Rule 3408. Mandatory settlement conference in residential foreclosure
actions. (a) 1. Except as provided in paragraph two of this subdivision,
in any residential foreclosure action involving a home loan as such term
is defined in section thirteen hundred four of the real property actions
and proceedings law, in which the defendant is a resident of the
property subject to foreclosure, plaintiff shall file proof of service
within twenty days of such service, however service is made, and the
court shall hold a mandatory conference within sixty days after the date
when proof of service upon such defendant 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: (i) determining whether the
parties can reach a mutually agreeable resolution 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, including, but not limited to, a
loan modification, short sale, deed in lieu of foreclosure, or any other
loss mitigation option; or (ii) whatever other purposes the court deems
appropriate.

2. (i) Paragraph one of this subdivision shall not apply to a home
loan secured by a reverse mortgage where the default was triggered by
the death of the last surviving borrower unless:

(A) the last surviving borrower's spouse, if any, is a resident of the
property subject to foreclosure; or

(B) the last surviving borrower's successor in interest, who, by
bequest or through intestacy, owns, or has a claim to the ownership of
the property subject to foreclosure, and who was a resident of such
property at the time of the death of such last surviving borrower.

(ii) The superintendent of financial services may promulgate such
rules and regulations as he or she shall deem necessary to implement the
provisions of this paragraph.

(b) 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
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 (a) of this section, and
otherwise shall proceed with the conference.

(c) At any conference held pursuant to this section, the plaintiff and
the defendant shall appear in person or by counsel, and each party's
representative at the conference shall be fully authorized to dispose of
the case. 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 appropriate, the court may permit
a representative of the plaintiff or the defendant to attend the
settlement conference telephonically or by video-conference.

(d) Upon the filing of a request for judicial intervention in any
action pursuant to this section, the court shall send either a copy of
such request or the defendant's name, address and telephone number (if
available) to a housing counseling agency or agencies on a list
designated by the division of housing and community renewal for the
judicial district in which the defendant resides. Such information shall
be used by the designated housing counseling agency or agencies
exclusively for the purpose of making the homeowner aware of housing
counseling and foreclosure prevention services and options available to
them.

(e) The court shall promptly send a notice to parties advising them of
the time and place of the settlement conference, the purpose of the
conference and the requirements of this section. The notice shall be in
a form prescribed by the office of court administration, or, at the
discretion of the office of court administration, the administrative
judge of the judicial district in which the action is pending, and shall
advise the parties of the documents that they shall bring to the
conference.

1. For the plaintiff, such documents shall include, but are not
limited to, (i) the payment history; (ii) an itemization of the amounts
needed to cure and pay off the loan; (iii) the mortgage and note or
copies of the same; (iv) standard application forms and a description of
loss mitigation options, if any, which may be available to the
defendant; and (v) any other documentation required by the presiding
judge. If the plaintiff is not the owner of the mortgage and note, the
plaintiff shall provide the name, address and telephone number of the
legal owner of the mortgage and note. For cases in which the lender or
its servicing agent has evaluated or is evaluating eligibility for home
loan modification programs or other loss mitigation options, in addition
to the documents listed above, the plaintiff shall bring a summary of
the status of the lender's or servicing agent's evaluation for such
modifications or other loss mitigation options, including, where
applicable, a list of outstanding items required for the borrower to
complete any modification application, an expected date of completion of
the lender's or servicer agent's evaluation, and, if the modification(s)
was denied, a denial letter or any other document explaining the
reason(s) for denial and the data input fields and values used in the
net present value evaluation. If the modification was denied on the
basis of an investor restriction, the plaintiff shall bring the
documentary evidence which provides the basis for the denial, such as a
pooling and servicing agreement.

2. For the defendant, such documents shall include, but are not
limited to, if applicable, information on current income tax returns,
expenses, property taxes and previously submitted applications for loss
mitigation; benefits information; rental agreements or proof of rental
income; and any other documentation relevant to the proceeding required
by the presiding judge.

