Bill Text: NY S08425 | 2019-2020 | General Assembly | Introduced
Bill Title: Relates to the forbearance of residential mortgage payments for qualified mortgagors for a period of up to 180 days with the option to extend for an additional 180 days.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2020-05-28 - REFERRED TO RULES [S08425 Detail]
Download: New_York-2019-S08425-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 8425 IN SENATE May 28, 2020 ___________ Introduced by Sen. KAVANAGH -- read twice and ordered printed, and when printed to be committed to the Committee on Rules AN ACT to amend the banking law, in relation to the forbearance of resi- dential mortgage payments The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 9-x of the banking law, as added by a chapter of 2 the laws of 2020, amending the banking law relating to the forbearance 3 of residential mortgage payments, as proposed in legislative bills 4 numbers S. 8243-C and A. 10351-B, is amended to read as follows: 5 § 9-x. Mortgage forbearance. 1. As used in this section, the following 6 terms shall have the following meanings: 7 (a) "Covered period" means March 7, 2020 until the date on which none 8 of the provisions that closed or otherwise restricted public or private 9 businesses or places of public accommodation, or required postponement 10 or cancellation of all non-essential gatherings of individuals of any 11 size for any reason in Executive Orders 202.3, 202.4, 202.5, 202.6, 12 202.7, 202.8, 202.10, 202.11, 202.13 or 202.14, as extended by Executive 13 Orders 202.28 and 202.31 and as further extended by any future Executive 14 Order, issued in response to the COVID-19 pandemic continue to apply in 15 the county of the qualified mortgagor's residence; 16 (b) "qualified mortgagor" means an individual [who resides in New17York] (i) whose [principal dwelling] primary residence is located in New 18 York and is encumbered by a home loan pursuant to paragraph (a) of 19 subdivision six of section thirteen hundred four of the real property 20 actions and proceedings law or whose [principal dwelling] primary resi- 21 dence is located in New York and is a co-operative unit whose shares are 22 encumbered by any loan otherwise meeting the requirements of a home loan 23 under paragraph (a) of subdivision six of section thirteen hundred four 24 of the real property actions and proceedings law, from or serviced by a 25 regulated institution; and (ii) who demonstrates financial hardship as a 26 result of COVID-19 during the covered period; EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD16551-02-0S. 8425 2 1 (c) "regulated institution" means any New York regulated banking 2 organization as defined in this chapter and any New York regulated mort- 3 gage servicer entity subject to supervision by the department; and 4 (d) "trial period plan" means an agreement whereby the mortgagor is 5 required to make trial payments in full and on-time in order to be 6 considered for a permanent loan modification. 7 2. Notwithstanding any other provision of law, New York regulated 8 institutions shall: 9 (a) make applications for forbearance of any payment due on a residen- 10 tial mortgage of a property located in New York widely available to any 11 qualified mortgagor who, during the covered period, is in arrears or on 12 a trial period plan, or who has applied for loss mitigation [and demon-13strates financial hardship during the covered period]; and 14 (b) grant such forbearance of all monthly payments due with respect to 15 the mortgage secured by the qualified mortgagor's primary residence in 16 New York for a period of up to one hundred eighty days to any such qual- 17 ified mortgagor [who is in arrears or on a trial period plan, or who has18applied for loss mitigation and demonstrates financial hardship], with 19 the option to extend the forbearance of such monthly payments for up to 20 an additional one hundred eighty days provided that this extension is 21 subject to the mortgagor demonstrating continued financial hardship. If 22 any qualified mortgagor has already received a forbearance pursuant to 23 executive order 202.9 of two thousand twenty, the time of such forbear- 24 ance shall be considered as part of the requirement of this section to 25 provide a forbearance of up to one hundred eighty days, and any exten- 26 sion thereof pursuant to this section. 27 (c) Such forbearance may be backdated to March seventh, two thousand 28 twenty, provided that the maximum length of the forbearance may be no 29 longer than one hundred eighty days and any extension thereof pursuant 30 to this section. 