NY State Senate Bill S8744

Archive: Last Bill Status - In Senate Committee Rules Committee

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

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

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.

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.

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.

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The New York State Senate

senate Bill S8744

Sponsored By

Archive: Last Bill Status - In Senate Committee Rules Committee

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S8744 (ACTIVE) - Details

S8744 (ACTIVE) - Summary

S8744 (ACTIVE) - Sponsor Memo

S8744 (ACTIVE) - Bill Text download pdf

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senate Bill S8744

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Sponsored By

James Sanders Jr.

Archive: Last Bill Status - In Senate Committee Rules Committee

Your Voice

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S8744 (ACTIVE) - Details

S8744 (ACTIVE) - Summary

S8744 (ACTIVE) - Sponsor Memo

S8744 (ACTIVE) - Bill Text download pdf

Comments