Jacob Inwald.

In 2016, new regulations went in effect in New York intended to protect unrepresented homeowners in foreclosure who are engaged in settlement talks with lenders, but the regulations are not being uniformly enforced across New York's 62 counties, according to a new report released this week.

Among the changes was a mandate to provide clearer information for homeowners who are navigating the foreclosure process and to give homeowners second chances to preserve their defenses, which advocates for homeowners say was needed because many pro se defendants unwittingly waive key defenses in their cases out of mistaken belief that doing so would help save their homes from foreclosure.

Additionally, the legislative changes strengthened the language for the requirement that parties appear at settlement conferences with representatives who have the authority to resolve cases, provided further details on the documents they should bring along with them to the negotiations and required courts to provide homeowners who are appearing for their first settlement conferences with the Consumer Bill of Rights.

But whether or not courts are enforcing the new requirements varies by county, said Jacob Inwald, director of foreclosure protection for Legal Services NYC, who wrote a report on compliance patterns for New Yorkers for Responsible Lending.

According to a survey that New Yorkers for Responsible Lending's mortgage working group conducted last year, 44 percent of the courts surveyed were ensuring that plaintiffs were showing up to settlement conferences with the required documentation, and 54 percent were checking parties were appearing with representatives with authority to dispose a case.
But while the survey revealed uneven enforcement patterns across the state, it brought some good news, as well, Inwald said in an interview with the Law Journal in which he broke down the findings.

The interview has been edited for clarity and length.

What are the positive takeaways from the report?

On balance, it is positive, for the most part. The most significant change that was implemented, in my view, is providing people an opportunity to defend their case on the merits when they appear at their first settlement conference, because the vast majority of homeowners who get their settlement conference notice have already defaulted and, up until this change, were deprived of the opportunity to put in an answer and assert their defenses to the case.
There were very unfavorable Appellate Division rulings, basically squelching unrepresented parties' ability to put in answers to complaints, even though the judicial system favors disposition of cases on the merits. Most of the courts are complying with that obligation and are providing that information. I would imagine that the courts are now seeing on the newly filed cases increased numbers of answers filed by defendants, rather than defaults.

What do you think is causing the disparity among the counties? Is it due to county-to-county differences in foreclosure activity?

That's part of it, and I think part of it is the culture of the New York state courts. The (state Supreme Courts), some of them may have resistance to being told what to do by the Office of Court Administration. Judges generally feel like they're entitled to run their own show in their courtrooms, and then you just have the individual predilections of particular judges or other personnel who are administering these. But I can't speculate on why individual courts are doing particular things.

What could the court system do to strengthen uniformity between the counties on enforcing the new law?

I think that OCA has been conscientious and, as soon as these amendments took effect, they did set to work trying to implement them, and I do think there were some challenges getting some courts to comply with these kinds of things. But I don't want to create the impression that the court system has been reckless or has been intentionally trying not to enforce these various provisions.

One of the things that I think could really make the entire process efficient statewide is really dependent on the individual judges and referees and personnel who are administering these conferences, because there are certain aspects that are black-letter law that they are not enforcing. I think you could really influence the banks' behavior a lot if it was just assumed that the law was going to be enforced, like there were going to be consequences to a lender if they come to a settlement conference unprepared, without the information that the law requires them to come with and without the settlement authority.

Right now, that happens on a regular basis and there are no consequences whatsoever. I don't necessarily pin the blame for that on OCA—the blame for that lies on individual judges and court attorneys and referees who are willing to accept the fact that the plaintiffs are showing up for their conferences often with per diem lawyers who don't even work for the firms, who just haven't complied with the law. They're not authorized to settle and they don't have very specific information that the law requires them to come to court with.