NY State Senate Bill 2019-S8744

Senate Bill S8744

2019-2020 Legislative Session

Relates to the forbearance of residential and commercial investment property mortgage payments

download bill text pdf

Archive: Last Bill Status - In Senate Committee Rules Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

Please enter your contact information

First Name

Last Name

Email Address

A valid email address is required.

Home address is used to determine the senate district in which you reside. Your support or opposition to this bill is then shared immediately with the senator who represents you.

Optional services from the NY State Senate:

Create an account. An account allows you to officially support or oppose key legislation, sign petitions with a single click, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Include a custom message for your Senator? (Optional)

Enter a message to your senator. Many New Yorkers use this to share the reasoning behind their support or opposition to the bill. Others might share a personal anecdote about how the bill would affect them or people they care about.

Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jul 13, 2020	referred to rules

2019-S8744 (ACTIVE) - Details

See Assembly Version of this Bill:: A10532
Current Committee:: Senate Rules
Law Section:: Banking Law
Laws Affected:: Add §9-y, Bank L

2019-S8744 (ACTIVE) - Summary

Relates to the forbearance of residential and commercial investment property mortgage repayments; requires New York regulated banking organizations to make applications for forbearance for residential and commercial investment property mortgage repayments available to qualified mortgagors during the period in which the NY on PAUSE order is in effect in the county wherein the qualified mortgagor holder is located and to grant such applications for a period of 180 days.

2019-S8744 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S8744

SPONSOR: SANDERS
 
TITLE OF BILL:

An act to amend the banking law, in relation to mortgage repayment
forbearance

 
PURPOSE:

This bill would add a new section 9-y to Article 1 of the banking law to
require New York regulated institutions to grant 180 days of forbearance
to residential mortgagors of small investment properties who can demon-
strate financial hardship as a result of the COVID-19 pandemic. This new
section would also allow for any mortgagor granted forbearance to choose
either to extend their loan for the length of the forbearance, pay their
arrears in monthly installments, or to defer the arrears as a lump sum
payment due at the maturity of the mortgage.

 
SUMMARY OF PROVISIONS:

Section 1 of the bill adds a new section 9-y to Article 1 of the banking
law.

Subsection 1 of section 9-y of the banking law sets forth definitions.

Subsection 2 of section 9-y of the banking law requires New York regu-
lated institutions to grant 180 days of forbearance-with the option for
an additional 180 days-on a residential mortgage of small investment
properties to any qualified mortgagor who can demonstrate financial
hardship during the NY on PAUSE Order issued in response to the COVID-19
pandemic. Mortgagors must submit an application for forbearance which
must be made widely available by the lending institution. Such forbear-
ance is available to those already in arrears, on a trial period plan or
who have applied for loss mitigation, and may be backdated to March 7,
2020.

Subsection 3 of section 9-y of the banking law requires banks to offer
mortgagors who have been granted forbearance because of the COVID-19
pandemic the following options: to extend the term of their mortgage for
the period of forbearance, pay their arrears in monthly installments, or
to defer the accumulated arrears as an interest-free balloon payment
payable at the maturity of the loan, consistent with the safety and
soundness of the bank. These options would prohibit a regulated lender
from charging interest or late fees or from negatively reporting the
decision to any credit bureau.

Subsection 4 of section 9-y of the banking law makes non-compliance with
this section a defense to a foreclosure action raised over payments that
would have otherwise been covered by this section.

Subsection 5 of section 9-y of the banking law specifies that this
section will not be applicable to mortgages made, insured, or securi-
tized by any agency or instrumentality of the United States, any Govern-
ment Sponsored Enterprise, or a Federal Home Loan Bank, or the rights
and obligations of any lender, issuer, servicer, or trustee of such
obligations.

Section 2 of the bill sets forth the effective date.
 
