Settlement conferences put face to foreclosure talks

With much trepidation and a court letter, delinquent borrower Jose Lazo showed up at State Supreme Court in Nassau County on Tuesday, right outside the room where homes were being auctioned.

But what he found were nonprofit counselors and volunteer attorneys prepping homeowners on the mandatory settlement conference, one of the last chances to negotiate a solution before a possible foreclosure judgment. Homeowners in the final legs of the process sat on one side of the hall, waiting for a counselor on the other side.

"At least I know what to expect," Lazo, of New Hyde Park, said afterward. "My stress level went down at least 50 percent."

Nassau state court officials began "pre-conference conferences" last month to get ahead of the law and cut delays caused by unprepared borrowers.

Starting Saturday, state law will require settlement conferences for all borrowers in the foreclosure process, not just those with subprime loans. Nassau court officials checked open cases as old as seven years and set up pre-conference meetings for 3,200 homeowners.

"We want to serve the public's interest and be fair to both sides," said Justice Anthony Marano, Nassau courts' administrative judge. "The mandatory conferences cannot be ... meaningful unless people do their homework and have enough information with them when they come to their conferences."

For many borrowers, settlement conferences are the first chance to argue for loan modifications with a lending representative who can make changes.

"Now I can at least get face-to-face with the bank," a delinquent homeowner said in the hall, adding that he even went to his bank's Florida headquarters, but no one would negotiate.

Settlement conferences, first mandated for subprime borrowers in a 2008 state law, were supposed to rescue homeowners. Instead, they clogged the courts.

While lenders send attorneys, Marano said, the "vast majority" of borrowers don't have attorneys or bring all the papers. When not everyone is ready, conferences are often rescheduled. As many as 54 percent were adjourned each month last year, Nassau court data show.

That's why "settlement conference" is a misnomer, said East Meadow attorney Kenneth Pelsinger: "It's just a matter of giving out forms."

State court officials in Suffolk began holding pre-conference meetings in March between subprime borrowers and law clerks, said State Supreme Court Justice H. Patrick Leis, Suffolk's administrative judge. Prime-rate borrowers are also being scheduled for pre-conference meetings. Nine percent of conferences in Suffolk led to deals, he said. Last year in Nassau, the percentage of cases settled each month during conference ranged from zero to 8.2 percent.

"On the subprimes, where there are issues as to whether the people should ever have been in these houses, we have not had great success," Leis said. "On the next wave, this is where we hope to make a substantial difference. On these negotiating conferences, we're hoping to keep these people, more of them, in their houses."

What to bring

Settlement conferences in foreclosure cases require a whole lot of documents on both sides.

Homeowners

Proof of current income,

including pay stubs

and benefits information

Monthly expenses

Recent mortgage statements

Property tax statements

Income tax returns

Loan modification proposals

Lenders

Current payoff and

reinstatement paperwork

Mortgage and note

Payment history

Workout forms

Load modification offers

Itemized list of amounts needed to satisfy loan