§ 3410 — Face-to-face meeting for foreclosure of reverse cooperative apartment unit loans

Rule 3410. Face-to-face meeting for foreclosure of reverse cooperative\napartment unit loans. (a) For purposes of this rule, default shall only\ninclude a borrower's breach of an obligation under the reverse mortgage\ncooperative loan agreement, and shall not include death of the borrower,\nexcept as detailed in paragraph one of subdivision (i) of this rule, or\nthe borrower's permanent vacating of the cooperative unit.\n (b) In any action involving a borrower's default under a reverse\ncooperative apartment unit loan, as defined in paragraph (a) of\nsubdivision one of section six-o of the banking law, the lender shall\nfile a petition with the supreme court of the county in which the\ncooperative apartment is located stating that the loan is in default and\nthe reason for the default. The petition must be served on the borrower\npursuant to section three hundred eight of this chapter. Within ten days\nof the date of service of the notice to the borrower, the petitioner\nmust file a specialized request for judicial intervention with the\nclerk. Within sixty days of receipt of the notice or on such adjourned\ndate as has been agreed to by the parties, the court shall hold a\nmandatory settlement conference for the purpose of holding settlement\ndiscussions pertaining to the relative rights and obligations of the\nparties under the loan documents, including, but not limited to:\n 1. determining whether the parties can reach a mutually agreeable\nresolution to help the borrower avoid losing his or her cooperative\napartment unit, and evaluating the potential for a resolution or other\nworkout options may be agreed; or\n 2. whatever other purposes the court deems appropriate.\n (c) At any meeting held pursuant to this rule, the lender and the\nborrower shall appear in person or by counsel, and each party's\nrepresentative at the meeting shall be fully authorized to dispose of\nthe matter. If the borrower is appearing without counsel, the court\nshall inform the borrower of the nature of the action and his or her\nrights and responsibilities. Where appropriate, the court may permit the\nborrower or a representative of the borrower or the defendant to attend\nthe settlement conference telephonically or by video-conference.\n (d) Upon the filing of the notice of default with the court, the court\nshall send either a copy of the notice or the borrower's name, address\nand telephone number (if available) to a housing counseling agency or\nagencies on a list designated by the department for the geographic\nregion in which the borrower resides. Such information shall be used by\nthe designated housing counseling agency or agencies exclusively for the\npurpose of making the borrower aware of housing counseling and\nforeclosure prevention services and options available to them.\n (e) The court shall promptly send a notice to parties advising them of\nthe time and place of the meeting, the purpose of the meeting and the\nrequirements of this rule. The notice shall be in a form prescribed by\nthe court, and shall advise the parties of the documents that they shall\nbring to the meeting.\n (f) Both the lender and the borrower shall negotiate in good faith to\nreach a mutually agreeable resolution, including but not limited to a\nre-payment agreement, or any other loss mitigation, if possible.\nCompliance with the obligation to negotiate in good faith pursuant to\nthis rule shall be measured by the totality of the circumstances,\nincluding but not limited to the following factors:\n 1. compliance with the requirements of this rule and applicable\nregulations pertaining to the face-to-face meeting process;\n 2. compliance with applicable lending and servicing laws, rules,\nregulations, investor directives, and loss mitigation standards or\noptions; and\n 3. conduct consistent with efforts to reach a mutually agreeable\nresolution, including but not limited to, avoiding unreasonable delay,\nappearing at the meeting with authority to fully dispose of the matter,\navoiding moving forward to take possession while loss mitigation\napplications and attempts are pending, and providing accurate\ninformation to the department and all parties.\n Neither of the parties' failure to make the offer or accept the offer\nmade by the other party is sufficient to establish a failure to\nnegotiate in good faith.\n (g) Upon a finding by the court that the plaintiff failed to negotiate\nin good faith pursuant to subdivision (f) of this rule, the court shall,\nat a minimum, toll the accumulation and collection of interest, costs,\nand fees during any undue delay caused by the plaintiff, and where\nappropriate, the court may also impose one or more of the following:\n 1. compel production of any documents requested by the court or the\ncourt's designee during the settlement conference;\n 2. impose a civil penalty payable to the state that is sufficient to\ndeter repetition of the conduct and in an amount not to exceed\ntwenty-five thousand dollars;\n 3. the court may award actual damages, fees, including attorney fees\nand expenses to the defendant as a result of plaintiff's failure to\nnegotiate in good faith; or\n 4. award any other relief that the court deems just and proper.\n (h) A party to a default action may not charge, impose, or otherwise\nrequire payment from the other party for any cost, including but not\nlimited to attorneys' fees, for appearance at or participation in the\nsettlement conference process.\n (i) This rule shall not apply if:\n 1. the borrower dies and there is no surviving borrower, unless: (i)\nthe last surviving borrower's spouse, if any, is a resident of the\nproperty subject to foreclosure; or (ii) the last surviving borrower's\nsuccessor in interest who by bequest or through intestacy, owns, or has\na claim to the ownership of the property subject to foreclosure, and who\nwas a resident of such property at the time of death of such last\nsurviving borrower; or the borrower does not reside in the unit after\nsuch non-occupancy by the borrower as verified by the lender and the\nlender has taken action as required by subdivision eight of section\nsix-o of the banking law; or\n 2. a repayment plan or other workout consistent with the borrower's\ncircumstances is entered into to bring the borrower's account current or\notherwise cure the default thus making a meeting unnecessary.\n