Empire State Development Issues Guidance on Real Estate Services

On March 9, 2020, Executive Order 202.6 mandated non-essential businesses to reduce their in-person workforce by 50% and later, by 100%. Today, the Empire State Development (ESD) issued guidance on Executive Order 202.6 to further determine which businesses are considered essential.

What does the ESD Guidance mean for real estate professionals?

Lawyers are permitted to continue to perform all work necessary, as long as it is performed remotely. Any in-person work must be only for supporting essential businesses or services, with the caveat that such work should still be conducted as remotely as possible.

Real estate services, including but not limited to, title searches, appraisals, permitting, inspections, recording, legal, financial and other services necessary to complete the transfer of real property shall be conducted remotely for ALL transactions.

• In-person services may be conducted only to the extent legally necessary and in accordance with appropriate social distancing and cleaning/disinfecting protocols.
• Brokerage and branch offices may be opened only to clients.

With ESD’s Guidance, along with Executive Order 202.10 and 202.14 which authorized remote notarization and electronic witnessing for deeds (which we blogged about HERE and HERE), real estate professionals can get back to work and close some deals.

Deeds & Estate Documents - Electronic Witnessing Now Permitted

Through Executive Order 202.14 and effective from April 7, 2020 to May 7, 2020, the act of witnessing as required in signing a will, healthcare proxy, disposition of remains, recording of instruments regarding real property, power of attorney and living trusts may now be done through audio-video technology.

To do so, the following requirements must be satisfied:

• The person requesting that their signature be witnessed, if not personally known to the witness(es), must present valid photo ID to the witness(es) during the video conference, not merely transmit it prior to or after;
• The video conference must allow for direct interaction between the person and the witness(es), and the supervising attorney, if applicable (e.g. no pre-recorded videos of the person signing);
• The witnesses must receive a legible copy of the signature page(s), which may be transmitted via fax or electronic means, on the same date that the pages are signed by the person;
• The witness(es) may sign the transmitted copy of the signature page(s) and transmit the same back to the person; and
• The witness(es) may repeat the witnessing of the original signature page(s) as of the date of execution provided the witness(es) receive such original signature pages together with the electronically witnessed copies within thirty days after the date of execution.

Similarly, video notarization has been permitted since March 19, 2020 through Executive Order 202.7, which we blogged about HERE.

This is one major step closer to remote real estate closings and estate planning.

Now, the NYS legislature needs to make this permanent and not let Coronavirus innovation be a wasted opportunity.

Are You at Risk to Exposure to COVID-19? Designate a Guardian with this Form

By Executive Order 202.14, Governor Cuomo has permitted the use of this form for "any parent, a legal guardian, a legal custodian, or primary caretaker who works or volunteers in a health care facility or who reasonably believes that they may otherwise be exposed to COVID-19... [to] designate a standby guardian" for their children:

Designation of Standby Guardian

(NOTE: As used in this form, the term “parent” shall include a parent, a court-appointed guardian of an infant's person or property, a legal custodian, or a primary caretaker, and the term “child(ren)” shall include the dependant infant of a parent, court-appointed guardian, legal custodian or primary caretaker

I _________________________ hereby designate 

________________________________________________________________________________________________________________________________________________________________(name, home address and telephone number of standby guardian) as standby guardian of the person and property of my child(ren) (You may, if you wish, provide that the standby guardian's authority shall extend only to the person, or only to the property, of your child, by crossing out “person” or “property”, whichever is inapplicable, above.)

______________________________________________________________________________________________________________________________________________________________

(name of child(ren)).

This appointment as the standby guardian of my child(ren) would be in the best interests of my child(ren) because:

________________________________________________________________________________________________________________________________________________________________

(insert justification for appointment of this person as the standby guardian)

The standby guardian's authority shall take effect: (1) if my doctor concludes in writing that I am mentally incapacitated, and thus unable to care for my child(ren); (2) if my doctor concludes in writing that I am physically debilitated, and thus unable to care for my child(ren) and I consent in writing, before two witnesses, to the standby guardian's authority taking effect; (3) If I become subject to an administrative separation such that care and supervision of the child will be interrupted or cannot be provided; or (4) upon my death.