JUSTIFICATION:

Owners of small investment properties rely on rental income to sustain
their mortgage payments. The seasonally adjusted unemployment rate in
New York state is 14.5 percent as of April 2020. In New York City in May
2020, about 25% of residential tenants were unable to pay their rent.
With the economy in freefall and record numbers of New Yorkers unem-
ployed, renters are unable to pay their landlords, leading to liquidity
issues and default for property owners. Unlike a big borrower, who can
draw on lines of credit, smaller investment property owners borrowers,
who have just a handful of units, will have a harder time staying afloat
because of liquidity issues.

On March 21, 2020, Gov. Andrew Cuomo issued Executive Order 202.9 to
temporarily (through April 20, 2020), require that certain New York
state-regulated financial institutions grant 180-day forbearance relief
to certain borrowers who are having a financial hardship as a result of
the COVID-19 pandemic. However, this relief was extended only to home-
owners and did not address how banks will process late payments by small
landlords affected by COVID-19.

This bill will extend the order to owners of small investment properties
by requiring all state-regulated mortgage lenders and servicers to grant
a 180-day forbearance period, with the option to extend another 180
days, to any landlords of one to four separate units who make 30% or
more of their income in rent and who certify they have a loss of income
during the COVID-19 crisis. This will include borrowers who already are
struggling to make payments.

Under the current order, lenders are allowed to collect back payments as
soon as the forbearance period ends. This bill will a) require lenders
and servicers to extend the payment period for a period of time equal to
the forbearance period, and b) allow mortgagors to pay their arrears in
monthly installments or pay the deferred payments as a balloon payment
upon the maturity of the loan. Under this bill the mortgage lender also
will be prohibited from charging interest or late fees during forbear-
ance, or on the balloon payment; from negatively reporting the forbear-
ance to a credit reporting bureau; and ensuring that late payments
during the COVID-19 pandemic do not affect mortgagers ability to obtain
permanent loan modifications.

Compliance with this law also will be required in order for a foreclo-
sure action to proceed against a mortgagor for payments that otherwise
would have been covered by this deferment period.

 
LEGISLATIVE HISTORY:

New Bill

 
FISCAL IMPLICATIONS:

None

 
EFFECTIVE DATE:
This act shall take effect immediately.

2019-S8744 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8744
 
                             I N  S E N A T E
 
                               July 13, 2020
                                ___________
 
 Introduced  by  Sen. SANDERS -- 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  mortgage  repayment
   forbearance
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. The banking law is amended by adding a new section  9-y  to
 read as follows:
   §  9-Y.  MORTGAGE  REPAYMENT  FORBEARANCE;  RESIDENTIAL  OR COMMERCIAL
 INVESTMENT PROPERTIES. 1. AS USED IN THIS SECTION, THE  FOLLOWING  TERMS
 SHALL HAVE THE FOLLOWING MEANINGS:
   (A)  "COVERED  PERIOD"  MEANS MARCH SEVENTH, TWO THOUSAND TWENTY UNTIL
 THE DATE ON WHICH NONE  OF  THE  PROVISIONS  THAT  CLOSED  OR  OTHERWISE
 RESTRICTED  PUBLIC  OR  PRIVATE  BUSINESSES OR PLACES OF PUBLIC ACCOMMO-
 DATION, OR REQUIRED POSTPONEMENT OR CANCELLATION  OF  ALL  NON-ESSENTIAL
 GATHERINGS OF INDIVIDUALS OF ANY SIZE FOR ANY REASON IN EXECUTIVE ORDERS
 202.3,  202.4,  202.5,  202.6,  202.7,  202.8, 202.10, 202.11, 202.13 OR
 202.14, AS EXTENDED BY EXECUTIVE ORDERS 202.28 AND 202.31 AND AS FURTHER
 EXTENDED BY ANY FUTURE  EXECUTIVE  ORDER,  ISSUED  IN  RESPONSE  TO  THE
 COVID-19  PANDEMIC  CONTINUE  TO  APPLY  IN  THE COUNTY OF THE QUALIFIED
 MORTGAGOR'S RESIDENCE;
   (B) "QUALIFIED MORTGAGOR" MEANS AN INDIVIDUAL (I) WHO RESIDES  IN  NEW
 YORK AND WHO OWNS A RESIDENTIAL OR COMMERCIAL INVESTMENT PROPERTY ENCUM-
 BERED  BY  A HOME LOAN AS DEFINED BY SUBDIVISION SIX OF SECTION THIRTEEN
 HUNDRED FOUR OF THE REAL PROPERTY ACTIONS AND PROCEEDINGS LAW, OR BY ANY
 OTHER MORTGAGE LOAN, FROM OR SERVICED BY  A  REGULATED  INSTITUTION,  ON
 SUCH  RESIDENTIAL OR COMMERCIAL PROPERTY HELD FOR INVESTMENT; (II) WHOSE
 RESIDENTIAL OR COMMERCIAL INVESTMENT PROPERTY CONTAINS ONE TO FOUR SEPA-
 RATE UNITS; (III) WHO RECEIVES AT LEAST THIRTY PERCENT  OF  HIS  OR  HER
 INCOME FROM RENT RECEIVED FROM SUCH RESIDENTIAL OR COMMERCIAL INVESTMENT
 PROPERTY;  AND  (IV)  WHO DEMONSTRATES FINANCIAL HARDSHIP AS A RESULT OF
 COVID-19 DURING THE COVERED PERIOD;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD16531-09-0