(f) Both the plaintiff and defendant shall negotiate in good faith to
reach a mutually agreeable resolution, including but not limited to a
loan modification, short sale, deed in lieu of foreclosure, or any other
loss mitigation, if possible. Compliance with the obligation to
negotiate in good faith pursuant to this section shall be measured by
the totality of the circumstances, including but not limited to the
following factors:

1. Compliance with the requirements of this rule and applicable court
rules, court orders, and directives by the court or its designee
pertaining to the settlement conference process;

2. Compliance with applicable mortgage servicing laws, rules,
regulations, investor directives, and loss mitigation standards or
options concerning loan modifications, short sales, and deeds in lieu of
foreclosure; and

3. Conduct consistent with efforts to reach a mutually agreeable
resolution, including but not limited to, avoiding unreasonable delay,
appearing at the settlement conference with authority to fully dispose
of the case, avoiding prosecution of foreclosure proceedings while loss
mitigation applications are pending, and providing accurate information
to the court and parties.

Neither of the parties' failure to make the offer or accept the offer
made by the other party is sufficient to establish a failure to
negotiate in good faith.

(g) The plaintiff must file a notice of discontinuance and vacatur of
the lis pendens within ninety days after any settlement agreement or
loan modification is fully executed.

(h) A party to a foreclosure action may not charge, impose, or
otherwise require payment from the other party for any cost, including
but not limited to attorneys' fees, for appearance at or participation
in the settlement conference.

(i) The court may determine whether either party fails to comply with
the duty to negotiate in good faith pursuant to subdivision (f) of this
section, and order remedies pursuant to subdivisions (j) and (k) of this
section, either on motion of any party or sua sponte on notice to the
parties, in accordance with such procedures as may be established by the
court or the office of court administration. A referee, judicial hearing
officer, or other staff designated by the court to oversee the
settlement conference process may hear and report findings of fact and
conclusions of law, and may make reports and recommendations for relief
to the court concerning any party's failure to negotiate in good faith
pursuant to subdivision (f) of this section.

(j) Upon a finding by the court that the plaintiff failed to negotiate
in good faith pursuant to subdivision (f) of this section, and order
remedies pursuant to this subdivision and subdivision (k) of this
section the court shall, at a minimum, toll the accumulation and
collection of interest, costs, and fees during any undue delay caused by
the plaintiff, and where appropriate, the court may also impose one or
more of the following:

1. Compel production of any documents requested by the court pursuant
to subdivision (e) of this section or the court's designee during the
settlement conference;

2. Impose a civil penalty payable to the state that is sufficient to
deter repetition of the conduct and in an amount not to exceed
twenty-five thousand dollars;

3. The court may award actual damages, fees, including attorney fees
and expenses to the defendant as a result of plaintiff's failure to
negotiate in good faith; or

4. Award any other relief that the court deems just and proper.

(k) Upon a finding by the court that the defendant failed to negotiate
in good faith pursuant to subdivision (f) of this section, the court
shall, at a minimum, remove the case from the conference calendar. In
considering such a finding, the court shall take into account equitable
factors including, but not limited to, whether the defendant was
represented by counsel.

(l) At the first settlement conference held pursuant to this section,
if the defendant has not filed an answer or made a pre-answer motion to
dismiss, the court shall:

1. advise the defendant of the requirement to answer the complaint;

2. explain what is required to answer a complaint in court;

3. advise that if an answer is not interposed the ability to contest
the foreclosure action and assert defenses may be lost; and

4. provide information about available resources for foreclosure
prevention assistance.

At the first conference held pursuant to this section, the court shall
also provide the defendant with a copy of the Consumer Bill of Rights
provided for in section thirteen hundred three of the real property
actions and proceedings law.

(m) A defendant who appears at the settlement conference but who
failed to file a timely answer, pursuant to rule 320 of the civil
practice law and rules, shall be presumed to have a reasonable excuse
for the default and shall be permitted to serve and file an answer,
without any substantive defenses deemed to have been waived within
thirty days of initial appearance at the settlement conference. The
default shall be deemed vacated upon service and filing of an answer.

(n) Any motions submitted by the plaintiff or defendant shall be held
in abeyance while the settlement conference process is ongoing, except
for motions concerning compliance with this rule and its implementing
rules.