In the event the person I designate above is unable or unwilling to act as guardian for my child(ren), I hereby designate 

________________________________________________________________________________________________________________________________________________________________

(name, home address and telephone number of alternate standby guardian), as standby guardian of my child(ren).

I also understand that my standby guardian's authority will cease sixty days after commencing unless by such date he or she petitions the court for appointment as guardian.

I understand that I retain full parental, guardianship, custodial or caretaker rights even after the commencement of the standby guardian's authority, and may revoke the standby guardianship at any time.

Signature: 

 

Address: 

 

Date: 

 

I declare that the person whose name appears above signed this document in my presence, or was physically unable to sign and asked another to sign this document, who did so in my presence. I further declare that I am at least eighteen years old and am not the person designated as standby guardian.

Witness' Signature: 

 

Address: 

 

Date: 

 

Witness' Signature: 

 

Address: 

 

Date: 

 

Penalties for Violating Executive Orders on Coronavirus Expanded AGAIN

By Executive Order 202.14, Governor Cuomo enacted new penalties for violating Coronavirus Executive Orders, in addition to what we discussed in our blogs - Penalties for Keeping Your Real Estate Opened in Coronavirus Expanded and What Happens When You Ignore the Essential Services Executive Order. 

The new penalty order states as follows:

The enforcement of any violation of the foregoing directives on and after April 7, 2020, in addition to any other enforcement mechanism stated in any prior executive orders, shall be a violation punishable as a violation of public health law section 12-b(2) and the Commissioner of Health is directed and authorized to issue emergency regulations. The fine for such violation by an individual who is participating in any gathering which violates the terms of the orders or is failing to abide by social distancing restrictions in effect in any place which is not their home shall not exceed $1,000.

You've been warned. 

New York State Courts Are Reopening for Non-Essential Matters

New York State courts are reopening.

On April 7, 2020 Judge Marks issued a memorandum to all trial court justices and judges outlining his plan for reopening the trial courts to non-essential matters beginning on Monday April 13, 2020. A full copy of the memorandum can be found HERE.

Judge Marks' April 7, 2020 memorandum states:

Going forward, the existing prohibition on the filing of new non-essential matters will continue. However, although our planning is ongoing, starting next Monday, April 13, we will take certain preliminary steps to open up access - remote access - to the courts for non-essential pending cases. This means that judges should review their case inventories to identify cases in which court conferences can be helpful in advancing the progress of the case, including achieving a resolution of the case. Judges can also schedule conferences at the request of the attorneys, and can be available during normal court hours to address discovery disputes and other ad hoc concerns. The conferences will need to be conducted remotely, by Skype or by telephone. Judges' personal staff will be able to assist judges remotely, as needed.

New York State courts have been closed to non-essential matters since March 22, 2020 when Chief Administrative Judge Lawrence K. Marks issued Administrative Order 78/20, which we blogged about HERE.


What will change on Monday, April 13?
Immediately, it appears that the courts are finding success in their remote operations for essential matters are looking to expand those capabilities to non-essential matters which make up the bulk of the caseload in the trial courts. Not only does the memorandum permit judges to conduct remote conferences on cases that are already pending before them, it encourages them to do so. Judges can schedule conferences and parties can request them as well.

The memorandum advises judges to examine their calendars, prioritize cases that will benefit from conferences, decide pending motions to clear backlogs, and to reduce their dockets while there are no new filings.

The big takeaway is that judges' chambers will be staffed and operational - conducting conferences and resolving motions to help clear their dockets. Your pending lawsuits are no longer frozen and progress will be made.


What don't we know?
There are some key limitations in this memorandum that cannot be overlooked:

Going forward, the existing prohibition on the filing of new non-essential matters will continue.

