Mandatory Settlement Conference

The foreclosure action essentially stops the foreclosure process to give you  an opportunity to sit down with the lender’s attorney or other bank representative to try to reach a settlement. The parties are required to negotiate in good faith to avoid an unnecessary foreclosure and may include a modification of the mortgage loan, a sale or refinance of the property, or a short sale or deed in lieu. It is very important to appear at each and every one of these conferences. Your case may be released back to the trial court and will proceed without many of the protections you would have while in the settlement conference if you fail to appear at these Court-monitored meetings.

The conference may be adjourned several times. If progress is being made – or if progress is not being made (and it is not your fault), the conferences may end up running to as long as a year. The conferences are presided over by a special referee, a neutral attorney who works for the court. The parties have a legal obligation to negotiate in good faith. If the lender is not negotiating in good faith, you may move the court for a finding to that effect and may ask the court to take steps to enforce the good-faith requirement. This can include cancelling interest and fees and imposing a fine of up to $25,000, payable to the state. You will receive a letter from the court informing them of the conference date. Because many borrowers did not know how to timely answer the complaint but did show up for the conferences, the Legislature adopted a change in the law that took effect in December of 2016. This change gives a borrower who has not served an answer a second opportunity to do so within 30 days after the first settlement conference. At the first conference, the referee will explain to you the importance of answering the complaint and will give the you a list of legal services organizations that can help.

Legal Editors: Thomas Tilona and K. Scott Kohanowski, City Bar Justice Center Foreclosure Prevention Project, December, 2017