Assembly Bill A10544

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   10544
 
                           I N  A S S E M B L Y
 
                               May 29, 2020
                                ___________
 
 Introduced by COMMITTEE ON RULES -- (at request of M. of A. Bichotte) --
   read once and referred to the Committee on Banks
 
 AN  ACT  to  amend  the  banking law, in relation to the forbearance for
   commercial retail space property mortgage payments
 
   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-x to
 read as follows:
   § 9-X. COMMERCIAL RETAIL SPACE PROPERTY MORTGAGE  FORBEARANCE.  1.  AS
 USED IN THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEAN-
 INGS:
   (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 IN WHICH THE QUALIFIED
 MORTGAGOR'S BUSINESS PROPERTY IS LOCATED;
   (B) "QUALIFIED MORTGAGOR" MEANS A SMALL BUSINESS AS DEFINED IN SECTION
 ONE HUNDRED THIRTY-ONE OF THE ECONOMIC DEVELOPMENT LAW THAT IS ORGANIZED
 UNDER NEW YORK LAW AND OWNS A COMMERCIAL RETAIL SPACE PRINCIPAL PLACE OF
 BUSINESS  IN THE STATE OF NEW YORK THAT IS ENCUMBERED BY A MORTGAGE LOAN
 AND SERVICED BY A REGULATED INSTITUTION;
   (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:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD16532-02-0

 A. 10544                            2
 
   (A) MAKE APPLICATIONS FOR FORBEARANCE OF ANY PAYMENT DUE ON A MORTGAGE
 OF A COMMERCIAL RETAIL SPACE PROPERTY LOCATED IN NEW YORK WIDELY  AVAIL-
 ABLE  TO  ANY  QUALIFIED MORTGAGOR WHO, DURING THE COVERED PERIOD, IS IN
 ARREARS OR ON A TRIAL PERIOD PLAN, OR WHO HAS  APPLIED  FOR  LOSS  MITI-
 GATION  AND  DEMONSTRATES  FINANCIAL HARDSHIP DURING THE COVERED PERIOD;
 AND
   (B) GRANT SUCH FORBEARANCE FOR A PERIOD OF ONE HUNDRED EIGHTY DAYS  TO
 ANY  SUCH  QUALIFIED  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 AN ADDITIONAL ONE HUNDRED EIGHTY
 DAYS.
   (C) SUCH FORBEARANCE MAY BE BACKDATED TO MARCH SEVENTH,  TWO  THOUSAND
 TWENTY.
   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 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; 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)  IF THE MORTGAGOR IS UNABLE TO MAKE MORTGAGE PAYMENTS DUE TO MORT-
 GAGORS' DEMONSTRATED HARDSHIP AND THE MORTGAGOR AND  REGULATED  INSTITU-
 TION  CANNOT AGREE ON A MUTUALLY ACCEPTABLE LOAN MODIFICATION, THE MORT-
 GAGOR SHALL HAVE THE OPTION TO  DEFER  ARREARS  ACCUMULATED  DURING  THE
 FORBEARANCE  PERIOD AS A NON-INTEREST BEARING BALLOON PAYMENT PAYABLE AT
 THE MATURITY OF THE LOAN CONSISTENT WITH THE  SAFETY  AND  SOUNDNESS  OF
 SUCH REGULATED INSTITUTION, 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 FORBEARANCE SHALL BE WAIVED.
   (D) THE EXERCISING OF OPTIONS PROVIDED FOR IN PARAGRAPH  (A),  (B)  OR
 (C)  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.
   5. NOTWITHSTANDING ANYTHING TO THE  CONTRARY  IN  THIS  SECTION,  THIS
 SECTION SHALL NOT APPLY TO, AND DOES NOT AFFECT ANY MORTGAGE LOANS MADE,
 INSURED,  OR  SECURITIZED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
 STATES, ANY GOVERNMENT SPONSORED ENTERPRISE,  OR  A  FEDERAL  HOME  LOAN
 BANK,  OR  THE RIGHTS AND OBLIGATIONS OF ANY LENDER, ISSUER, SERVICER OR
 TRUSTEE OF SUCH OBLIGATIONS,  INCLUDING  SERVICERS  FOR  THE  GOVERNMENT
 NATIONAL MORTGAGE ASSOCIATION.
   § 2. This act shall take effect immediately.