It is clear that as of now, you cannot commence a new action in NYS courts (you can commence a new action in the Federal courts). That means no new lawsuits in NYS courts. It is not clear, however, if that means you can file new papers on pending actions. For instance, it is unclear if you are permitted to file a new motion on a pending action, or even an answer to a complaint that was already filed and served. For now, existing administrative and executive orders tolling time limitations still control.

What to expect going forward.

Judge Marks realizes that a total freeze on court operations is unnecessary. While in-person appearances in a judge's courtroom or chambers are sometimes necessary for a civil matter in the Supreme Court, it is rarely mandatory. Remote conferences can handle most preliminary conferences, discovery disputes, and status conferences. In-person appearances are unnecessary to resolve most motions, and oral argument can be conducted over Skype, Zoom, etc. Civil parts in the Supreme Court can operate at nearly 100% capacity without opening their doors to the bar. 

I expect Judge Marks to reopen the civil parts of the Supreme Court in stages, gradually increasing their capacity until everything except trials can move forward while the rest of the country remains closed due to COVID-19. 

Courts that heavily rely upon in-person appearances, such as landlord-tenant court and the housing court, will be slower to reopen, but those actions are stayed anyway so there is less emphasis on figuring out remote operations for those parts. 

Look for continuing guidance from Judge Marks and local administrative Judges later this week and early next week.

Can any of this become permanent?

It is no secret that it is exceptionally difficult to force large institutions to adopt opportunities presented by advances in technology. For example, even though we have electronic filing, attorneys still need to appear in person to file physical motion papers in some courts that are too stubborn to change their old procedures. Even though some states permit telephone conferences, some courts in New York force attorneys to appear in their courtroom just to tell the judge that they are on schedule with their discovery and don't need any help from the court. That is a waste of time, money, and the courts' limited resources.

Perhaps the changes forced by COVID-19 will open the courts' eyes to the increased efficiency and productivity that technology can bring to our stubborn industry. Listen to our podcast about the future of the courts HERE - Court System is Archaic | Modernization Needed ASAP.

2021 NYS State Budget Enacts Paid Sick Leave Law

On April 2, 2020, Governor Cuomo announced the 2021 New York State Budget which includes a statewide paid sick leave law. The new law states, in summary, as follows: 

• Every employer is required to provide employees with annual sick leave beginning on January 1, 2021; the amount and pay required is dependent on the number of employees:

• Employers with four (4) or fewer employees and a net income of less than one (1) million dollars in the prior tax year must provide up to forty (40) hours of unpaid sick leave per year. 
• Employers with 5-99 employees (and employers who have four (4) or fewer employees and a net income greater than one (1) million dollars) must provide up to forty (40) hours of paid sick leave per year. 
• Employers with a 100 or more employees must provide fifty-six (56) hours of paid sick leave per year.

• Sick leave accrues at a rate of one (1) hour for every thirty (30) hours worked. Employers may provide all of the required hours at the beginning of the year. 

• Employees may use sick leave under the following circumstances:

• Employee has a a mental or physical illness or injury (regardless if it has been diagnosed or employee requires medical care). 
• To care for a family member who has an illness or injury. 
• To take various precautionary measures; seek treatment or services as a result of the employee or family member being a victim of domestic violence. 

• Employers who deny employees sick leave or retaliate against an employee for taking sick leave may be liable for substantial damages including but not limited to: back pay, front pay, attorneys' fees, civil penalties and liquidated damages up to $20,000.

Paycheck Protection Program - Regulations Explained

The Coronavirus Aid, Relief, & Economic Security Act (CARES Act), signed into law on 3/27/2020, includes expeditious relief for America's small businesses through loans funded at $349 billion.

§1102 of the CARES Act establishes the Paycheck Protection Program (PPP) under the SBA 7(a) Loan Program & §1106 provides forgiveness of up to the full principal of loan.

To fulfill the expeditious intent of providing relief to small businesses, the SBA issued its final rule on 4/2/2020 without the typical 30-day delay for effectiveness. 

We will be discussing the PPP in great detail on Real Estate Investing with Andrew Lieb this Sunday at noon on LI News Radio (WRCN / FM103.9) - If you are in business, don't miss this important segment - it could save your financial life. 

