S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8425
 
                             I N  S E N A T E
 
                               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:

   Section  1.  Section  9-x of the banking law, as added by a chapter of
 the laws of 2020, amending the banking law relating to  the  forbearance
 of  residential  mortgage  payments,  as  proposed  in legislative bills
 numbers S. 8243-C and A. 10351-B, is amended to read as follows:
   § 9-x. Mortgage forbearance. 1. As used in this section, the following
 terms shall have the following meanings:
   (a) "Covered period" means March 7, 2020 until the date on which  none
 of  the provisions that closed or otherwise restricted public or private
 businesses or places of public accommodation, 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  [who  resides  in  New
 York] (I) whose [principal dwelling] PRIMARY RESIDENCE IS LOCATED IN NEW
 YORK  AND  is  encumbered  by  a  home loan pursuant to paragraph (a) of
 subdivision six of section thirteen hundred four of  the  real  property
 actions  and proceedings law or whose [principal dwelling] PRIMARY RESI-
 DENCE IS LOCATED IN NEW YORK AND is a co-operative unit whose shares are
 encumbered by any loan otherwise meeting the requirements of a home loan
 under paragraph (a) of subdivision six of section thirteen hundred  four
 of  the real property actions and proceedings law, from or serviced by a
 regulated institution; AND (II) 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.
                                                            LBD16551-02-0
              

 S. 8425                             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 mortgagor is
 required to make trial payments in full  and  on-time  in  order  to  be
 considered for a permanent loan modification.
   2.  Notwithstanding  any  other  provision  of law, New York regulated
 institutions shall:
   (a) make applications for forbearance of any payment due on a residen-
 tial mortgage of a property 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  demon-
 strates financial hardship during the covered period]; and
   (b) grant such forbearance OF ALL MONTHLY PAYMENTS DUE WITH RESPECT TO
 THE  MORTGAGE  SECURED BY THE QUALIFIED MORTGAGOR'S PRIMARY RESIDENCE IN
 NEW YORK for a period of UP TO one hundred eighty days to any such qual-
 ified mortgagor [who is in arrears or on a trial period plan, or who has
 applied for loss mitigation and demonstrates financial  hardship],  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 MORTGAGOR DEMONSTRATING CONTINUED FINANCIAL HARDSHIP.  IF
 ANY  QUALIFIED  MORTGAGOR HAS ALREADY RECEIVED A FORBEARANCE PURSUANT TO
 EXECUTIVE ORDER 202.9 OF TWO THOUSAND TWENTY, THE TIME OF SUCH  FORBEAR-
 ANCE  SHALL  BE CONSIDERED AS PART OF THE REQUIREMENT OF THIS SECTION TO
 PROVIDE A FORBEARANCE OF UP TO ONE HUNDRED EIGHTY DAYS, AND  ANY  EXTEN-
 SION THEREOF PURSUANT TO THIS SECTION.
   (c)  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 executive order
 number 202.9 of two thousand twenty, this section, or  [any  other  law,
 rule  or regulation to the] 3 NYCRR PART 119 TO A qualified mortgagor as
 a result of financial hardship [during  the  covered  period]  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 [waive interest on the principal for the term of  the  forbearance
 and  waive any late fees accumulated as a result of the forbearance] 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 is unable to make mortgage payments due to mort-
 gagors'  demonstrated hardship and] the mortgagor and regulated institu-
 tion cannot REASONABLY agree on a mutually acceptable loan modification,
 the [mortgagor] REGULATED INSTITUTION shall [have the option]  OFFER  to
 defer  arrears accumulated during the forbearance period as a non-inter-
 est bearing balloon [payment] LOAN payable at the maturity of  the  loan
 [consistent  with  the  safety  and soundness of such regulated institu-

 S. 8425                             3

 tion], 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.
   [(d)] (E) The exercising of options provided for in paragraph (a), (b)
 [or],  (c) OR (D) of this subdivision by a qualified mortgagor shall not
 be reported negatively to any credit bureau by  any  regulated  institu-
 tion.
   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.
   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 on the same date and in the same
 manner as a chapter of the laws of 2020, amending the banking law relat-
 ing to the forbearance of residential mortgage payments, as proposed  in
 legislative bills numbers S. 8243-C and A. 10351-B, takes effect.