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New York governor signs bill setting forth eviction and foreclosure protections for small businesses
On March 9, the New York governor signed the COVID-19 Emergency Protect Our Small Businesses Act of 2021 (S471A/A3207), which sets forth eviction and foreclosure protections for small businesses. Among other things, the act prohibits removal of a commercial tenant prior to May 1, 2021, except by eviction proceedings. The act also prohibits the initiation of eviction proceedings until May 1, 2021 and stays pending eviction proceedings for a certain period of time depending on whether an eviction warrant or judgment of possession or ejectment has been issued. The act further requires landlords to provide certain pre-eviction notices. The press release notes that the act builds on prior state moratoriums on residential and commercial evictions.
On February 1, the attorney general of New York announced an extension of its previous order to halt the collection efforts on certain debts through February 28, 2021. Consumers with student loan debt and medical debt owed to the state will receive an additional 28-day hiatus on payments including a freeze on the accrual of interest on the debts—in order to allow them to deal with the effects of Covid-19. Specifically, the moratorium on collection applies to: (i) “[p]atients that owe medical debt due to the five state hospitals and the five state veterans' home[s]”; (ii) “[s]tudents that owe student debt due to State University of New York (SUNY) campuses”; and (iii) “[i]ndividual debtors, sole-proprietors, small business owners, and certain homeowners that owe debt relating to oil spill cleanup and removal costs, property damage, and breach of contract, as well as other fees owed to state agencies.” New Yorkers who have other types of debt that are owed to the state and who are referred to the Office of the Attorney General may apply for a temporary freeze on collection by submitting an application which can be found here.
On January 14, the OCC moved for summary judgment in an action filed by the California, Illinois, and New York attorneys general (collectively, “states”) challenging the OCC’s valid-when-made rule, arguing that the challenge is without merit and that the agency “reasonably interprets the ‘gap’ in [12 U.S.C. § 85] concerning what happens when a national bank sells, assigns, or transfers a loan.” As previously covered by InfoBytes, the OCC’s final rule was designed to effectively reverse the Second Circuit’s 2015 Madden v. Midland Funding decision and provides that “[i]nterest on a loan that is permissible under [12 U.S.C. § 85 for national bank or 12 U.S.C. § 1463(g)(1) for federal thrifts] shall not be affected by the sale, assignment, or other transfer of the loan.” The states challenged the rule, arguing that it is “contrary to the plain language” of section 85 (and section 1463(g)(1)) and “contravenes the judgment of Congress,” which declined to extend preemption to non-banks. Moreover, the states contend that the OCC “failed to give meaningful consideration” to the commentary received regarding the rule, essentially enabling “‘rent-a-bank’ schemes.”
In response, the OCC argued that not only does the final rule reasonably interpret the “gap” in section 85, it is consistent with section 85’s “purpose of facilitating national banks’ ability to operate their nationwide lending programs.” Moreover, the agency asserts that 12 U.S.C. § 25b’s preemption standards do not apply to the final rule, because, among other things, the OCC “has not concluded that a state consumer financial law is being preempted.” The final rule “addresses only the ‘substantive [ ] meaning’ of § 85” and Congress “expressly exempted OCC’s interpretations of § 85 from § 25b’s requirements.” Lastly, the OCC argued that it made an “informed and reasoned decision,” including addressing issues raised during the public comment period. Thus, the court should uphold the final rule and affirm summary judgment for the agency.
On January 7, the New York Attorney General James issued guidance for the state’s Sheriffs’ Association regarding law enforcement’s role in the eviction process during the Covid-19 public health crisis. The guidance reminds law enforcement that tenants may provide a declaration of hardship at any point in the eviction process to obtain an automatic stay of eviction until May 1. The guidance further notes that upon receipt of such a declaration law enforcement are prohibited from evicting the tenant and occupants and must notify the court.
On December 28, the New York enacted the Covid-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (see the press release here). Among other things, the act imposes a moratorium on residential evictions for tenants that experienced Covid-related hardships through May 1, 2021, in addition to mandating specific disclosures regarding evictions. It also suspends residential foreclosures until May 1, 2021, enabling Covid-impacted homeowners and landlords with 10 or fewer residential dwellings to file hardship declarations with their mortgage lender to prevent foreclosure. The act also contains provisions prohibiting certain tax lien sales and Covid-related discrimination by lenders.
On December 18, New York Governor Cuomo issued Executive Order 83, which, among other things, eliminates the requirement for tenants to provide proof that they were contributing more than 30 percent of gross monthly income towards rent prior to March 2020 in order to receive rental assistance pursuant to the Covid-19 Rent Relief Act.
On October 20, the New York governor issued an executive order extending the state’s moratorium on commercial evictions and foreclosures related to Covid-19 until January 1, 2021. For previous coverage, see here, here and here.
On September 29, the U.S. District Court for the Eastern District of New York granted a national bank’s request for interlocutory appeal of the court’s September 2019 decision denying the dismissal of a pair of actions, which alleged that the bank violated New York law by not paying interest on escrow amounts for residential mortgages. As previously covered by InfoBytes, last September, the district court concluded that the National Bank Act (NBA) does not preempt a New York law requiring interest on mortgage escrow accounts, because there is “clear evidence that Congress intended mortgage escrow accounts, even those administered by national banks, to be subject to some measure of consumer protection regulation.” The bank moved to amend the prior order and certify the preemption question for interlocutory appeal to the U.S. Court of Appeals for the Second Circuit. The court granted the motion stating that the case “presents one of the rare instances in which there would be system-wide benefits to granting an interlocutory appeal.” The court noted that certifying the question for appeal would foster an “effective and efficient judiciary” by saving the defendants and jurists “considerable time and effort” by not having to re-litigate the issue. Moreover, certifying for appeal would “materially advance the ultimate disposition of [the] litigation.”
October 9, the New York State Department of Financial Services amended its rules governing adjudication proceedings to permit hearings to be held by videoconference. Whether a hearing is conducted by videoconference is at the discretion of the official who issued the notice for the hearing, although the respondent or applicant may object. When a hearing is conducted by videoconference, none of the parties nor the hearing officer need by physically present at the same location. The amendments, which were adopted on an emergency basis, will remain effective for 90 days from the date of filing. The regulator intends to submit a similar notice of proposed rulemaking in the future.
On September 21, the New York governor issued Executive Order 202.64, which extends the moratorium on Covid-19-related commercial evictions until October 20. The eviction moratorium, which was first issued on March 20, has been extended several times. For our previous coverage, see here.
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