Here is a Summary of the Interim Final Rule found at 13 CFR Part 120: 

• Loan Terms:
• No collateral
• No personal guarantee
• No fees
• Loan payments deferred 6 months (interest accrues)
• 2-year maturity
• 1% interest rate
• Maximum loan $10MM
• Loan Amount (calculation methodology):
1. Aggregate payroll costs from last 12 months
2. Subtract amounts paid to employee over $100K
3. Divide net of steps 1 & 2 by 12
4. Multiply step 3 by 2.5
5. Add outstanding amount of an Economic Injury Disaster Loan made from 1/31/2020 to 4/3/2020 less advances
• Loan Forgiveness Availability:
• Employees are on the payroll for 8 weeks 
• Money used for payroll, rent (lease dated before 2/15/2020), mortgage interest (obligation incurred before 2/15/2020), or utilities (service agreement before 2/15/2020)
• 75% of loan forgiven must be used on payroll
• Payroll includes:
• Small business = Salary, wages, commission, cash tips, vacation / parental / family /medical / sick leave, allowance for separation / dismissal, employee benefits (health / retirement), state / local employment tax
• Independent Contractor = wage, commission, income, or net earnings
• Payroll doesn’t include: 
• Employee with principal residence outside US
• Salary over $100k (prorated)
• Fed employment tax from 2/15/2020 to 6/30/2020
• Qualified sick & family leave wages
• To prove proper payments, lenders can rely on borrower’s documentation without any verification requirements
• Application:
• SBA Form 2483 (lender submits SBA Form 2484)
• Applicant certifies that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.
• Available from 4/3/2020 to 6/30/2020 or until exhausted
• Borrower can only get 1 loan
• First-come, first service
• E-signature / consent permitted
• Eligibility:
• Must be small business, non-profit, independent contractor (sole proprietor)
• Must have < 500 employees (certain exceptions if bigger) with principal place of residence in US
• Must be in operations on 2/15/2020 with W2 employees
• Must submit proof of eligibility of:
• Payroll processor records
• Payroll tax filings
• Form 1099-Misc
• Income & expenses for sole proprietorship
• If don’t have above, bank records to demonstrate qualifying payroll
• Ineligibility:
• You are engaged in illegal activity under federal, state or local law (no legal marijuana) 
• Household employer of nannies / housekeepers
• Owner of 20% or more is incarcerated, on probation / parole, subject to indictment, criminal information, arraignment, or convicted of felony in last 5 years
• Delinquent / defaults on SBA loan within last 7 years
• Misuse Penalties:
• Knowingly using loan for unauthorized purposes is fraud
• False statements on application is up to 5 year imprisonment / up to $250K fine + up to 2 years imprisonment / up to $5K fine + up to 30 years imprisonment / up to $1MM fine
• Lenders Fees Paid from SBA:
• 5% of loans up to $350K
• 3% of loans over $350K & less than $2MM
• 1% of loans at least $2MM  
• Agent Fees Paid by Lender from its Fees:
• 1% of loans up to $350K
• 0.5% of loans over $350K & less than $2MM
• 0.25% of loans at least $2MM

·        Questions should be made to Lender Relations Specialist at the local SBA Field Office 

“Unemployment on Steroids”: Cares Act Extends Unemployment Coverage to Independent Contractors and Provides an Additional $600 to Individuals Receiving NYS Benefits

In response to many workers losing their jobs as a result of COVID-19, the federal government is providing unemployment insurance assistance in addition to what is currently offered by the States. Some members of Congress aptly referred to the new law as “unemployment on steroids.” The law provides the following additional unemployment insurance benefits:

• Extends eligibility to independent contractors, individuals who are self-employed, or cannot work (individuals who can telework are not covered) for a reason directly related to COVID-19. In order to apply for Pandemic Unemployment Assistance ("PUA"), you must first apply and be determined ineligible to receive New York State unemployment insurance benefits.
• Provides an additional $600 a week to all individuals receiving State unemployment insurance benefits. In New York State, if you are receiving the minimum benefits, the maximum benefits ($504 per week) or somewhere in between, you will receive an additional $600 per week. The federal benefits are retroactive to January 27, 2020 and expires on July 31, 2020. It is unclear from the information currently available whether you are entitled to the additional $600 if you are receiving partial unemployment benefits from New York State (hours/salary are reduced by employer).
• Provides an additional 13 weeks of benefits (NYS currently offers 26 weeks of unemployment benefits).

