NYCLU Settles class-action

NYCLU Settles class-action lawsuit against the New York state office of court administration for failing to analyze homeowners for free legal Representation.

On March 15, 2024, the New York Civil Liberties Union (“NYCLU”) and counsel for the New York State Office of Court Administration (“OCA”) signed a settlement agreement ending a class-action lawsuit claiming that the OCA failed to adequately protect homeowners facing foreclosure. Specifically, under New York Civil Practice Law & Rules (“CPLR”) § 3408, parties in a residential foreclosure case must participate in a mandatory settlement conference to determine what, if any, retention options are available to the homeowner. At this conference, courts are required to conduct an analysis to determine whether a homeowner who appears at the conference without legal counsel qualifies for free legal representation.

In June 2023, the NYCLU, along with several private law firms, initiated a class-action lawsuit alleging that all New York courts, but particularly Kings County a/k/a Brooklyn, regularly failed to conduct assessments on homeowners facing foreclosure in violation of CPLR § 3408. The lawsuit detailed situations in which homeowners would appear at CPLR § 3408 conferences and attempt to resolve the matters on their own without being evaluated for court appointed counsel. According to the lawsuit, this left many homeowners unrepresented and more vulnerable to the loss of their home. Further complicating the situation, it appears that there were circumstances in which CPLR § 3408 were not held at all based on the non-appearance of homeowners at “pre-settlement” conferences. Given the allegations and the parties’ desire to resolve the lawsuit without additional litigation, the OCA and NYCLU reached a settlement that reinforces the OCA’s responsibility to abide by CPLR § 3408.

According to the settlement, the OCA and Kings County officials will implement new policies and procedures that will ensure compliance with CPLR § 3408. In addition, until further notice, Kings County officials conducting CPLR § 3408 conferences will deem all unrepresented homeowners appearing at initial settlement conferences as having made motions to be deemed “poor persons”. Upon review, should the motions be granted, all qualifying Brooklyn homeowners will receive appointed counsel. Further, the OCA and Kings County officials will review all foreclosure matters filed on or after December 1, 2022, in which initial CPLR § 3408 conferences took place. If unrepresented homeowners were present at the conference, a notice will be sent out allowing them to request that they be re-evaluated for “poor person” status, essentially giving all unrepresented homeowners a do-over in Kings County. The “poor person” analysis will then occur at the CPLR § 3408 conferences, and if the Brooklyn homeowner qualifies, they will receive appointed counsel for the conference and any litigation that follows. Lastly, all other New York counties are expected to review their policies and procedures and make changes to ensure that the legislature’s intent in passing CPLR § 3408 is honored and complied with.

Given the sheer amount of matters filed in Kings County and the backlog that currently exists, this settlement will likely add delays to many already slowly moving foreclosure matters. On behalf of lenders, this settlement represents a frustrating turn of events that should have been avoided by the OCA. Adding to the frustration is that there is little lenders can do to speed the process up since it is the court’s responsibility to analyze a homeowner for “poor person” status. Nonetheless, Stern & Eisenberg will continue to cooperate with the OCA and Kings County officials to ensure that proper CPLR § 3408 conferences occur on all of our foreclosure matters statewide. It is our belief that having the proper conferences occur at the outset of a foreclosure matter will save time and money in the long run, and as such, we will do our best to highlight non-compliance with the court as soon as possible. Should you have any questions or concerns regarding your New York foreclosure matters or if you have any questions regarding the lawsuit and its settlement, please contact Stern & Eisenberg New York Managing Attorney, Arsenio Rodriguez, Esq.

By: Arsenio Rodriguez, Managing New York Attorney & Shareholder

Date: March 19, 2024


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