE COURT BEFORE WHICH SUCH ACTION IS  COMMENCED  TO  HOLD
SUCH  ACTION  IN  ABEYANCE  PURSUANT TO SUBDIVISION TWO OF THIS SECTION.
MOTIONS ON NOTICE IN ACCORDANCE WITH THE CIVIL PRACTICE  LAW  AND  RULES
MADE  BY  THE  MORTGAGOR  SHALL  BE  DEEMED TO HAVE BEEN FILED BY A POOR
PERSON PURSUANT TO ARTICLE ELEVEN OF THE CIVIL PRACTICE  LAW  AND  RULES
AND ALL COURT FEES OTHERWISE APPLICABLE TO SUCH ACTIONS AND PAYABLE BY A
MORTGAGOR  SHALL  BE  WAIVED.    IF  A  FORECLOSURE  ACTION HAS NOT BEEN
COMMENCED PRIOR TO THE EFFECTIVE DATE OF THIS SECTION, A MORTGAGOR  MUST
COMMENCE  AN  ACTION  IN  STATE  SUPREME  COURT  BY FILING AND SERVING A
SUMMONS PURSUANT TO ARTICLE THREE OF THE CIVIL PRACTICE  LAW  AND  RULES
WITH A REQUEST FOR RELIEF PURSUANT TO THE TERMS OF THIS SECTION. IN SUCH
CASE,  SUCH  FILING  SHALL BE DEEMED TO HAVE BEEN FILED BY A POOR PERSON
PURSUANT TO ARTICLE ELEVEN OF THE CIVIL PRACTICE LAW AND RULES  AND  ALL
FILING  AND  COURT FEES OTHERWISE APPLICABLE TO SUCH ACTIONS AND PAYABLE
BY A MORTGAGOR IN THE FORM OF INDEX AND MOTION FEES SHALL BE WAIVED.
  4. PRIMA FACIE CASE. A MORTGAGOR MUST ESTABLISH A PRIMA FACIE CASE  IN
THE  MOTION  OR PLEADING. AMENDMENTS TO SUCH MOTION OR PLEADING SHALL BE
LIBERALLY GRANTED. SUCH PLEADING MUST ESTABLISH THAT:
  A. THE MORTGAGOR IS A NATURAL PERSON; AND
  B. THE DEBT IS INCURRED BY THE MORTGAGOR PRIMARILY FOR PERSONAL, FAMI-
LY OR HOUSEHOLD PURPOSES; AND
  C. THE LOAN IS SECURED BY A MORTGAGE, SECOND MORTGAGE OR  HOME  EQUITY
LOAN  ON  REAL  PROPERTY  WHICH  IS IMPROVED WITH A RESIDENTIAL BUILDING
CONTAINING ONE TO FOUR DWELLING UNITS; AND
  D. THE REAL PROPERTY SUBJECT TO FORECLOSURE IS THE PRINCIPAL RESIDENCE
OF THE MORTGAGOR; AND
  E. THE MORTGAGOR OWNS NO OTHER REAL PROPERTY; AND
  F. THE REAL PROPERTY IS LOCATED IN THIS STATE.
  5. MONTHLY PAYMENT SCHEDULE. IF A PRIMA FACIE  CASE  HAS  BEEN  ESTAB-
LISHED,  THE  COURT  OFFICER  OR  MEDIATOR PRESIDING OVER THE SETTLEMENT
CONFERENCE SET FORTH IN RULE 3408 OF THE CIVIL PRACTICE  LAW  AND  RULES
SHALL  WORK WITH THE PARTIES TO ESTABLISH THE TERMS OF A MONTHLY PAYMENT
SCHEDULE WHICH WILL PRESERVE THE RELATIVE FINANCIAL  INTERESTS  OF  BOTH
PARTIES  UNDER TERMS WHICH ARE EQUITABLE AND JUST. TOWARDS THAT END, THE
COURT OFFICER OR MEDIATOR SHALL INQUIRE INTO THE FINANCES  OF  BOTH  THE
MORTGAGEE  AND  THE  MORTGAGOR.  THE PURPOSE OF SUCH INQUIRY SHALL BE TO
DETERMINE THE MINIMUM  AMOUNT  NECESSARY  TO  MAINTAIN  THE  MORTGAGEE'S

S. 4109--B                          7

FINANCIAL  POSITION AND TO DETERMINE THE AMOUNT WHICH THE MORTGAGOR WILL
BE ABLE TO AFFORD.  SUCH MONTHLY PAYMENTS SHALL BE APPLIED TO THE  PRIN-
CIPAL AND INTEREST UPON THE INDEBTEDNESS.  IF THE FINANCIAL CONDITION OF
THE  MORTGAGOR  EXCEEDS  THE  MINIMUM  AMOUNT  NECESSARY TO MAINTAIN THE
FINANCIAL  POSITION  OF  THE  MORTGAGEE,  SUCH  MONTHLY  AMOUNT  MAY  BE
INCREASED  BEYOND THE MINIMUM AMOUNT AS DETERMINED WITHIN THE DISCRETION
OF THE COURT OFFICER OR MEDIATOR.  IT IS WITHIN THE COURT  OFFICER'S  OR
MEDIATOR'S  DISCRETION  TO  DETERMINE  WHETHER THE ESTABLISHMENT OF SUCH
PAYMENT SCHEDULE IS POSSIBLE UNDER TERMS WHICH ARE EQUITABLE  AND  JUST.
