Banksters Accused Of Loophole Abuse In NY Law Calling For Foreclosure Settlement Conferences; Results In Judicial Logjams, Homeowners Left In Limbo

The New York Law Journal reports:

• Advocates of homeowners facing foreclosure are pushing for a change in court rules to remove an obstacle that has put many homeowners in a judicial limbo, unable to participate in settlement conferences to make their debt more manageable.



• In particular, the advocates have proposed moving up the point at which attorneys for lenders must submit an affirmation attesting to the accuracy of court documents.



• "If the whole point of the [affirmation] rule is to prevent plaintiff lawyers from knowingly filing false or inaccurate filings in foreclosure cases, make it a rule that the affirmation be filed when they file the complaint, and not wait until they file the request for judicial intervention," said Jacob Inwald, director of foreclosure prevention litigation for Legal Services NYC.



• Under current procedure, lenders can file a summons and complaint for a foreclosure action without triggering a mandatory settlement conference. A conference is scheduled only after proof that the summons has been served, a specialized request for judicial intervention and the attorney's affirmation are submitted.



• Since the implementation of the affirmation requirement in October 2010, advocates charge that lenders have delayed filing the request for judicial intervention so that they do not have to file the affirmation right away. That has created a "shadow docket" of cases that do not show up in official court statistics or trigger a settlement conference.

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• [Co-director of the Neighborhood Economic Development Advocacy Project Josh] Zinner said he and fellow advocates are "very supportive" of the affirmation, noting that the purported shadow docket was "not the fault of the [attorney affirmation] rule itself." Instead, he argued, "lenders are not following the spirit of the rule by taking advantage of a loophole, filing cases and holding off on filing the affirmation."

For more, see Advocates Seek to Eliminate Foreclosure 'Shadow Docket'.