Appellate Division Addresses Remedies for Lenders’ Failure to Act in Good Faith During Foreclosure Settlement Conferences—Courts Lack Authority to Force Parties to Reach an Agreement—Lender Misrepresented that it was Considering Borrower for HAMP Loan Modification During Period of 13 Months and Did Not Timely Disclose That its Pool Servicing Agreement Did Not Authorize a Modification of the Interest Rate or Term of the Mortgage—Order Barring Attorney Fees and Costs Constituted An Improper Attempt to Rewrite the Mortgage Note
IN A FORECLOSURE ACTION, the plaintiff (lender) moved to reject a referee’s report (report), which had been issued after settlement conferences which had been held pursuant to CPLR 3408. The trial court denied the lender’s motion to reject the report and confirmed parts of the report. The trial court had denied the defendant borrower’s motion to hold the lender in civil contempt, directed the lender to review the borrower’s application “for an affordable mortgage loan modification pursuant to the Home Affordable Modification Program [HAMP] using payoff figures from June 2010 and to submit a proposed loan modification order to the [borrower].” The trial court had canceled all interest accrued on the mortgage “between the date of the initial settlement conference in June 2010 and the date that the parties agree to a loan modification.” The trial court also barred the lender from charging any attorney fees and costs and directed it to provide the borrower with a payoff statement which incorporates the cancellation of interest from June 2010 and which does not assess any attorney fees or costs in this action. The Appellate Division (court) modified the trial court order.
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