 S. 8744                             2
 
   (C) "REGULATED INSTITUTION"  MEANS  ANY  NEW  YORK  REGULATED  BANKING
 ORGANIZATION AS DEFINED IN THIS CHAPTER AND ANY NEW YORK REGULATED MORT-
 GAGE SERVICER ENTITY SUBJECT TO SUPERVISION BY THE DEPARTMENT; AND
   (D) "TRIAL PERIOD PLAN" MEANS AN AGREEMENT WHEREBY THE QUALIFIED MORT-
 GAGOR IS REQUIRED TO MAKE TRIAL PAYMENTS IN FULL AND ON-TIME IN ORDER TO
 BE CONSIDERED FOR A PERMANENT LOAN REPAYMENT MODIFICATION.
   2.  NOTWITHSTANDING  ANY  OTHER  PROVISION  OF LAW, NEW YORK REGULATED
 INSTITUTIONS SHALL:
   (A) MAKE APPLICATIONS FOR FORBEARANCE OF ANY PAYMENT DUE ON A MORTGAGE
 ON A RESIDENTIAL OR COMMERCIAL PROPERTY HELD FOR INVESTMENT  LOCATED  IN
 NEW  YORK  WIDELY  AVAILABLE  TO ANY QUALIFIED MORTGAGOR WHO, DURING THE
 COVERED PERIOD, IS IN ARREARS OR ON A TRIAL  PERIOD  PLAN,  OR  WHO  HAS
 APPLIED FOR LOSS MITIGATION; AND
   (B) GRANT SUCH FORBEARANCE OF ALL MONTHLY PAYMENTS DUE WITH RESPECT TO
 THE MORTGAGE SECURED BY THE QUALIFIED MORTGAGOR'S RESIDENTIAL OR COMMER-
 CIAL  INVESTMENT  PROPERTY IN NEW YORK FOR A PERIOD OF UP TO ONE HUNDRED
 EIGHTY DAYS TO ANY SUCH QUALIFIED MORTGAGOR, WITH THE OPTION  TO  EXTEND
 THE  FORBEARANCE  OF  SUCH  MONTHLY PAYMENTS FOR UP TO AN ADDITIONAL ONE
 HUNDRED EIGHTY DAYS PROVIDED THAT THIS EXTENSION IS SUBJECT TO THE MORT-
 GAGOR DEMONSTRATING CONTINUED FINANCIAL HARDSHIP.  SUCH FORBEARANCE  MAY
 BE  BACKDATED  TO  MARCH SEVENTH, TWO THOUSAND TWENTY, PROVIDED THAT THE
 MAXIMUM LENGTH OF THE FORBEARANCE MAY BE  NO  LONGER  THAN  ONE  HUNDRED
 EIGHTY DAYS AND ANY EXTENSION THEREOF PURSUANT TO THIS SECTION.
   3.  NOTWITHSTANDING  ANY OTHER PROVISION OF LAW, ANY MORTGAGE FORBEAR-
 ANCE GRANTED BY A REGULATED INSTITUTION PURSUANT TO THIS  SECTION  TO  A
 QUALIFIED  MORTGAGOR  AS A RESULT OF FINANCIAL HARDSHIP SHALL BE SUBJECT
 TO THE FOLLOWING PROVISIONS:
