What to know about your first settlement conference

This information helps if:

  1. You live in a home with 1 to 4 units or you live in a condo and 
  2. You have a home loan that is secured by a mortgage or deed of trust and 
  3. The bank has sued you saying that you have not met your payments and
  4. You get a court notice for a “settlement conference” at the courthouse.

 

What is a settlement conference?

A settlement conference is a meeting between you, the court representative, and the bank’s lawyer to reach an agreement so you don’t lose your home.

Why should I go to my first settlement conference?

1. Attending the first settlement conference gives you 30 days after the conference to file an Answer. If you don’t file an Answer, the judge lets the bank foreclose and you lose your home. Also, the Answer serves as your defense if you have a trial.

2. If you don’t show up, the foreclosure case moves to the next stage quickly and you risk losing your home.

How do I prepare for my first settlement conference?

To make the most out of your settlement conference, know your budget and how much you can afford for a monthly mortgage payment (or if you can afford one at all).

Bring these papers to your first settlement conference:

  • Proof of income, like pay stubs and copies of bank statements that show direct deposit payments from work.
  • Proof of benefits, like Social Security or food stamps (SNAP).
  • List of your monthly expenses.
  • Information on current income tax returns, expenses, and property taxes.
  • Documents to show you tried to avoid foreclosure. (alternatives to foreclosure).
  • Proof of any rental income or rental agreements.

This is not a complete list. Sometimes, the judge asks you to bring other documents.

What happens at my first settlement conference?

You and the bank’s lawyer discuss ways to settle the case. Some options allow you to keep your home. But if you cannot afford a mortgage payment at all, you will lose your home.

Options that allow you to keep your home:

  1. A one-time payment of what is past due, including fees.
  2. Reduce or suspend monthly payments for a short time-period (loan forbearance).
  3. Change the terms of the loan, so that you can make payments (loan modification).

Options where you don’t keep your home, but you settle your debt:

  1. Turn over the deed to your home in return for not owing any additional debt (deed-in-lieu of foreclosure).
  2. Sell your home in a short sale.

A court representative oversees the settlement conference to keep it on track. If you reach an agreement, it is put in writing and signed by everyone. Do not sign anything you do not understand or do not agree with.

What happens if we don’t reach an agreement at the first settlement conference?

You might get a new date to continue the settlement conference. If you still cannot agree, the foreclosure case continues.

What else should I know about settlement conferences?

  1. Attend all hearings and meet the court’s deadlines.
  2. Take notes.
  3. If you reach an agreement, get a copy of everything before your case is dismissed. For example, if the loan is modified (changed), get a copy that is signed by both the bank and you.
  4. You can represent yourself or try to get a lawyer.
  5. You and the bank’s lawyer must negotiate in good faith. This means you try to reach an agreement. If either of you are being difficult, there could be penalties and other consequences.

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