Defendant Yocasta Sosa moves by order to show cause for an order vacating the default judgment entered against her and compelling the plaintiff to accept her verified answer with counterclaims. The plaintiff opposes the application.

In light of the well-publicized mortgage foreclosure crisis, it is useful to review the relevant facts leading up to the instant application. On or about October 25, 2007, defendant Sosa executed and delivered to plaintiff a note and mortgage for property located at 63 Kramer Road, Poughkeepsie, New York 12603. Defendant Sosa allegedly was unable to make the required payment as provided for in the note and, as a result, the plaintiff commenced a foreclosure action on or about April 30, 2008. Defendant Sosa was personally served with the summons and complaint on May 3, 2008. After defendant Sosa failed to answer the complaint, the plaintiff moved on December 22, 2008 for entry of a judgment of foreclosure and sale. The plaintiff's application was granted by order of this court dated February 9, 2009.

While there is no dispute among the parties that defendant Sosa was offered potential participation in a Home Affordable Modification Trial Period Plan ("HAMP"), the parties strenuously disagree as to the date defendant Sosa was offered such potential participation. Defendant Sosa contends she did not appear and answer the plaintiff's complaint because she had been offered participation in the HAMP program and had been assured by the plaintiff that her participation would bring her mortgage back into compliance and would result in the termination of the foreclosure action. The plaintiff avers that defendant Sosa was not offered this program until in or about May 2009, approximately three months after plaintiff was granted its judgment of foreclosure and sale. The documents submitted by both parties demonstrate that defendant Sosa made a down payment to the plaintiff in April 2009 and the trial period plan effective date is indicated as June 1, 2009. Although defendant Sosa made each of the required trial period payments, she ultimately received a letter from the plaintiff dated December 21, 2009 indicating that she did not qualify for any loan modification programs due to her insufficient income. On October 15, 2010, defendant Sosa filed the instant motion. Defendant Sosa contends that her delay in appearing and answering is attributable to the plaintiff's failure to provide her with notice of a settlement conference as required by RPAPL §1304 and CPLR Rule 3408. Defendant Sosa further asserts that the plaintiff lured her into a purported Home Affordable Modification Trial Period Plan ("HAMP") while simultaneously pursuing the foreclosure action.

A defendant seeking to vacate a default judgment pursuant to CPLR Rule 5015(a)(1) must demonstrate an acceptable excuse for her delay in appearing and answering the plaintiff's complaint and a meritorious defense to the action. (Gray v. B.R. Trucking Co., 59 NY2d 649 [1983].) Furthermore, even where a movant fails to demonstrate grounds for relief pursuant to CPLR Rule 5015, a court may exercise its inherent power to grant relief in the furtherance of justice. (Columbus Realty Investment Corp. v. G & S Winding Road, L.P., 257 AD2d 592 [2nd Dept. 1998].)

In 2008, in response to the spreading mortgage foreclosure [*2]crisis, Senate Bill 8143 was approved and enacted as 2008 NY Laws, Chapter 472 which amended CPLR Rule 3408 and RPAPL §1304. Among other things, the amendments provided for mandatory conferences for the purpose of holding a settlement discussion on any foreclosure actions involving sub-prime, high cost or non-traditional type home loans. The effective dates of these amendments are August 5, 2008 and September 1, 2008, respectively. Although the amendments are not retroactive in nature, the legislature provided in Section 3-A for foreclosure action commenced prior to September 1, 2008 for which a final order of judgment has not yet been issued that the court must "request each plaintiff to identify whether the loan in foreclosure is a subprime home loan as defined in [RPAPL §1304] or is a high-cost loan as defined in [Banking Law §6-1]." If the loan meets one of the two aforementioned definitions, then the court must "notify the defendant that if he or she is a resident of such property, he or she may request a settlement conference." Pursuant to a directive issued by the Ninth Judicial District, letters were to be sent by the Office of Court Administration to all attorneys with pending foreclosure matters. The letters requested the attorneys provide information regarding the type of mortgage and contact information for the defendants. In appropriate cases, letters were then to be sent to defendants notifying them of their right to request a conference. The Office of Court Administration would then notify the applicable court of any defendant requesting a conference so that the same may be scheduled.

The motion papers submitted in this matter establish that this foreclosure action involving a subprime loan was commenced prior to September 1, 2008. Therefore, based on the legislative mandates imposed upon the court by 2008 NY Laws, Ch. 472, Section 3-a and the directive issued by the Ninth Judicial District, the defendant was entitled to notification of her right to request a settlement conference. It appears from the record that the plaintiff provided the required disclosure concerning the qualification of the defendant's loan as subprime (although the plaintiff did not provide contact information for the defendant) but that the defendant never received notice of her right to request a settlement conference. Therefore, in the furtherance of justice, it is ordered that defendant Sosa's motion to vacate the judgment of foreclosure of sale and file and serve a late answer is granted. Defendant Sosa shall have thirty (30) days from the date of this decision to file and serve her verified answer. It is further ordered that defendant Sosa is directed to notify this court, on notice to the plaintiff, within twenty (20) days of the date of this decision whether she resides at 63 Kramer Road, Poughkeepsie, New York 12603 and, if so, whether she requests a settlement conference pursuant to 2008 NY Laws, Ch. [*3]472, Section 3-a.

The Court read and considered the following documents upon this application:

The foregoing constitutes the decision and order of the Court.

Dated:Poughkeepsie, New York

April 8, 2011

ENTER

HON. JAMES D. PAGONES, A.J.S.C.