   (A) THE MORTGAGOR SHALL HAVE THE OPTION TO EXTEND THE TERM OF THE LOAN
 FOR THE LENGTH OF THE PERIOD OF FORBEARANCE. THE  REGULATED  INSTITUTION
 SHALL  NOT  CHARGE  ADDITIONAL INTEREST OR ANY LATE FEES OR PENALTIES ON
 THE FORBORNE PAYMENT; OR
   (B) THE MORTGAGOR SHALL HAVE THE OPTION TO HAVE  THE  ARREARS  ACCUMU-
 LATED  DURING  THE FORBEARANCE PERIOD PAYABLE ON A MONTHLY BASIS FOR THE
 REMAINING TERM OF THE LOAN WITHOUT BEING SUBJECT TO  PENALTIES  OR  LATE
 FEES INCURRED AS A RESULT OF THE FORBEARANCE; OR
   (C)  THE MORTGAGOR SHALL HAVE THE OPTION TO NEGOTIATE A LOAN MODIFICA-
 TION OR ANY OTHER OPTION THAT MEETS THE  CHANGED  CIRCUMSTANCES  OF  THE
 QUALIFIED MORTGAGOR; OR
   (D) IF THE MORTGAGOR AND REGULATED INSTITUTION CANNOT REASONABLY AGREE
 ON  A  MUTUALLY  ACCEPTABLE LOAN MODIFICATION, THE REGULATED INSTITUTION
 SHALL OFFER TO DEFER ARREARS ACCUMULATED DURING THE  FORBEARANCE  PERIOD
 AS  A  NON-INTEREST  BEARING BALLOON LOAN PAYABLE AT THE MATURITY OF THE
 LOAN, OR AT THE TIME THE LOAN IS SATISFIED THROUGH A REFINANCE  OR  SALE
 OF  THE  PROPERTY. ANY LATE FEES ACCUMULATED AS A RESULT OF THE FORBEAR-
 ANCE SHALL BE WAIVED.
   THE EXERCISING OF OPTIONS PROVIDED FOR IN PARAGRAPH (A), (B),  (C)  OR
 (D)  OF  THIS SUBDIVISION BY A QUALIFIED MORTGAGOR SHALL NOT BE REPORTED
 NEGATIVELY TO ANY CREDIT BUREAU BY ANY REGULATED INSTITUTION.
   4. NOTWITHSTANDING ANY OTHER PROVISION OF  LAW,  ADHERENCE  WITH  THIS
 SECTION  SHALL  BE  A  CONDITION  PRECEDENT  TO COMMENCING A FORECLOSURE
 ACTION STEMMING FROM MISSED PAYMENTS WHICH  WOULD  HAVE  OTHERWISE  BEEN
 SUBJECT  TO  THIS  SECTION.  A DEFENDANT MAY RAISE THE VIOLATION OF THIS
 SECTION AS A DEFENSE TO A FORECLOSURE ACTION COMMENCED  ON  THE  DEFEND-
 ANT'S  PROPERTY  WHEN SUCH ACTION IS BASED ON MISSED PAYMENTS THAT WOULD
 HAVE OTHERWISE BEEN SUBJECT TO THIS SECTION.