According to NYSAR - Real Estate Brokers Can Conduct Showings - What Are Your Business Ethics?

According to NYSAR, Empire State Development clarified that "[t]he following functions of real estate and/or realtors (sic) are considered essential: residential home and commercial office showings; home inspections; and residential appraisers."

Now that it's permissible, the question turns to whether real estate salespersons / associate brokers should be conducting showings?

This is the biggest ethical question for real estate brokers today.

Ironically, Lieb School is in the midst of creating a new CE course on ethical business practices, which is a required course for license renewal on and after 7/1/2021. We are now incorporating this situation into the course as a case study for our students to determine their own business ethics in real estate brokerage.

Unlike laws, business ethics refers to appropriate business practices on controversial subjects that are driven by moral concerns. Showing a house during the coronavirus pandemic is a practice that needs to be driven by your moral concerns.

When it comes to morals and values there is not a one size fits all answer to any question. This is the answer that I gave to a friend in response to his text requesting my take on the fact that "realtors were just declared essential services:"

It's not on the empire state development webpage so it's probably a responsive email to a clarification request from NYSAR. We got one today that my law firm can do in- person closings. That being said, we are trying to avoid them at all costs and have our office working remotely. It's good and bad that the clarification was issued. It's good that smart brokers are authorized to help people in need, but it unfortunately gives permission to the idiots in our industry to spread coronavirus and put their lives and the lives of others in jeopardy all for a dollar. I would not show a senior's house if they live there. I would not show an immunocompromised person's house if they live there. I would not do public open houses. I would limit my in-person contact to the extent necessary while always wearing PPE. If not for the business ethics that require it, at least for the fact that I refuse to bring coronavirus to my family. We will get through this, but we must be smart and pick health over money at each turn for money without health is useless. Stay safe my friend.

If you would like to further explore this topic, we have a special guest on our radio show this Sunday at noon on WRCN (FM 103.9) - www.listentolieb.com - iheart.com (LI News Radio).

Stay safe my friends.

LIEB Permitted to Close Real Estate Deals by NYS

On April 2, 2020 we received word from NYS Empire State Development that "[r]eal estate law practices are deemed essential if it is necessary to be in-person to do the work."

LIEB can close your deals in-person. 

Make no mistake, we are a leader in remote closings, but sometimes lenders and title underwriters won't permit such a closing and we have been struggling to find a solution. So, rather than guessing, we made request of the Empire State Development to tell us. This is something every business must do before acting because the penalties are outrageous for non-compliance. 

We just got our answer and we are already scheduling closings. 

Some people might say that this is a terrible move for a public health advocate. However, my favorite professor during my Master's program taught me to never ignore any of the dimensions of health while only focusing on physical health. Yes, the physical dimension is important. Yet, one can never ignore the spiritual, emotional, social and mental dimensions as well. To that end, there are people who need to close their real estate deal to be healthy. They may be living in limbo with no place to go, there can be financial stress of continued home ownership, there could be too many people occupying one space, or a plethora of other reasons that a closing is necessary.

Remember not to judge someone else's circumstances. 

We will be sure to keep social distance and avoid any gatherings to never forget the physical health needs of our team, our clients and ever other individual who is involved in our closing process.

It's Fair Housing Month - Coronavirus Discrimination Must Stop

Equal rights to housing is particularly important during this quarantine. 

A quarantine can be a very different experience dependent on your housing situation. Some people are sharing a bathroom with ten others while others are navigating between their indoor pool and their gym. Some have country homes to escape the city while others must walk stairwells infested with COVID-19. This is our current reality as a society. 