31 3. Notwithstanding any other provision of law, any mortgage forbear- 32 ance granted by a regulated institution pursuant to executive order 33 number 202.9 of two thousand twenty, this section, or [any other law,34rule or regulation to the] 3 NYCRR Part 119 to a qualified mortgagor as 35 a result of financial hardship [during the covered period] shall be 36 subject to the following provisions: 37 (a) the mortgagor shall have the option to extend the term of the loan 38 for the length of the period of forbearance. The regulated institution 39 shall [waive interest on the principal for the term of the forbearance40and waive any late fees accumulated as a result of the forbearance] not 41 charge additional interest or any late fees or penalties on the forborne 42 payment; or 43 (b) the mortgagor shall have the option to have the arrears accumu- 44 lated during the forbearance period payable on a monthly basis for the 45 remaining term of the loan without being subject to penalties or late 46 fees incurred as a result of the forbearance; or 47 (c) the mortgagor shall have the option to negotiate a loan modifica- 48 tion or any other option that meets the changed circumstances of the 49 qualified mortgagor; or 50 (d) if [the mortgagor is unable to make mortgage payments due to mort-51gagors' demonstrated hardship and] the mortgagor and regulated institu- 52 tion cannot reasonably agree on a mutually acceptable loan modification, 53 the [mortgagor] regulated institution shall [have the option] offer to 54 defer arrears accumulated during the forbearance period as a non-inter- 55 est bearing balloon [payment] loan payable at the maturity of the loan 56 [consistent with the safety and soundness of such regulated institu-S. 8425 3 1tion], or at the time the loan is satisfied through a refinance or sale 2 of the property. Any late fees accumulated as a result of the forbear- 3 ance shall be waived. 4 [(d)] (e) The exercising of options provided for in paragraph (a), (b) 5 [or], (c) or (d) of this subdivision by a qualified mortgagor shall not 6 be reported negatively to any credit bureau by any regulated institu- 7 tion. 8 4. Notwithstanding any other provision of law, adherence with this 9 section shall be a condition precedent to commencing a foreclosure 10 action stemming from missed payments which would have otherwise been 11 subject to this section. A defendant may raise the violation of this 12 section as a defense to a foreclosure action commenced on the defend- 13 ant's property when such action is based on missed payments that would 14 have otherwise been subject to this section. 15 5. Notwithstanding anything to the contrary in this section, this 16 section shall not apply to, and does not affect any mortgage loans made, 17 insured, purchased or securitized by any agency or instrumentality of 18 the United States, any government sponsored enterprise, or a federal 19 home loan bank, or a corporate governmental agency of the state consti- 20 tuted as a political subdivision and public benefit corporation, or the 21 rights and obligations of any lender, issuer, servicer or trustee of 22 such obligations, including servicers for the Government National Mort- 23 gage Association. 24 6. Notwithstanding any other provision of law or of this section, the 25 obligation to grant the forbearance relief required by this section 26 shall be subject to the regulated institution having sufficient capital 27 and liquidity to meet its obligations and to operate in a safe and sound 28 manner. Any regulated institution that determines that it is not able to 29 offer relief pursuant to this section to any qualified mortgagor must 30 notify the department within five business days of making such determi- 31 nation. Any such notice filed with the department shall include informa- 32 tion about the qualified mortgagor, the reason the regulated institution 33 determined that it was unable to offer any relief pursuant to this 34 section, information about the regulated institution's financial condi- 35 tion supporting the regulated institution's determination, and any other 36 information required by the department. At the same time that the regu- 37 lated institution provides notice to the department, it shall advise the 38 qualified mortgagor that the application for relief was denied and 39 provide a statement that the applicant may file a complaint with the New 40 York state department of financial services at 1-800-342-3736 or 41 http://www.dfs.ny.gov if the applicant believes the application was 42 wrongly denied. 43 § 2. This act shall take effect on the same date and in the same 44 manner as a chapter of the laws of 2020, amending the banking law relat- 45 ing to the forbearance of residential mortgage payments, as proposed in 46 legislative bills numbers S. 8243-C and A. 10351-B, takes effect.
