How can they proceed with the foreclosure case if the account is no longer behind?

The simplest answer is to call the lender and ask them about the status. Confirm that your two late payments were received. Ask if there are late fees or other costs still outstanding and ask what you have to do to reinstate the loan. Ask the lender if the court hearing will be cancelled and ask that they send you written confirmation of that. Take careful notes during the phone call and send a letter by certified mail confirming everything that was said. Call the court clerk's office and confirm whether the hearing is still on calendar or has been taken off. If it is still on, you must attend. I don't know what you mean by "foreclosure papers," but if the lender has filed a lawsuit against you, you must file a written answer with the court or the lender will win by default. Call the lender's attorney and ask what he intends to do. You really need to show the papers to an attorney to get proper advice on how to proceed. Your local County Bar Association may have a Lawyer Referral Service that can set up a consultation with an attorney for a nominal fee. It would be money well spent. If not, get the names of a few attorneys from the internet and call and ask whether they give free consultations. In either case, be sure to ask or look for a real estate/foreclosure specialist. Whatever you do, DO NOT trust the lender to do the right thing. The lender is NOT on your side. Do not assume the lender wants to work with you to prevent foreclosure. Do not believe anything the lender tells you without confirming it yourself. Tens of thousands of people have lost their homes to foreclosure by believing what they were told by the lender on the phone.

I am not sure if you received a Summons and Complaint if so you must respond to those papers If you are talking about settlement conference which is required in New York State which is a 3408 hearing in any event you must attend the court date and request a discontinuance on this matter otherwise it will stay open. Do not trust the Bank the foreclosure process and Bank process are two separate actions always respond to both.

Once the foreclosure process has begun there are several fees that the lender will add to your account. So even though you've paid the back mortgage payments, you may still show that you're behind because of the fees they've incurred. A typical foreclosure proceeding does not require any court hearings, they may be trying to sue you for breach of the contract rather than foreclose on the property. You may want to get an attorney involved sooner than later, but call them immediately and ask for the amount they are showing that you are behind and typically if that is paid they will dismiss the hearing.