Make no mistake, in our capitalist society these differences should not only be accepted, but celebrated. Yet, these differences can only be caused by economic differences, not based upon the way we stigmatize people as a result of their demographic characteristics. 

Unfortunately, not everyone is observing the law today. According to the CDC, "fear and anxiety about a disease can lead to social stigma toward people, places, or things." In fact, the CDC has identified individuals of "Asian descent" as the current victims of stigma during the coronavirus pandemic. Let's change that starting today. 

Today is the start of Fair Housing Month. According to HUD, Fair Housing Month is a time to come together "as a community and a nation to celebrate the anniversary of the passing of the Fair Housing Act and recommit to that goal which inspired us in the aftermath of Rev. Dr. Martin Luther King Jr’s assassination in 1968: to eliminate housing discrimination and create equal opportunity in every community.”

We should do it. We can do it. We must do it.

Executing a New Will While in Quarantine? Avoid Will Deals That Seem too Good to be True

COVID-19 uncertainty is causing many people to rethink their wills and advanced directives.

With the acceptance of video notarization, which we blogged about HERE, many attorneys are advertising remote will execution ceremonies that remove the traditional requirement that the testator execute their will in a room with two witnesses and an attorney. The seeming ease of a remote will execution has caused a race to the bottom as attorneys compete on price for business. Things have gotten so desperate that I've seen an attorney advertise a will for $100.00. Is it too good to be true?

While the availability of remote notarization does make remote will execution ceremonies possible, it is important not to forget the fundamental requirements of a will signing. If your will is rejected by the Surrogate's Court because you failed to conform to the requirements of EPTL §3-2.1 all of your estate planning and forward thinking may have been for nothing. Avoid the nightmare scenario of your well-intentioned plans falling apart. 

The following is a list of some considerations which your attorney should be addressing when deciding how they are going to conduct a remote will execution ceremony:

1. Your attorney must draft a will that conforms to your intentions.
2. You must execute your will in the presence of two witnesses, or your signature must be acknowledged to the witnesses after it has already been affixed. Your remote execution procedure must qualify as "in the presence of". 
3. Your witnesses must sign the will itself within thirty days of one another. 
4. Your witnesses should sign affidavits attesting to the proper execution of your will. 
5. Your attorney should sign an attorney draftsman's affidavit. 
6. Your witnesses' affidavits should be notarized, and your attorney draftsman's affidavit should be notarized. 
7. Your original signature, the witnesses' original signatures, the attorney draftsman's original signature, and the notary's original signatures should all be combined into one original document which can be presented for probate. 

If you think your attorney can do all of that for $100.00, it's probably too good to be true.

Covered Employers Must Comply With the WARN Act Prior to Laying off Employees

Employers contemplating reductions in force as a result of the Coronavirus must consider the applicable Federal and State laws prior to effectuating any layoffs, including but not limited to the WARN Act, to avoid substantial penalties.

The New York WARN ("Worker Adjustment and Retraining Notification Act") Act is not suspended during the Coronavirus. Rather, the notice must be distributed, as detailed below, as soon as possible under the circumstances (as opposed to the regular 90 day notice requirement). Failure to provide such notice may result in the employer being required to pay back wages and/or the imposition of civil penalties.

When does the WARN Act apply?:

The New York WARN Act (which is more stringent than the Federal law) covers employers with 50 or more employees under the following circumstances:

• Plant or unit closing affecting 25 or more workers;
• Mass layoff of 25 or more full-time workers if the workers comprise of at least 33% of all workers at the physical site;
• Mass layoff of 250 or more full-time workers; and
• Certain other reductions of employees' work hours.

Notice

The WARN Act requires ninety (90) day notice of a mass layoff or plant closing to:

• Affected employees;
• New York State Department of Labor;
• Employee/Union Representatives; and
• The Local Workforce Investment Board.

