ALBANY, N.Y., Feb 14 (Reuters) – A new court initiative will allow all New York homeowners facing foreclosure to obtain legal representation and streamline the process of settling mortgage disputes out of court, Chief Judge Jonathan Lippman said Tuesday during his annual State of the Judiciary speech.
The “unprecedented” deal between the state, legal service groups and four large banks — Wells Fargo, Citibank, Chase and Bank of America — includes the creation of a new court part that will hear only foreclosure settlement conferences, Lippman said. Each week of the month will be dedicated to a different bank, with one attorney assigned to handle all cases for that lender.
“There will be no more excuses, no more delays,” Lippman said. “Real negotiations will take place, and homeowners will leave the table with the best available offer.”
The court system, Lippman said, is seeking to avoid scenarios that can delay settlement conferences for years, including homeowners being told their paperwork is out-of-date and lawyers for banks claiming to have incomplete sets of documents.
The program will kick off in New York City, where non-profit legal service groups have agreed to represent all homeowners entering the settlement conference process. The new part will not launch for “at least a couple of months,” said Paul Lewis, who helps coordinate courts’ handling of foreclosure proceedings for the Office of Court Administration.
Last year, New York became the first state to require attorneys for lenders to verify the accuracy of all mortgage documents. The rule led to an immediate dip in the number of foreclosures filed in the state, but court officials recently warned of a continuing crisis that is depriving homeowners of their legal rights and overburdening the court system. More than 345,000 mortgages were delinquent or in default in New York in 2011, according to a report released last month by the Neighborhood Economic Development Advocacy Project