THE  PURPOSE OF SUCH MONTHLY PAYMENTS IS TO PRESERVE THE RELATIVE FINAN-
CIAL INTERESTS OF BOTH PARTIES UNTIL A SETTLEMENT CAN BE REACHED BUT  IN
NO  EVENT  SHALL  SUCH  ORDER  GOVERN FOR MORE THAN ONE YEAR. FAILURE TO
ADHERE TO THE TERMS OF SUCH SCHEDULE MAY ALSO RESULT IN  FORECLOSURE  OR
LIFTING OF THE ABEYANCE.
  6. POSTPONEMENT ORDER. ONCE THE COURT DETERMINES THAT AN EQUITABLE AND
JUST  PAYMENT SCHEDULE CAN BE ESTABLISHED, IT SHALL ISSUE AN ORDER WHICH
SETS FORTH THE TERMS OF SUCH PAYMENT SCHEDULE  AND  SERVE  IT  UPON  ALL
PARTIES  TO THE PROCEEDING. SUCH ORDER SHALL SET FORTH A RETURN DATE FOR
THE RE-EXAMINATION OF SUCH MATTER AFTER PASSAGE OF THE POSTPONEMENT TIME
PERIOD AT A FORMAL HEARING ON NOTICE  TO  THE  PARTIES.  THE  COURT  MAY
TAILOR  RELIEF  AS  REQUIRED BY THE FACTS OF EACH CASE THAT FALLS WITHIN
THE PURVIEW OF THIS SECTION. HOWEVER, IN NO EVENT SHALL SUCH ORDER POST-
PONE FINAL ACTION BEYOND  ONE  YEAR  WITHOUT  A  RE-EXAMINATION  OF  THE
PARTIES'  FINANCIAL  CIRCUMSTANCES AFTER FORMAL HEARING ON NOTICE TO THE
PARTIES. THE TIME PERIOD OF SUCH ORDER SHALL RUN FROM THE  DATE  OF  THE
ENTRY  OF  SUCH ORDER.  SUCH ABEYANCE SHALL NOT BEGIN UNTIL THE FORECLO-
SURE PROCESS HAS REACHED THE POINT WHERE A FINAL DETERMINATION IS POSSI-
BLE BUT SHALL BE WITHHELD UNTIL THE  POSTPONEMENT  PERIOD  HAS  ELAPSED.
ENTITLEMENT  TO  SUCH ABEYANCE MAY BE ESTABLISHED AT ANY TIME REGARDLESS
OF WHETHER FORECLOSURE IS BEING SOUGHT BY THE MORTGAGEE. MULTIPLE  POST-
PONEMENTS  MAY BE GRANTED IN THE DISCRETION OF THE COURT IF WARRANTED BY
THE FACTS OF A GIVEN CASE AND THE ECONOMIC CONDITIONS ACROSS THE STATE.
  7. CONTINUING JURISDICTION. THE COURT SHALL MAINTAIN CONTINUING JURIS-
DICTION OF THE MATTER UNTIL IT REACHES FINAL RESOLUTION. UPON THE APPLI-
CATION OF EITHER PARTY, PRIOR TO  THE  EXPIRATION  OF  THE  POSTPONEMENT
PERIOD,  UPON PRESENTATION OF EVIDENCE THAT THE TERMS FIXED BY THE COURT
ARE NO LONGER JUST AND EQUITABLE, THE COURT MAY REVISE  AND  ALTER  SUCH
TERMS  IN  SUCH  MANNER  AS THE CHANGED CIRCUMSTANCES AND CONDITIONS MAY
REQUIRE.
  S 10. The judiciary law is amended by adding a new section 2-c to read
as follows:
  S 2-C. INDIVIDUAL ASSIGNMENTS. THE UNIFIED COURT SYSTEM, IN ACCORDANCE
WITH THEIR INDIVIDUAL ASSIGNMENT SYSTEM, SHALL ENSURE THAT ALL CAUSES OF
ACTION TO FORECLOSE ON REAL PROPERTY SHALL BE ASSIGNED TO THE SAME JUDGE
OR JUDGES, TO THE EXTENT PRACTICABLE.
  S 11. Notwithstanding the ninety day provision  in  subdivision  1  of
rule  3408  of  the civil practice law and rules, a judge shall schedule
settlement conferences pursuant to  such  section  for  any  foreclosure
proceeding currently on their calendar.
  S  12.  This  act shall take effect on the sixtieth day after it shall
have become a law and shall 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.