 S. 8744                             3
 
   5. NOTWITHSTANDING ANYTHING TO THE  CONTRARY  IN  THIS  SECTION,  THIS
 SECTION SHALL NOT APPLY TO, AND DOES NOT AFFECT ANY MORTGAGE LOANS MADE,
 INSURED,  PURCHASED,  OR SECURITIZED BY ANY AGENCY OR INSTRUMENTALITY OF
 THE UNITED STATES, ANY GOVERNMENT SPONSORED  ENTERPRISE,  OR  A  FEDERAL
 HOME  LOAN BANK, OR A CORPORATE GOVERNMENTAL AGENCY OF THE STATE CONSTI-
 TUTED AS A POLITICAL SUBDIVISION AND PUBLIC BENEFIT CORPORATION, OR  THE
 RIGHTS  AND  OBLIGATIONS  OF  ANY LENDER, ISSUER, SERVICER OR TRUSTEE OF
 SUCH OBLIGATIONS, INCLUDING SERVICERS FOR THE GOVERNMENT NATIONAL  MORT-
 GAGE ASSOCIATION.
   6.  NOTWITHSTANDING ANY OTHER PROVISION OF LAW OR OF THIS SECTION, THE
 OBLIGATION TO GRANT THE FORBEARANCE  RELIEF  REQUIRED  BY  THIS  SECTION
 SHALL  BE SUBJECT TO THE REGULATED INSTITUTION HAVING SUFFICIENT CAPITAL
 AND LIQUIDITY TO MEET ITS OBLIGATIONS AND TO OPERATE IN A SAFE AND SOUND
 MANNER. ANY REGULATED INSTITUTION THAT DETERMINES THAT IT IS NOT ABLE TO
 OFFER RELIEF PURSUANT TO THIS SECTION TO ANY  QUALIFIED  MORTGAGOR  MUST
 NOTIFY  THE DEPARTMENT WITHIN FIVE BUSINESS DAYS OF MAKING SUCH DETERMI-
 NATION. ANY SUCH NOTICE FILED WITH THE DEPARTMENT SHALL INCLUDE INFORMA-
 TION ABOUT THE QUALIFIED MORTGAGOR, THE REASON THE REGULATED INSTITUTION
 DETERMINED THAT IT WAS UNABLE TO  OFFER  ANY  RELIEF  PURSUANT  TO  THIS
 SECTION,  INFORMATION ABOUT THE REGULATED INSTITUTION'S FINANCIAL CONDI-
 TION SUPPORTING THE REGULATED INSTITUTION'S DETERMINATION, AND ANY OTHER
 INFORMATION REQUIRED BY THE DEPARTMENT. AT THE SAME TIME THAT THE  REGU-
 LATED INSTITUTION PROVIDES NOTICE TO THE DEPARTMENT, IT SHALL ADVISE THE
 QUALIFIED  MORTGAGOR  THAT  THE  APPLICATION  FOR  RELIEF WAS DENIED AND
 PROVIDE A STATEMENT THAT THE APPLICANT MAY FILE A COMPLAINT WITH THE NEW
 YORK  STATE  DEPARTMENT  OF  FINANCIAL  SERVICES  AT  1-800-342-3736  OR
 HTTP://WWW.DFS.NY.GOV  IF  THE  APPLICANT  BELIEVES  THE APPLICATION WAS
 WRONGLY DENIED.
   § 2. This act shall take effect immediately.

Comments

Open Legislation is a forum for New York State legislation. All comments are subject to review and community moderation is encouraged.

Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity, hate or toxic speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Attempts to intimidate and silence contributors or deliberately deceive the public, including excessive or extraneous posting/posts, or coordinated activity, are prohibited and may result in the temporary or permanent banning of the user. Comment moderation is generally performed Monday through Friday. By contributing or voting you agree to the Terms of Participation and verify you are over 13.

Create an account. An account allows you to sign petitions with a single click, officially support or oppose key legislation, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.