Settlement Conference Not Excuse For Borrower Default In Answering

One of so many factors which contribute to delay of foreclosure actions in New York is manipulation of the answer process by borrowers.  Although an answer to the complaint is due today, the borrower (after having received multiple extensions to answer) submits it weeks or months later.  If the lender rejects it as late, a motion by the borrower to compel its acceptance is often likely to meet with approval from a sympathetic court.  It can be better then to avoid the extra time and litigation expense in a futile effort – so the late answer will typically be taken, again incurring still more detainment.

Perhaps more insidious is the instance of the borrower who never answers, until doing so only much later in the case.  Not surprisingly, there is a procedure for a party to obtain permission to interpose a late answer.  That defendant, however, must provide both a reasonable excuse for the delay and demonstrate a potentially meritorious defense to the action.  What a reasonable excuse may be is within the court’s discretion.  While that means, of course, that a court could be compassionate, it is also empowered to reject an excuse which, in the end, is deemed empty.  A new case explores this subject and is worthy of attention: Mannino Development, Inc. v. Linares, 117 A.D.3d 995, 986 N.Y.S.2d 578 (2d Dept. 2014).

Here, the borrowers appeared with their attorney and participated in settlement conferences which are, of course, required in home loan cases.  They then offered this conference process as the supposed reasonable excuse for their delay in answering.

The court was not taken in by this, though.  It concluded that attending the conference is not a reasonable excuse for refraining from answering.

Not incidentally, because there was no excuse, the court then did not need to address whether there might be a meritorious defense; there was simply no basis for any answer.

Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2017), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.