A10532 Summary:

SPONSORRules (Bichotte)
Add 9-y, Bank L
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.
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A10532 Actions:

05/28/2020referred to banks
07/10/2020amend (t) and recommit to banks
07/10/2020print number 10532a
07/13/2020reported referred to codes
07/17/2020reported referred to rules
07/22/2020rules report cal.329
07/22/2020ordered to third reading rules cal.329
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A10532 Committee Votes:

BANKS Chair:Abinanti DATE:07/13/2020AYE/NAY:23/6 Action: Favorable refer to committee Codes
De La RosaAye

CODES Chair:Lentol DATE:07/17/2020AYE/NAY:21/0 Action: Favorable refer to committee Rules

RULES Chair:Heastie DATE:07/22/2020AYE/NAY:22/7 Action: Favorable

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A10532 Floor Votes:

There are no votes for this bill in this legislative session.
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A10532 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A10532A                    REVISED 7/13/2020
SPONSOR: Rules (Bichotte)
  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.
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A10532 Text:

                STATE OF NEW YORK
                   IN ASSEMBLY
                                      May 28, 2020
        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

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. The banking law is amended by adding a new section  9-y  to
     2  read as follows:
     3    §  9-y.  Mortgage  repayment  forbearance;  residential  or commercial
     4  investment properties. 1. As used in this section, the  following  terms
     5  shall have the following meanings:
     6    (a)  "covered  period"  means March seventh, two thousand twenty until
     7  the date on which none  of  the  provisions  that  closed  or  otherwise
     8  restricted  public  or  private  businesses or places of public accommo-
     9  dation, or required postponement or cancellation  of  all  non-essential
    10  gatherings of individuals of any size for any reason in Executive Orders
    11  202.3,  202.4,  202.5,  202.6,  202.7,  202.8, 202.10, 202.11, 202.13 or
    12  202.14, as extended by Executive Orders 202.28 and 202.31 and as further
    13  extended by any future  Executive  Order,  issued  in  response  to  the
    14  COVID-19  pandemic  continue  to  apply  in  the county of the qualified
    15  mortgagor's residence;
    16    (b) "qualified mortgagor" means an individual (i) who resides  in  New
    17  York and who owns a residential or commercial investment property encum-
    18  bered  by  a home loan as defined by subdivision six of section thirteen
    19  hundred four of the real property actions and proceedings law, or by any
    20  other mortgage loan, from or serviced by  a  regulated  institution,  on
    21  such  residential or commercial property held for investment; (ii) whose
    22  residential or commercial investment property contains one to four sepa-
    23  rate units; (iii) who receives at least thirty percent  of  his  or  her
    24  income from rent received from such residential or commercial investment
    25  property;  and  (iv)  who demonstrates financial hardship as a result of
    26  COVID-19 during the covered period;
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 10532--A                         2
     1    (c) "regulated institution"  means  any  New  York  regulated  banking
     2  organization as defined in this chapter and any New York regulated mort-
     3  gage servicer entity subject to supervision by the department; and
     4    (d) "trial period plan" means an agreement whereby the qualified mort-
     5  gagor is required to make trial payments in full and on-time in order to
     6  be considered for a permanent loan repayment modification.
     7    2.  Notwithstanding  any  other  provision  of law, New York regulated
     8  institutions shall:
     9    (a) make applications for forbearance of any payment due on a mortgage
    10  on a residential or commercial property held for investment  located  in
    11  New  York  widely  available  to any qualified mortgagor who, during the
    12  covered period, is in arrears or on a trial  period  plan,  or  who  has
    13  applied for loss mitigation; and
    14    (b) grant such forbearance of all monthly payments due with respect to
    15  the mortgage secured by the qualified mortgagor's residential or commer-
    16  cial  investment  property in New York for a period of up to one hundred
    17  eighty days to any such qualified mortgagor, with the option  to  extend
    18  the  forbearance  of  such  monthly payments for up to an additional one
    19  hundred eighty days provided that this extension is subject to the mort-
    20  gagor demonstrating continued financial hardship.  Such forbearance  may
    21  be  backdated  to  March seventh, two thousand twenty, provided that the
    22  maximum length of the forbearance may be  no  longer  than  one  hundred
    23  eighty days and any extension thereof pursuant to this section.
    24    3.  Notwithstanding  any other provision of law, any mortgage forbear-
    25  ance granted by a regulated institution pursuant to this  section  to  a
    26  qualified  mortgagor  as a result of financial hardship shall be subject
    27  to the following provisions:
    28    (a) the mortgagor shall have the option to extend the term of the loan
    29  for the length of the period of forbearance. The  regulated  institution
    30  shall  not  charge  additional interest or any late fees or penalties on
    31  the forborne payment; or
    32    (b) the mortgagor shall have the option to have  the  arrears  accumu-
    33  lated  during  the forbearance period payable on a monthly basis for the
    34  remaining term of the loan without being subject to  penalties  or  late
    35  fees incurred as a result of the forbearance; or
    36    (c)  the mortgagor shall have the option to negotiate a loan modifica-
    37  tion or any other option that meets the  changed  circumstances  of  the
    38  qualified mortgagor; or
    39    (d) if the mortgagor and regulated institution cannot reasonably agree
    40  on  a  mutually  acceptable loan modification, the regulated institution
    41  shall offer to defer arrears accumulated during the  forbearance  period
    42  as  a  non-interest  bearing balloon loan payable at the maturity of the
    43  loan, or at the time the loan is satisfied through a refinance  or  sale
    44  of  the  property. Any late fees accumulated as a result of the forbear-
    45  ance shall be waived.
    46    The exercising of options provided for in paragraph (a), (b),  (c)  or
    47  (d)  of  this subdivision by a qualified mortgagor shall not be reported
    48  negatively to any credit bureau by any regulated institution.
    49    4. Notwithstanding any other provision of  law,  adherence  with  this
    50  section  shall  be  a  condition  precedent  to commencing a foreclosure
    51  action stemming from missed payments which  would  have  otherwise  been
    52  subject  to  this  section.  A defendant may raise the violation of this
    53  section as a defense to a foreclosure action commenced  on  the  defend-
    54  ant's  property  when such action is based on missed payments that would
    55  have otherwise been subject to this section.

