NYS Mortgage Relief Plans Becomes Clearer, BUT Not Enough

On March 21, 2020, the Governor issued NYS Executive Order 202.9, which provides, in pertinent part, as follows:

Subdivision two of Section 39 of the Banking Law is hereby modified to provide that it shall be deemed an unsafe and unsound business practice if, in response to the COVID-19 pandemic, any bank which is subject to the jurisdiction of the Department shall not grant a forbearance to any person or business who has a financial hardship as a result of the COVID-19 pandemic for a period of ninety days... The Superintendent of the Department of Financial Services shall 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 a forbearance of payments for a mortgage for any person or entity facing a financial hardship due to the COVID-19 pandemic. The Superintendent shall promulgate emergency regulations to require that the application for such forbearance be made widely available for consumers, and such application shall be granted in all reasonable and prudent circumstances solely for the period of such emergency. 

While a cursory reading shows that mortgage help is on the way, many uncertainties remain, including:

• What does subject to the jurisdiction of the Department mean in the Order? Specifically, there are two charting systems for banks; federal and state. The Federal Office of the Comptroller of the Currency controls federally chartered banks pursuant to the National Bank Act. Generally, you can tell that a bank is federally chartered because it has the initials N.A. after its name. As a result, NYS doesn't have jurisdiction over federally chartered banks so how does this work if you have a loan through a federal bank like many NYS residents do?
• When is the Superintendent promulgating emergency regulations and how are consumers going to understand those regulations if attorneys at law were not labeled as essential services under the quarantine and therefore are becoming less available by the minute? Yes, some law firms are open and working remotely, but for how long with many clerks' offices closed and all court deadlines tolled (yesterday's Executive Order 202.8), including "any specific time limit for the commencement, filing, or service of any legal action, notice, motion, or other process or proceeding."
• By adding the words business & entity, is it intended that this applies to both residential and commercial property?
• Is there a limit on the amount of the mortgage for this to be applicable?
• After the forbearance is over, what happens to the money deferred (i.e., back end balloon, recapitalized, ballooned immediately, something else)?
• Will the Superintendent of DFS be answering these questions or someone else; plus, will the answers be part of a regulation or just advisory? 

Please don't misunderstand this post. We 100% support the quarantine and also support the forbearance. Instead, this blog is designed to prevent further hardship to the vulnerable who take a leap of faith on their mortgage without first researching facts.

Get facts before you act and the facts aren't out yet - so, CONTINUE PAYING YOUR MORTGAGE for now.

NYS, FHA, Fannie Mae and Freddie Mac Mortgage Relief Plans Do Not Automatically Waive Mortgage Payments

On March 19, 2020, Governor Cuomo announced a 90-day Mortgage Relief Plan ("Plan") for New York State mortgage borrowers. New York State mortgage servicers are directed to provide 90-day mortgage relief to borrowers affected by the novel coronavirus (COVID-19). The Plan aims to provide the following relief:

• Waiving mortgage payments based on financial hardship;
• No negative reporting to credit bureaus;
• Grace period for loan modification;
• No late payment fees or online payment fees; and
• Postponing or suspending foreclosures.

While the Plan does bring immediate relief to homeowners affected by the coronavirus (COVID-19), the Plan does not simply waive mortgage payments due in the next 90 days. In his press conference, Governor Cuomo clarified, "We're not exempting people from the mortgage payments. We're just adjusting the mortgage to include those payments on the back end."

Currently, specific procedures on how to apply and/or how to qualify under the Plan is yet to be published, so stay tuned. Until then, borrowers should retain counsel to apply and negotiate with their mortgage lender or servicer for a forbearance plan to prevent incurring interest and fees for missed payments.

Mortgage relief plans are also in place for FHA, Fannie Mae, and Freddie Mac mortgages. Similar to New York State's Plan, however, borrowers should be aware that the mortgage payments are not automatically waived nor placed on hold and they should retain counsel to apply and negotiate with their mortgage servicer immediately.

Remote (Mail Away) Real Estate Closings are Here - Governor Issues Order

NYS' Governor Cuomo has ordered the permissibility of video notarization through April 18, 2020 as follows:

"Any notarial act that is required under New York State law is authorized to be performed utilizing audio-video technology provided that the following conditions are met:

• The person seeking the Notary's services, if not personally known to the Notary, must present valid photo ID to the Notary 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 Notary (e.g. no pre-recorded videos of the person signing);
• The person must affirmatively represent that he or she is physically situated in the State of New York;
• The person must transmit by fax or electronic means a legible copy of the signed document directly to the Notary on the same date it was signed;
• The Notary may notarize the transmitted copy of the document and transmit the same back to the person; and
• The Notary may repeat the notarization of the original signed document as of the date of execution provided the Notary receives such original signed document together with the electronically notarized copy within thirty days after the date of execution." 

