• The Act applies to owners or mortgagors of commercial properties who:
• owns 10 or fewer commercial units (directly or indirectly; units may be in more than 1 property or building as long as total units are occupied or available for rent);
• is a business that is a resident in New York State;
• is independently owned and operated;
• is not dominant in its field; and
• employs 50 or fewer persons.
• The Act does not apply to mortgage loans backed by a state corporate governmental agency.

• The Act requires the Court or the foreclosing party (depending on the status of the foreclosure proceeding) to provide the borrower with a statement of protections available under the Act in 14-point type (“Hardship Declaration”).
• More importantly, the borrower must complete the Hardship Declaration and provide it to the foreclosing party to be afforded relief under the Act, if the borrower is suffering a financial hardship including, but not limited to:
• a significant loss of revenue;
• a significant increase in necessary expenses related to providing protective equipment to prevent transmission of COVID-19;
• moving expenses and difficulty securing alternative property; or
• a commercial tenants’ default on a significant amount of rent since March 1, 2020,
• The borrower’s submission of the Hardship Declaration is a rebuttable presumption of a financial hardship for purposes of establishing a defense.

• If the borrower provides a Hardship Declaration to the foreclosing party/foreclosing party’s agent, the foreclosing party is prohibited from commencing any foreclosure proceeding until May 1, 2021.
• If the borrower does not provide a hardship affidavit, the lender is required to file the following to commence a foreclosure proceeding:
• affidavit of service of the Hardship Declaration in; and
• affidavit of the foreclosing party / foreclosing party’s agent attesting that the foreclosing party or his agent did not receive a Hardship Declaration from the Borrower.
• If the Court determines that the foreclosing party failed to provide the Hardship Declaration to the borrower, the court shall stay the foreclosure for at least 10 days to allow the borrower to complete the Hardship Declaration.

• Refers to proceedings commenced before March 7, 2020 or commenced within 30 days of March 10, 2021.
• Stayed for at least 60 days to May 9, 2021, or to such later date the Court deems necessary to provide borrower time to complete and submit the hardship declaration.
• Court shall issue stay and mail copy of the Hardship Declaration to the borrower.
• If the borrower provides a completed Hardship Declaration to the court or lender, the foreclosure proceedings are stayed until May 1, 2021.

Post-Judgment

• In any foreclosure proceeding in which a judgment of sale has already been issued, execution is stayed until the court holds a status conference with the parties.
• If the borrower provides a Hardship Declaration, the execution of the warrant is stayed until May 1, 2021.

The headlines are in - the federal foreclosure / eviction moratoriums are extended to June 30, 2021 from March. This extension applies to 70% of single family home mortgages.

The subtext is that we have a foreclosure / eviction crisis on the horizon. According to the White House "1 in 5 renters is behind on rent and just over 10 million homeowners are behind on mortgage payments." 

If you just use a little deduction, you will quickly realize that almost every block across America is going to see foreclosures and evictions. In the micro, this will result in firesales, which will reduce comparable home prices across the board. In the macro, it will decrease property upkeep and maintenance, which will create a secondary impact on the greater community's desirability and pricing. 

That's the bad. 

The good is that it's going to be a buyer's market soon.

We need to start thinking about strategies to Purchase Property Post-Pandemic. 

What's your strategy? 

Here is the scenario - You are trying to sell a property and you order a payoff from your mortgage company, but that payoff quote comes in much higher than you believe that it should. 

You are in a real bind. 

You need to sell, but you don't want to overpay. What should you do?

This is particularly problematic where you are in default on your mortgage and the lender has started tacking on exorbitant penalties and attorneys' fees.

The answer is that you better protest the payoff, in writing, while requesting an itemization and then, you should pay it anyway. 

If you do, you can then file a motion for an accounting and ask the court to compute the appropriate fees, charges, expenses, and other payments due under the mortgage. 

If you don't, your motion to the court for an accounting will probably be denied in light of the voluntary payment doctrine, equitable estoppel, and waiver bar the accounting.

Again, protest and pay is the strategy based upon the appellate court decision in US Bank v. Cordero. 

Are you selling a house in foreclosure? If so, pay attention. 

On 12/28/2020, the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 became law. 

This law effectively stops all residential foreclosures in NYS until May 1, 2021, but it does nothing about the borrower's obligation to repay their loan.  

Do you think that makes sense?

Isn’t that just delaying the inevitable foreclosure crisis?

Shouldn't something be done about the loan too? 

Here is how the law works – a homeowner needs to submit a hardship declaration to their lender and magic, no more foreclosure until May.

The Details:

o   Either the court or lender (depending on foreclosure status) must provide the borrower with a statement explaining the law.

o   To qualify, a borrower must be suffering a financial hardship including, such as

§  A significant loss of household income;

§  Increase in necessary expenses;

§  Childcare responsibilities;

§  Moving expenses; and/or

§  Other circumstances negatively affecting the borrower’s ability to find meaningful employment.

o   Sample hardship declarations will be available on the Office of Court Administration website.

o   New Foreclosures – If the borrower does not provide the declaration, the lender is required to file all sorts of documents to commence a foreclosure proceeding, including:

§  Affidavit of Service of the Hardship Declaration in English and in the borrower’s primary language.

§  Affidavit of Service of RPAPL 1303 and 1304 notices; and

§  Affidavit of the Petitioner/Petitioner’s agent attesting that the Petitioner or his agent did not receive a Hardship Declaration from the Borrower.

o   Existing Foreclosures – Paused (stayed) for at least 60 days to provide the borrower time to complete and submit the hardship declaration.

o   This also stops foreclosure sales if the case already was decided by the court in a judgment.

Make no mistake, this new law does NOT excuse borrowers from paying the mortgage. 

So, what is the point? 

Isn’t it misleading borrowers into digging an even bigger financial hole?

What do you think?