We recently discussed what mandatory foreclosure settlement conferences are in New York. They are a last attempt to help you preserve your home and avoid foreclosure. The types of settlements that can be discussed at these conferences include short sales, deed in lieu of foreclosure, and loan modifications – the latter of which is the preferred type of settlement.

The settlement rates are increasing throughout New York, but many cases still result in failed settlements. What happens in New York when your foreclosure settlement conference fails?

What happens when you don't settle at a New York foreclosure settlement conference?

To be clear, there isn't just one foreclosure settlement conference. Rather, there can be a string of them so long as the parties are negotiating in good faith to derive at a settlement. So, for the sake of expectations, you can have more than once conference – but again – only so long as negotiations are being made in good faith. 

When the negotiations break down and it is clear a settlement won't be achieved, the next step in the process takes place: discovery.

What is discovery?

Discovery during a foreclosure lawsuit is a period of time both parties exchange information. The plaintiff and respondent work out a timeline for this part of the process. Discovery includes:

• requests for admissions – both parties ask the other parties to admit or deny certain facts of the case
• requests for production –both parties request specific information or documents relevant to the case
• interrogatories – each party provides a list of questions that the other party must answer
• depositions – key witnesses are formally interviewed and recorded under oath.

The types of information an experienced foreclosure lawyer will want from the lender include things like:

• the original promissory note and mortgage (which the lender should have brought to the mandatory foreclosure settlement conference) to prove standing
• proof of notice (there could be a valid defense if the notice was not property provided)
• mortgage agreement (to show the terms are unfair)
• bank accounting documents (to show errors or mistakes that led to an improper claim of default).

If the bank refuses to provide the requested documentation, it can be compelled to do so. Under New York Civil Practice Law and Rules 3124 (CPLR 3124), the judge can intervene after a Motion to Compel is filed.  

Why is discovery important New York foreclosure cases?

Discovery is an important part of your foreclosure case because the information necessary to prevent foreclosure can be uncovered. The bank has an obligation to share information, documents, etc. It doesn't have the right to hide information that can help you keep your home.

But having an attorney who will be committed and uphold your rights in the face of a bank's attempt to thwart the case will also be key to your success. These banks have not one but many lawyers working on their behalf, and they don't always have the interests of justice in mind but rather work for the bank with the bank's profits in mind. 

So, if you are facing foreclosure – retain an experienced foreclosure attorney who can first help you through the mandatory foreclosure settlement conference. Then, if that fails, help you secure a positive outcome at trial by discovering the evidence you need to prove your case.