Now, real estate brokers / salespersons / attorneys / loan officers, and the like, should get to work - we have real estate closings to get done!

Thank you Governor Cuomo for hearing our requests. 

NYS legislature should vote to make this permanent by passing S4352B as we discussed in 5 Real Estate Laws to Know in These Times.  

60-Day Moratorium on Foreclosures and Evictions for FHA, Fannie Mae, and Freddie Mac Mortgages

On March 18, 2020, the U.S. Department of Housing and Urban Development (HUD) authorized the Federal Housing Administration (FHA) to implement a 60-day moratorium on foreclosures and evictions for single family homeowners with FHA-backed mortgages. Similarly, the Federal Housing Finance Agency (FHFA) also directed Fannie Mae and Freddie Mac to suspend foreclosures and evictions for single family mortgages for at least 60 days. These moratoriums were intended to curb the effects of the coronavirus (COVID-19) on homeowners and in connection with the proclamation of the COVID-19 outbreak as a national emergency.

The 60-day moratorium for FHA, Fannie Mae, and Freddie Mac mortgages took effect on March 18, 2020. For FHA mortgages, the moratorium applies to all FHA Title II Single Family forward and Home Equity Conversion Mortgage (reverse) mortgage programs and covers the initiation of foreclosures up to completion of foreclosures in process. Evictions from properties secured by FHA, Fannie Mae and Freddie Mac single family mortgages are also on hold for 60 days.

In addition to HUD and FHFA moratoriums, all evictions and foreclosures are indefinitely suspended in the counties of Nassau County and Suffolk County.

Coronavirus Family/Sick Leave Bill Signed Into Law

On March 18, 2020, President Trump Signed The Families First Coronavirus Response Act into law. The new law contains several modifications from the original bill passed by the House. Employers must immediately draft policies and train human resources employees to implement the new law. In addition, Employers must post a Notice in the workplace as detailed below.

Here is a summary of key provisions of the new law that apply to employers/employees:

1) Emergency Family and Medical Leave Expansion Act

Effective Dates: April 2, 2020 – December 31, 2020.

Qualified Employers/Employees: Applies to employers with less than 500 employees for all employees who have been employed for at least 30 calendar days.

Reason for Leave: The qualifying reason for leave is limited to an employee who is "unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable due to a "public health emergency."

Amount of Pay (tax credits are available to employers): The first 10 days of leave are unpaid (employee may substitute accrued vacation, personal or sick leave). For the following 10 additional weeks, the employer must compensate the employee at a rate of no less than two-third's of the employee's regular rate of pay. However, such pay is capped at $200 per day and $10,000 total.

Job Protection: Position is protected until return from leave unless employer, who employs 25 or fewer employees, eliminates position due to a downturn in economic conditions as a result of the Coronavirus. However, employers would still have to make "reasonable efforts" to restore employee to the same or equivalent position.

Exemptions: The Act provides authority to the Department of Labor to exclude health care providers, emergency responders and employers with less than 50 employees where the "viability of the business as a going concern" would be jeopardized.

2) Emergency Paid Sick Leave Act

·         Effective Dates: April 2, 2020 – December 31, 2020

·         Qualified Employer/Employee: Covers all employers with less than 500 employees for all employees regardless of length of employment.

·         Reasons for Leave: Employee may take leave under this Act, if unable to work (or telework) for any of the following reasons:

• The employee is subject to federal, state or local quarantine as a result of the Coronavirus;
• The employee has been advised by a health care provide to self-quarantine as a result of the Coronavirus;
•  The employee is experiencing symptoms of the Coronavirus and is seeking a medical diagnosis;
•  The employee is caring for an individual who is subject to an order described in Section 1, or advised as described in Section 2;
• To care for a child whose school is closed or his/her regular child care provider is unavailable;
• The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor. 

Amount of Pay (tax credits are available to employers): Employers must pay all employees who qualify under reasons 1-3 above at the employee's regular rate of pay, capped at $511 per day and $5,110 total. However, if employee's leave is a result of reasons 4-6 above, employer must only compensate employee at 2/3 of his/her regular rate of pay, capped at $200 per day and $2,000 total.

Exemptions: Health care providers and emergency responders.