Coronavirus and Foreclosures in NYS
With so many Americans suddenly unemployed due to COVID-19, a huge number of homeowners are unable to make their mortgage payments, forcing people to go into foreclosure.
Governor Andrew M. Cuomo first announced a New York State moratorium on residential and commercial foreclosures on March 20, 2020 to ensure people were not evicted during the height of the pandemic. This comes after the federal Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted for the purposes of relieving financial strain on Americans affected by COVID-19. On March 27, 2020 the CARES Act passed the House and was signed into law by President Donald J. Trump.
Since the inception of the moratorium, there have been different levels and orders of the moratorium. Executive Order 202.8 barred the enforcement of any foreclosure proceeding until June 20, 2020. Executive Order 202.28 extended the moratorium on evictions and foreclosures to August 20, 2020, as long as the non-payment of mortgage is by “someone that is eligible for unemployment insurance or benefits under state or federal law or otherwise facing financial hardship due to the COVID-19 pandemic” (https://www.nycourts.gov/evictions/outside-nyc/, https://www.law.com/newyorklawjournal/2020/07/28/one-year-foreclosure-moratorium-law-proposed/?slreturn=20200824162050).
Another moratorium was put into place on March 21, 2020, when Governor Cuomo issued Executive Order 202.9, which directs the Department of Financial Services to “ensure under reasonable and prudent circumstances that any licensed or regulated entities provide to any consumer in the State of New York an opportunity for the forbearance of payments for a mortgage for any person or entity facing a financial hardship due to the COVID-19 pandemic” (http://dmna.ny.gov/covid19/docs/all/EXEC_COVID19_ExecutiveOrder202.9_032120.pdf).
On August 20, 2020, Governor Cuomo signed an executive order to extend the deadline to September 20, 2020, and it was yet extended until October 20, 2020. https://www.governor.ny.gov/news/governor-cuomo-announces-executive-order-extending-moratorium-covid-related-commercial
Forbearance Stops Foreclosure Countdown
When a foreclosure is already pending, the borrower is bound to partake in the mandatory settlement conference, even if they appeared at a prior settlement conference and the case was marked unsettled. As an alternative, the mortgagee can allow the borrower to participate in a forbearance agreement in accordance with the settlement conference statute. Essentially, this means that a forborne payment will be due at the end of the forbearance period, at which time the terms of repayment will be negotiated. https://www.law.com/newyorklawjournal/2020/07/28/one-year-foreclosure-moratorium-law-proposed/
Forbearance effectively puts foreclosure on hold. If you have a federally backed mortgage, the CARES Act permits six months of mortgage forbearance —a reduction or suspension of your payments. If you qualify for mortgage forbearance under the CARES Act, you will eventually have to pay back any amount you were excused from paying during the forbearance period. The positive outcome is that the CARES Act forbids lenders from charging extra interest on those payments.
If you are unable to fully repay the amount at the end of the forbearance period, you should speak with a foreclosure attorney to discuss loss mitigation options. Your foreclosure attorney can arrange mortgage forbearance under provisions of the CARES Act so that the mortgage delinquency status is “frozen.” Forbearance is not automatic, so you or your attorney must contact your lender to arrange for mortgage forbearance under the CARES Act. During this time, the foreclosure lawyer will research a forbearance agreement with the creditor to either discuss financing, returning the property, extending the term of the loan, or partial repayment throughout the life of the loan, which would result in increased monthly payments.
How COVID-19 Affected Foreclosures in New York State
COVID-19 foreclosure proceedings were unable to be initiated until the New York State courts reopened gradually on May 4, 2020, but the Chief Judge imposed a continuing Court stay of filing matters dealing with foreclosures. https://www.nycourts.gov/whatsnew/pdf/Foreclosures-Memo-July%2024.pdf
There were many mature foreclosures in the pipelines when Covid-19 arrived that had already gone through years of litigation. Covid-19, lockdowns, layoffs, and the economic recession will add to that pipeline. By not allowing these forecloses to move forward or end with a foreclosure sale or start with a complaint filed with the court, the government is delaying dealing with a problem that will be much more extreme when these protections are over. The goal was well-intentioned to keep people in their homes during the pandemic, but not enough to distinguish between old foreclosures and new foreclosures. The result is that all lumped together, people may get forgiveness, more time, and advantages that may in itself worsen the situation.
Considering that New York foreclosures are already time-consuming, this further delay—the moratorium—creates an obvious burden. At the end of the hiatus, lenders may be overwhelmed, the debt could be greater, reinstatement could be more difficult, and the borrower may have a day of reckoning giving them a false sense of security. Thus, it’s important for borrowers to be prepared to make payments when the moratorium ends.
Foreclosure Attorneys Are Here to Help
The Law Office of Ronald D. Weiss, P.C. provides foreclosure defense services by using litigation strategies that allow homeowners to assert their rights and oppose a foreclosure proceeding. Our firm represents clients’ from the start by answering the initial summons and complaint. In addition, our negotiation lawyers use their expertise in foreclosure methods, such as structuring mortgage modifications to give mortgagees more time as well as forming new loans to lower interest rates. The Law Office of Ronald D. Weiss, P.C. is here to help play catch up on what you may have fallen behind on.