Wednesday, November 30, 2016

WHAT IS BAD FAITH IN FORECLOSURE SETTLEMENT CONFERENCES



M&T BANK v. ARCATE, 2016 NY Slip Op 32201 - NY: Supreme Court 2016:

"CPLR 3408 mandates that the court hold a settlement conference in a residential foreclosure action. The statute requires that the parties to a foreclosure action must "negotiate in good faith to reach a mutually agreeable resolution including a loan modification, if possible." A determination of whether a party breached the duty to negotiate in good faith must be based on the totality of the circumstances taking into account that CPLR 3408 is a remedial statute (Citibank, N.A. v. Barclay, 124 AD3d 174, 176, 999 NYS2d 375, 377 (1st Dept., 2014); U.S. Bank, N.A. v. Sarmiento, 121 AD3d 187, 991 NYS2d 68 (2nd Dept., 2014)). The test for determining whether a party participated in good faith in the CPLR 3408 process is clearly one of reasonableness taking into considerations the actions taken by the parties engaging in the settlement conference.

.......

 With respect to the issue of "bad faith" there is insufficient proof that the bank acted in "bad faith" during the negotiating process at the mandatory court settlement conferences. Court records indicate that settlement conferences were conducted on August 1, 2013; September 19, 2013; November 25, 2013, December 9, 2013 and March 7, 2014 when the action was marked "not settled". There is no indication that the court attorneys/referees responsible for conducting the conferences considered the conduct of either party as acting in bad faith. While there is evidence of confusion between the parties concerning the amounts due under proposed modification plans offered during the course of negotiations, the record does not show that the bank representatives acted in "bad faith" during negotiations, or for the reason that the bank was unwilling to consent to the terms the defendant claimed she could afford. Under these circumstances no valid basis exists sufficient to warrant imposition of sanctions, or to reschedule additional settlement conferences as the defendant was afforded multiple opportunities to modify the loan which were not acceptable to her."

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