New York Senate Bill Amends Extended Forbearance Relief Granted By Previous Bill | Ballard Spahr srl
As stated in our alert on June 9, 2020, New York Senate Bill S8243C was handed over to the Governor on June 5, 2020. On the same day, New York Senate Bill S8428 was also presented to Governor Andrew Cuomo. If signed, Senate Bill S8243C will add a new Section 9-x to the New York Banking Act and Part C of Senate Bill S8428 will amend this new section. Senate Bill S8243C will come into force immediately, and Senate Bill S8428 will come into force “on the same date and in the same manner” as S8243C. These bills are legislative extensions of the Executive Decree 202.0 and emergency regulations 3 NYCRR Part 199 related to financial hardship related to COVID-19 and mortgage forbearance options. Our March 26, 2020 alert summarizes the emergency regulations.
New York Senate Bill S8428 amends the new Section 9-x of the Banking Act, established by Senate Bill S8243C, in several key ways.
First, it amends the definition of a “qualified mortgage borrower” by removing the requirement that the individual reside in New York with their “principal residence” in New York, and replace it with the requirement that the “residence principal ‘of the particular must be New York. In addition, the demonstration of financial difficulty due to COVID-19 during the period covered is moved in the definition of a qualified mortgagor.
The Senate Bill S8243C Excluding Coverage which appears to be designed to exclude loans covered by the CARES Act from coverage under New York law has also been slightly amended. The initial exclusion from relief options included mortgages “made, insured or securitized” by a federal agency, GSEs or federal real estate loan bank, or to the “rights and obligations of any lender, issuer, servicing agent. or fiduciary of such obligations ”, including service providers for GNMA. Senate Bill S8428 amends the exclusion in two respects by adding (1) “a state corporate government body constituted as a political subdivision and a public benefit corporation” to the list of entities, and (2) loans “bought” by any of the listed entities.
Senate Bill S8428 amends Section 9-x on Granting Forbearance in the Banking Act to require that “all monthly payments due” be included in the initial 180 day forbearance period and submits the ability of a qualified mortgagor to obtain an additional forbearance period to demonstrate continuing financial hardship. In addition, if the qualifying mortgagor had already received a forbearance under Executive Decree 202.9, the total forbearance period would include the period of forbearance already received under Executive Decree. The Senate bill also removes the requirement that the mortgagor is in arrears with payment, on a trial period plan or has requested loss mitigation.
Senate Bill S8243C made three options available with respect to any mortgage forbearance granted by a regulated institution to a qualified mortgagor pursuant to Bill, Executive Decree 202.9, “or any other law, rule or regulation” in due to financial problems. trials. Senate Bill S8428 adds a fourth option, to negotiate a “loan modification or other option that meets the new circumstances of the qualified mortgagor”. Additionally, Senate Bill S8428 replaces the reference to “any other law, rule, or regulation” with a reference to “3 NYCRR Part 199”, which are emergency rules adopted to implement Executive Order 202.9 .
Finally, Senate Bill S8243C made an obligation for a regulated institution to include in the options offered to a qualified mortgagor an option to carry over arrears in the form of an interest-free balloon loan to the As an option is compatible with the security and soundness of the institution, Senate Bill S8428 removes the element of security and soundness with respect to the option and adds an overall provision of safety and soundness. Under the safety and soundness provision, the obligation of a regulated institution to grant forbearance relief is subject to the condition that the regulated institution “has sufficient capital and liquidity to operate. fulfill its obligations and operate in a safe and healthy manner ”. If a regulated institution determines that it cannot offer relief and otherwise operate in a safe and healthy manner, it must notify the New York Department of Financial Services within five business days, including specific information surrounding that decision. . At the same time, the regulated institution must notify the qualified mortgagor that the request for relief has been denied and provide a statement and contact details for complaints to the New York Department of Financial Services.
Although the scope of potentially covered loans is restricted by Senate Bill S8428, if both bills are signed by the governor, compliance by service providers will remain essential in the short and long term. Non-compliance, in the short term, could subject New York’s regulated institutions to regulatory scrutiny and reviews, and in the long term, pose risks to effective and successful foreclosure actions.