        A. 10532--A                         3

     1    5. Notwithstanding anything to the  contrary  in  this  section,  this
     2  section shall not apply to, and does not affect any mortgage loans made,
     3  insured,  purchased,  or securitized by any agency or instrumentality of
     4  the United States, any government sponsored  enterprise,  or  a  federal
     5  home  loan bank, or a corporate governmental agency of the state consti-
     6  tuted as a political subdivision and public benefit corporation, or  the
     7  rights  and  obligations  of  any lender, issuer, servicer or trustee of
     8  such obligations, including servicers for the Government National  Mort-
     9  gage Association.
    10    6.  Notwithstanding any other provision of law or of this section, the
    11  obligation to grant the forbearance  relief  required  by  this  section
    12  shall  be subject to the regulated institution having sufficient capital
    13  and liquidity to meet its obligations and to operate in a safe and sound
    14  manner. Any regulated institution that determines that it is not able to
    15  offer relief pursuant to this section to any  qualified  mortgagor  must
    16  notify  the department within five business days of making such determi-
    17  nation. Any such notice filed with the department shall include informa-
    18  tion about the qualified mortgagor, the reason the regulated institution
    19  determined that it was unable to  offer  any  relief  pursuant  to  this
    20  section,  information about the regulated institution's financial condi-
    21  tion supporting the regulated institution's determination, and any other
    22  information required by the department. At the same time that the  regu-
    23  lated institution provides notice to the department, it shall advise the
    24  qualified  mortgagor  that  the  application  for  relief was denied and
    25  provide a statement that the applicant may file a complaint with the New
    26  York  state  department  of  financial  services  at  1-800-342-3736  or
    27  http://www.dfs.ny.gov  if  the  applicant  believes  the application was
    28  wrongly denied.
    29    § 2. This act shall take effect immediately.
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A10532 LFIN:

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A10532 Chamber Video/Transcript:

7-23-20Video (@ 03:34:36)Transcript pdf Transcript html
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