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Financial Services Law Insights and Observations

New York enacts legislation on residential mortgage payment forbearance

State Issues Covid-19 New York Mortgages Forbearance Foreclosure GSE Mortgage Servicing

State Issues

On June 17, New York Senate Bill 8243, which relates to the forbearance of residential mortgage payments, was signed into law.  Specifically, SB 8243 requires New York regulated institutions to: (1) make applications for forbearance of any payment due on a residential mortgage on 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  demonstrates financial hardship during the covered period;” and (2) grant such forbearance for a period of 180 days to any such qualified mortgagor with an option to extend an additional 180 days.  Such forbearances may be backdated to March 7, 2020.  SB 8243 also sets forth certain requirements for the mortgage forbearances granted under the law, which includes limitations on credit reporting and charging interest and late fees.  The law also provides that adhering to SB 8243 will be a condition precedent to commencing a foreclosure action resulting from a missed payment, which would have otherwise been subject to the law.  However, SB 8243 does not apply to, or affect mortgage loans made, insured, or secured by a United States agency or instrumentality, a government sponsored enterprise, or a federal home loan, or the rights and obligations of any lender, issuer,  servicer  or trustee  of  such  obligations,  including  servicers for the Government National Mortgage Association.


On the same day, New York Senate Bill 8428, which also relates to the forbearance of residential mortgage loans, was signed into the law.  The requirements in SB 8428 are similar to the requirements set forth in SB 8243, except that SB 8428 clarify certain areas of the law including the types of properties subject to the Law, who may receive a forbearance, and when a forbearance extension is warranted.  SB 8428 also clarifies that the obligation to grant the forbearance relief required is subject to the regulated institution having sufficient capital and liquidity to meet its obligations and to operate in a safe and sound manner.  To the extent a regulated institution determines it is unable to offer relief, it must alert the Department of Financial Institutions within five days of making such a determination.

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