Monteiro & Fishman LLP

Facing a title wave of foreclosures across the State, in 2009 the N.Y.S. legislature enacted a law designed to help homeowners facing foreclosures. That law mandated that all parties to a foreclosure case (i.e. the bank and homeowners) attend a foreclosure settlement conference for cases commenced after February 13, 2010. At the conference, the court will discuss the rights of the parties, determine alternatives to foreclosure (including whether a loan modification is available), and streamline court proceedings if a settlement cannot be reached or if no foreclosure alternatives are available. These conferences are held in a court room located in the basement of Nassau County Supreme Court, commonly called the “Foreclosure Court” and presided by court-appointed “Referees in Foreclosure.”

 
In Foreclosure Court, the foreclosing bank should bring all relevant documents necessary to foreclose, including a payoff, reinstatement documents, the mortgage and note, a payment history, loan modification and any other proposals. Similarly, homeowners should also bring various financial documents, like current income, paystubs, itemization of monthly expenses, mortgage statements, income tax returns, to determine whether they are eligible for foreclosure alternatives, like a loan modification.

 
If the homeowner has already applied for a loan modification, then they should appear with a complete status report. The bank’s lawyer who attends the conference must either have authority to settle, withdraw the foreclosure case, or discuss the status of the loan modification application if available.
The parties must appear at the Foreclosure Part, and any adjourned dates, until a decision on a loan modification application or other settlement arraignment is reached. While the Court acknowledges that the “specter of thousands of mortgagees losing their foothold on the path to home ownership is distressing … the obligation of the Courts is to do justice to all parties, including the holders of valid notes and mortgages which have fallen into default [and the referees shall] carry out the sale of property when directed…”. As such, if the loan modification is rejected, or a settlement not reached, then the Court will issue an order transferring the case out of the foreclosure part and the Bank is allowed to proceed with its foreclosure.
Under that scenario, the bank will move the Court to sell the house at auction. On the date of sale, the property will be auctioned and sold to a successful bidder.

 
Despite the Court rules and mandates, what typically occurs is the foreclosing bank will appear at the Foreclosure Court through their attorneys. The bank lawyers will oftentimes not be provided with accurate paperwork by their bank clients, lack other necessary paperwork, or are misinformed about the status of a pending loan modification application (oftentimes requesting permission to proceed with its foreclosure and auction sale).

As such, a home owner who has filed a loan modification application with their bank must oftentimes contend with a misinformed (or under-informed) bank attorneys in a Court proceeding where they have little to no experience. This prospect can be daunting and intimidating. However, an experienced loan modification lawyer will ensure that a client’s modification submissions are correct, properly received and review by the bank, and in its most advantageous format. At the Foreclosure Court, the attorney can quickly correct any errors in the bank attorney’s submission to the Court, or correct misstatements made about the status of the application. An experienced loan modification lawyer will also ensure that a client’s house doesn’t wrongly proceed to a foreclosure auction and sale – which can have irreversible consequences.

 
Assisting homeowners through the foreclosure process has given rise to “mortgage modification professionals” and other “rescue companies.” However, these offices are not law firms, are not licensed, and are not bound by the strict legal and ethical rules that New York attorneys must obey. Also, these “professionals” cannot represent homeowners in court Beproceeding – like Nassau County’s Foreclosure Court. As with many things, diligence and research are necessary to avoid being scammed by con artists and in choosing the right attorney – if any.

 
The Foreclosure Court is having a positive effect on foreclosures in Nassau County. In August 2012, the foreclosure rate was 7.09% of all Long Island homes, which dropped to 4.67% by February 2016. However, the foreclosure rate is still well above the national average of 1.13%. The Foreclosure Part is also extending the time to foreclose, averaging 1,061 days, which is the third-longest foreclosure delay in the country. As of May 2016, the below towns, villages and cities in Long Island have the following number of homes in foreclosure, evidencing that foreclosed homes is an issue that affects all Long Islanders.

NASSAU COUNTY
Town of Hempstead
Atlantic Beach 37 Baldwin 710
Bellmore 102 Seaford 208
Bethpage 191 Cedarhurst 70
East Meadow 339 East Rockaway 114
Elmont 768 Floral Park 914
Franklin Square 230 Freeport 975
Garden City 119 Hempstead 1,135
Hewlett 71 Inwood 118
Island Park 158 Lawrence 69
Levittown 586 Lynbrook 172
Malverne 91 Merrick 312
Mineola 95 New Hyde Park 194
Point Lookout 10 Rockville Centre 169
Roosevelt 573 Seaford 208
Oceanside 353 Uniondale 549
Valley Stream 929 Wantagh 25
West Hempstead 357 Woodmere 131

Town of North Hempstead
Albertson 42 Carle Place 31
Floral Park 914 Glenwood Landing 13
Great Neck 197 Greenvale 11
Kings Point 70 Manhasset 50
Williston Park 43 Old Westbury 40
Port Washington 144 Roslyn 77
Roslyn Heights 95 Westbury 719

Town of Oyster Bay
Bayville 62 Bethpage 191
East Norwich 29 Farmingdale 332
Glen Head 79 Hicksville 405
Jericho 54 Locust Valley 58
Massapequa 583 Massapequa Park 153
Mill Neck 6 Old Bethpage 35
Old Westbury 40 Oyster Bay 81
Plainview 352 Sea Cliff 34
Syosset 174 Woodbury 57

SUFFOLK COUNTY
Town of Babylon
Amityville 559 Babylon 1,186
Lindenhurst 804 Copiague 449
Farmingdale 332 Wheatley Heights 507
Wyandanch 507

Town of Huntington
Lloyd Harbor 475 Northport 144
Centerport 63 Cold Spring Harbor 21
Dix Hills 895 Greenlawn 90
Melville 167 Huntington 1,370
Halesite 475 Commack 189

Town of Islip
Brightwaters 36 Islandia 112
Ocean Beach 14 Bohemia 128
Bay Shore 1,317 Bayport 85
Brentwood 1,359 Central Islip 990
East Islip 175 Great River 14
Hauppauge 232 Islip 173
Islip Terrace 163 Oakdale 94
Sayville 135 West Islip 347
Holbrook 300 Holtsville 113
Lake Ronkonkoma 522 Ronkonkoma 634
Nissequogue 116 Kings Park 100
Nesconset 105 Smithtown 338
Lake Grove 109 Commack 189

Town of Brookhaven
Coram 392 Bellport 133
Mastic Beach 62 Patchogue 508
Moriches 16 Port Jefferson 44
Shoreham 56 Blue Point 47
Brookhaven 41 Centereach 360
Setauket 119 Shoreham 56
Farmingville 332 Selden 335
Manorville 152 Mastic 418
Medford 867 Middle Island 234
Miller Place 135 Mount Sinai 122
Ridge 183 Rocky Point 209
Sound Beach 130 Stony Brook 81

Town of Southampton
Sagaponack 8 Quogue 15
Westhampton 28 Sag Harbor 52
Bridgehampton 185 Eastport 23
Flanders 250 Hampton Bays 139
Watermill 24

Town of Riverhead
Riverhead 250 Jamesport 2
Wading River 64 Baiting Hollow 61

Town of East Hampton
Amagansett 7 Sag Harbor 52
Montauck 17 Wainscott 3

Town of Shelter Island
Shelter Island 28

Town of Southold
Greenport 24 Cutchogue 17
Laurel 2 Mattituck 36
Orient 8 Southold 39

Please call Monteiro & Fishman LLP at 516-280-4600 with any questions about this article.