S T A T E O F N E W Y O R K
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10532--A
I N A S S E M B L Y
May 28, 2020
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Introduced by COMMITTEE ON RULES -- (at request of M. of A. Bichotte) --
read once and referred to the Committee on Banks -- committee
discharged, bill amended, ordered reprinted as amended and recommitted
to said committee
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.
LBD16531-08-0
A. 10532--A 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.
A. 10532--A 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.