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Settling foreclosures shifts supreme court caseloads

iStock image used with permission.

New laws are helping keep people in their homes, but required settlement conferences are increasing the caseloads in the state’s supreme courts.

Particular laws of 2008 and 2009 address the residential foreclosure crisis and require courts to conduct settlement conferences in affected cases. The court system, partnering with legal services providers, also set up a pilot project to bring lenders and homeowners together.

“After conducting tens of thousands of foreclosure settlement conferences, we have learned that these conferences play an essential role in helping to prevent the loss of people’s homes,” says a new report recently released by Chief Administrative Judge Ann Pfau. “What was not apparent from the outset is how complex and labor intensive the conferences are. The long lifespan of these cases … coupled with a dramatic increase in foreclosure filings, has resulted in an unprecedented shift in the civil caseload of the New York State Supreme Court.”

For instance, there were 77,815 pending foreclosure cases statewide in 2010, representing about 29 percent of the total supreme court filings, which include 194,815 other civil matters, compared to 2009 when 54,591 pending foreclosures represented about 22 percent of the total, which included 189,904 other civil cases pending.

In some counties, the percentage of foreclosures has jumped to 50 percent or more of total civil cases. In Wyoming County, one of eight counties in the Seventh Judicial District, foreclosure cases represent 48 percent of total supreme court civil cases pending.

The numbers are down slightly in Monroe County where Judge Thomas M. Van Strydonck, administrative judge of the Seventh Judicial District, has appointed a special attorney to oversee foreclosures.

There were 1,917 foreclosure filings in Monroe County in 2005, representing 31 percent of total supreme court filings of 6,133 matters, compared to 1,748 foreclosure filings this year, 29 percent of the total 5,979 filings.

All residential foreclosures in Monroe County that require a court-mandated conference start with Paul M. Riordan, foreclosure mediator for the Monroe County Foreclosure Conference Program. The program has reviewed about 1,300 mortgage cases between March 15, when Riordan was appointed by Judge Van Strydonck, and Nov. 30.

Riordan said about 700 cases were eligible for the program, half of which are pending and half have been closed. He said of the 350 that were closed, about 200 did not even attend a conference.

“Here’s the rub,” Riordan said. “Of those 150 that came, about 66 percent got some sort of disposition that was favorable to them.”

In other words, a settlement was reached that allowed them to keep their homes. Riordan said about 60 percent of those who are eligible do not respond, many of which result in the foreclosure proceeding and the sale of the home.

“I don’t know whether people feel they have no hope or they’ve abandoned the property,” Riordan said. “People are simply not taking advantage of these conferences. We’re having good results with the remaining 40 percent. It’s a terrific program.”

Riordan said average settlements take about four to six meetings and are reached in about four months. Once a settlement is reached, the matter goes before a judge for final approval.

“The courts are hit with just a huge volume of foreclosures because of the state of the economy,” Riordan said. “The Foreclosure Conference Program has helped the judges manage their calendars a lot better because the judges are not having to run these conferences.”

He and his assistant also work with The Housing Council and Empire Justice Center where attorney Rebecca Case Grammatico said the value of the conferences is tremendous.

“Settlement conferences have created a much more level playing field,” she said. “And it forces the lenders to come to the table and at least address the applications for modifications from the homeowners before plowing through with the foreclosure. Even though it’s a particularly slow and painful process, it’s far better than what it was before.”

Grammatico said the communication of all parties is smoother with Riordan involved. She says the problem she sees is that there are not enough resources — pro bono can only go so far. She said there is no additional funding after December 2011, but that the conferences go into 2015.

“If there are no attorneys to represent these folks, the courts are going to face an even steeper uphill battle,” Grammatico said, noting homeowners are more likely to give up and walk away if they can’t get legal help. Those who try to represent themselves consume a lot more court time and are less likely to have satisfactory outcomes.

Statewide, there have been 89,093 settlement conferences between Jan. 1 and Oct. 2, of which 58,512 were outside of New York City.

Judge Pfau, in her report, notes that the default rate — where the defendant neither files an answer nor participates in any of the proceedings — was very high in foreclosure cases, almost 90 percent in some instances, with cases often proceeding to sale without a single appearance by parties before a judge.

“Since the legislatively mandated conferences began, however, the default rate has improved significantly and many more homeowners are taking part in foreclosure settlement conferences,” Judge Pfau notes. “In 2010, a total of 10,866 homeowner/defendants failed to appear for any of their scheduled conferences, a default rate of 20 percent.”

Still 62 percent of homeowners attended the conferences without legal representation,

“When homeowners are unrepresented, judges and court staff must carefully explain the process and assist those defendants to the fullest extent possible,” the report states. “The lack of representation in foreclosure cases continues to be one of the greatest challenges we face in fulfilling our statutory mandate.

“While fulfilling the legislative mandate had strained the court system’s resources, the difficulty we are experiencing is tempered by the realization that each day homeowners and banks are reaching acceptable solutions that prevent home loss and the further deterioration of communities,” the report concludes.