The Coronavirus Aid, Relief, Economic and Security (CARES) Act allows borrowers to request a forbearance on their mortgage. (You can read more about the CARES Act and mortgage forbearance requests in our article HERE.) As bankruptcy filings are expected to rise due to the COVID-19 pandemic, the U.S. Bankruptcy Court system implemented a few system changes to their Case Management/Electronic Case Filing (CM/ECF) Database in relation to borrowers who have requested a forbearance. These changes are effective May 11, 2020.

Specifically, a new bankruptcy event, “Notice of Mortgage Forbearance” was created to docket such event on the CM/ECF database. In addition to clicking such event, a question was also added to ask, “is a Notice of Mortgage Forbearance being filed with this filing?” in relation to established events on Notice of Mortgage Change. This change has been made to prevent filers from choosing the “Notice of Mortgage Change” event when only a forbearance has been obtained.

As the Court works towards streamlining and implementing a more efficient process, readers are advised to contact their counsel to ensure that the Court’s bankruptcy process and its recent changes be followed to a T to prevent any delays or other issues with filings.

In Episode 42, Andrew and Lauren breakdown the cost/benefit analysis of whether you deserve a mortgage modification. We discuss foreclosure lawsuits, mortgage terms and what motivates a modification from your lenders perspective.

On May 7, 2020, Governor Cuomo signed Executive Order 202.28 which tackled major changes to landlord-tenant matters in light of the COVID-19 pandemic, including an extension to the eviction moratorium, the usage of security deposits towards rent, and the prohibition on charging late fees.

1. Eviction and Foreclosure Moratorium Extended to August 20, 2020 for Tenants Who Are Unable to Pay Rent or Mortgage Payments due to COVID-19.
On March 7, 2020, Executive Order 202.8 previously ordered an eviction moratorium from March 7 to June 20, 2020. Executive Order 202.28 extends that moratorium to August 20, 2020. Specifically, no proceedings or enforcement may be initiated for residential or commercial tenants on the basis of nonpayment of rent due to the COVID-19 pandemic.

Similarly, foreclosure proceedings of any residential or commercial mortgage for nonpayment of such mortgage due to COVID-19 is also prohibited until August 20, 2020.

It is important to note that unlike the Executive Order  202.8 which ordered a moratorium on ALL evictions and foreclosures until June 20, 2020, the extension of the eviction and foreclosure moratorium to August 20, 2020 under Executive Order 202.28 only applies to residential or commercial tenants who are unable to pay their rent and are eligible for unemployment insurance or benefits under state or federal law, or otherwise facing financial hardship due to COVID-19. Thus, eviction proceedings based on breach of material terms under the lease other than nonpayment may start beginning June 20, 2020.

2. Residential Landlords May Apply Security Deposit towards Rent upon Written Agreement.

In addition to the extension of the eviction moratorium, residential landlords, with the tenant’s consent, are now allowed to apply the security deposit and any interest accrued to pay rent in arrears or rent that will become due through a written agreement. If the security deposit is less than one month’s rent, the consent does not constitute the landlord’s waiver for the remaining rent. Executive Order 202.28 expressly allows execution of this written agreement by email. Landlords and tenants should contact counsel prior to making any agreements to ensure that their interests are protected.

Any security deposit used as payment of rent must be replenished by the tenant at the rate of 1/12 the amount used as rent per month and such payments begin 90 days from when the security deposit was used as rent. Alternatively, tenants may retain insurance that provides relief for the landlord in lieu of monthly security deposit replenishment. However, like the extension, the above relief in relation to security deposits only applies to tenants eligible for unemployment insurance or benefits or are otherwise facing financial hardship due to COVID-19.

3. Late Charges for Residential Tenants Prohibited for Periods beginning March 20, 2020 to August 20, 2020.

Executive Order 202.28 also prohibits landlords from demanding or being entitled to any payment, fee, or charge, for late payment of rent pursuant to RPL 238-a occurring from March 20, 2020 to August 20, 2020. This provision only applies to residential properties but take note that it is not limited to tenants who were unable rent to pay due to COVID-19.

Governor Cuomo has signed a new executive order extending many of the previous actions taken in his previous orders. Included among these extensions is the tolling of statute of limitations until June 6, 2020. This is necessary, of course, because litigants are still prohibited from filing new non-essential actions. Litigators should be aware that this does not toll all deadlines in pending and ongoing actions. Notices of appeal, motion deadlines, time to answer and appear, and discovery deadlines are all up and running with the courts' expanded remote operations. Additionally, statute of limitations on federal claims are not affected as federal courts remain fully operational. A copy of the executive order, No. 202.28, can be found HERE. 

Stay tuned to our blog for big changes to the current commercial and residential eviction moratorium.