The Mandatory CPLR 3408 Foreclosure Settlement Conference in New York

New York is unusual in how much it requires lenders to negotiate before taking a home. In any residential foreclosure on an owner-occupied, one-to-four-family home loan, the court must hold a mandatory settlement conference under CPLR § 3408. It is a court-supervised meeting whose entire purpose is to see whether the parties can reach an alternative to foreclosure — most often a loan modification. For many homeowners it is the single most useful step in the whole case.

What the conference is for

The conference brings you, the lender (through its attorney), and a court referee or judge together to explore loss mitigation: a modification that lowers your payment, a repayment plan, forbearance, or another resolution that lets you keep the home. The law requires both sides to negotiate in good faith — the lender cannot simply show up, refuse to engage, and march toward a sale. A homeowner who comes prepared, with documents in hand, can use the conference to genuinely change the trajectory of the case.

It pauses the case — but not your other deadlines forever

While your case is in the settlement-conference part, the foreclosure is effectively paused: the lender generally cannot move for judgment while conferences are ongoing. That breathing room is valuable. But the conference is not a substitute for filing an Answer — attending does not stop your time to answer from running. The safest course is to file your Answer and attend the conference, so you preserve your defenses while you negotiate.

The good-faith requirement has teeth

Because the statute requires good faith, a lender that drags out the process, repeatedly loses your documents, gives inconsistent answers, or refuses to consider a modification you plainly qualify for may be found to have negotiated in bad faith. Courts can impose consequences for that — which is why you should keep a detailed record: dates, who you spoke with, what you submitted, and what the lender said. That record can become leverage.

How to prepare for the conference

1. Bring (and keep copies of) your financial documents: recent pay stubs, tax returns, bank statements, a monthly budget, and a hardship letter explaining what happened.
2. Submit a complete loss-mitigation application as early as you can, and keep proof of exactly what you sent and when — a complete application also triggers federal anti-dual-tracking protection.
3. Respond promptly to every request for more documents, and follow up in writing so there is a paper trail.
4. Track every conference date and adjournment, and never miss one — failing to appear can have the conference part released and the case put back on the litigation track.
5. Consider bringing a HUD-approved housing counselor (free) or a licensed attorney to help you negotiate.

What if the lender won't deal?

If negotiations fail, the case leaves the conference part and returns to ordinary litigation — where your Answer and affirmative defenses matter most. That is why filing an Answer alongside the conference is so important: if the modification does not come through, you still have a defended case rather than a default. And if you documented the lender's bad faith, that record can support arguments later.