The notice must include the following:

• Name/address where plant closing or mass layoff is to occur;
• Explanation as to whether the employment loss will be permanent or temporary;
• Expected date of scheduled layoff(s);
• Affected positions and number of affected employees in each position;
• Name(s) of applicable union/employee representatives; and
• Contact information of company representative who can provide additional information.

Consult with your employment attorney to confirm the satisfaction of all of these requirements before implementing layoffs.

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Evictions Stopped Under Coronavirus Stimulus - CARES Act

The Coronavirus Aid, Relief, and Economic Security or “CARES” Act was enacted into law on March 27, 2020. In addition to the relief enumerated in two of our recent articles (Nuts & Bolts of Stimulus Package - House Passes 2 Trillion Dollar Stimulus Package and Forbearance and Foreclosure Moratorium in Coronavirus Stimulus), the CARES Act also provides relief to residential tenants.

Under the CARES Act, from March 27, 2020 to July 25, 2020, landlords of 1- to 4-family and multifamily (5 or more) properties with FHA, Fannie Mae, or Freddie Mac mortgage loans may NOT:

• Initiate a legal action to recover possession based on nonpayment of rent or other fees or charges;
• Charge fees, penalties or other charges related to the nonpayment of rent;
• Require the tenant to vacate with less than 30-days’ notice; and
• Issue the 30-day notice to vacate until after July 25, 2020.

In addition, landlords who obtain a forbearance on their multifamily mortgage due to a financial hardship caused by the COVID-19 outbreak are prohibited from doing the above before their forbearance period expires.

Forbearance and Foreclosure Freeze in Coronavirus Stimulus

On March 27, 2020, the historic stimulus package known as the Coronavirus Aid, Relief, and Economic Security or “CARES” Act was enacted into law.

In addition to the relief enumerated in our recent blog (Nuts & Bolts of Stimulus Package - House Passes 2 Trillion Dollar Stimulus Package), the CARES Act also includes mortgage relief in the form of forbearance periods and foreclosure moratoriums for federally backed mortgages on 1-4 family homes and multifamily (5 or more) homes.

Which mortgages are covered?

• Federally backed mortgage loans secured by a first or subordinate lien on residential real property (including individual units of condominiums and cooperatives) for 1- to 4-families and for on multifamily residential real property (5 or more dwelling units) are covered, these include loans:
• insured by the Federal Housing Administration;
• insured under section 255 of the National Housing Act;
• guaranteed under section 184 or 184A of the Housing and Community Development Act of 1992;
• guaranteed or insured by the Department of Veterans Affairs;
• guaranteed or insured by the Department of Agriculture;
• made by the Department of Agriculture; or
• purchased or securitized by the Federal Home Loan Mortgage Corporation (Freddie Mac) or Federal National Mortgage Association (Fannie Mae).

What relief is available? 

For 1-4 family properties:

• Forbearance period of 180 days, which may be extended for an additional 180 days, upon the borrower’s request;
• No late fees, interest, or penalties during the forbearance period beyond those scheduled or calculated as if borrower is current on the mortgage; and
• Foreclosure moratorium – servicers are prohibited from moving for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction from March 18, 2020 to May 17, 2020;

For multifamily properties: 

• Forbearance period of 30 days, which may be extended for up to 2 additional 30-day periods, upon the borrower’s request. Note that the forbearance is only applicable to multifamily mortgage loans that were current on payments as of February 1, 2020. Also, tenants may not be evicted nor issued a notice to vacate for nonpayment or late payment of rent during the forbearance period.
• Foreclosure moratorium: servicers are prohibited from moving for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction from March 18, 2020 to May 17, 2020. 

What is the process for requesting a forbearance?

• For 1-4 family properties: Requests for a forbearance may be made by submitting a borrower’s attestation to a financial hardship caused by the COVID-19 emergency. No other documentation is required for the initial 180-day forbearance to be granted.
• For multifamily properties: Requests for a forbearance may be submitted to the servicer orally or in writing, through an affirmation that the multifamily borrower is experiencing a financial hardship during the COVID-19 emergency.