|SAME AS||SAME AS S08454-A|
|Add 9-y, Bank L|
|Relates to authorizing commercial mortgage forbearance during the COVID-19 pandemic; requires New York regulated institutions to make applications for forbearance available to qualified commercial mortgagors and to grant such forbearance for a period of ninety days, subject to the safety and soundness requirements of the regulated institution.|
|07/24/2020||referred to banks|
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NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A10876 SPONSOR: Rules (Jean-Pierre)
TITLE OF BILL: An act to amend the banking law, in relation to authorizing commercial mortgage forbearance during the COVID-19 pandemic   PURPOSE OF BILL: This bill would add a new section 9-x to the banking law to require New York regulated institutions to grant 90 days of forbearance to qualified commercial mortgagors who can demonstrate financial hardship during the NY on PAUSE order caused by the COVID-19 pandemic. This bill would allow any mortgagor granted forbearance to defer their payments to a non-interest-bearing balloon payment due twelve months after the end of the forbearance period. The bill would also give commercial tenants in buildings receiving forbearance the ability to receive a rental defer- ment proportional to the tenant's share of the rental income generated by the mortgaged property.   SUMMARY OF SPECIFIC PROVISIONS: Section 1 of the bill adds a new section 9-x to the banking law. Subsection 1 of section 9-x of the banking law sets definitions. Subsection 2 of section 9-x of the banking law would require New York regulated institutions to grant 120 days of forbearance to any qualified commercial mortgagor who can demonstrate financial hardship during the NY on PAUSE order for the county in which the encumbered property is located. 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 or on a trial period plan, and may be backdated to March 7, 2020. Subsection 3 of section 9-x of the banking law would give mortgagors the ability to defer the accumulated arrears as an interest-free balloon payment due twelve months after the forbearance period ends. This section also provides commercial tenants with a rental deferment propor- tional to their share of the total rental income generated by the mort- gaged property. Mortgagors who receive this forbearance cannot evict tenants for unpaid rent during the forbearance period. Subsection 4 of section 9-x of the banking law requires adherence to this section as a condition precedent in all foreclosure proceedings, and allows defendants in such proceedings to raise any violations as a defense when the action is based on missed payments otherwise subject to this section. Subsection 5 of section 9-x 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 obli- gations. Section 2 of the bill sets forth the effective date.   JUSTIFICATION: As the COVID-19 pandemic continues to wreak havoc on New York, and with State and local governments mandating the shuttering of all but essen- tial businesses in the interest of protecting public health, New York has seen a rapid and unprecedented economic decline. Many New York busi- nesses will not be able to keep up with mortgage payments during this time. With the Governor's issuance of Executive Order 202.9, some resi- dential mortgagors have been granted forbearance, but this order has left commercial mortgagors scrambling. A moratorium on foreclosure proceedings is simply not enough to quell the fears of this economic crisis among our small businesses. Without this legislation, businesses would be at risk of mass foreclosures once the moratorium is lifted. Commercial mortgagors who qualify for this program, including those with mortgages on agricultural properties, mixed-use properties, and multi- family mortgagors with five or more units will be able to defer their missed payments into a non-interest-bearing balloon payment due one year after the forbearance period ends. This offers a chance for our busi- nesses to survive this crisis and get back on their feet. Commercial tenants will also be able to receive a rental deferment proportional to their share of the total rent generated by the property for which mort- gage forbearance is received. Therefore, if a commercial tenant makes up 10% of the building's total rent roll, they can defer 10% of the total forbearance received from their rental obligation for 12 months after the forbearance period ends. Tenants in properties who receive this forbearance will also be protected from eviction for nonpayment of rents during the forbearance period. By passing this legislation, we can provide essential security to small businesses across New York, ensuring that no one will be subject to foreclosure, or lose their place of business due the COVID-19 pandemic.   LEGISLATIVE HISTORY: This is a new bill.   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: To be determined.   EFFECTIVE DATE: This act shall take effect immediately.
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STATE OF NEW YORK ________________________________________________________________________ 10876 IN ASSEMBLY July 24, 2020 ___________ Introduced by COMMITTEE ON RULES -- (at request of M. of A. Jean-Pierre) -- read once and referred to the Committee on Banks AN ACT to amend the banking law, in relation to authorizing commercial mortgage forbearance during the COVID-19 pandemic 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 forbearance. 1. As used in this section, the following 4 terms shall have the following meanings: 5 (a) "covered period" means March seventh, two thousand twenty until 6 the date on which none of the provisions that closed or otherwise 7 restricted public or private businesses or places of public accommo- 8 dation, or required postponement or cancellation of all non-essential 9 gatherings of individuals of any size for any reason in executive order 10 numbers 202.3, 202.4, 202.5, 202.6, 202.7, 202.8, 202.10, 202.11, 202.13 11 or 202.14 of two thousand twenty, as extended by executive order numbers 12 202.28 and 202.31 and as further extended by any future executive order, 13 issued in response to the COVID-19 pandemic continue to apply in the 14 county in which the property encumbered by the mortgage in question is 15 located; and 16 (b) "regulated institution" means any New York regulated banking 17 organization as defined under this chapter and any New York regulated 18 mortgage servicer entity subject to the authority of the department. 19 2. Notwithstanding any other provision of law, New York regulated 20 institutions shall: 21 (a) make applications for forbearance of any payment due on a commer- 22 cial mortgage of a property located in New York widely available to any 23 qualified commercial mortgagor including those who are already in 24 arrears or on a trial period plan or who have applied for loss miti- 25 gation and who demonstrate financial hardship during the covered period; 26 and EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD16436-04-0A. 10876 2 1 (b) grant such forbearance for a period of one hundred twenty days to 2 any such qualified commercial mortgagor, subject to the safety and 3 soundness requirements of the regulated institution. 4 (c) such forbearance may be backdated to March seventh, two thousand 5 twenty. 6 3. Notwithstanding any other provision of law, any mortgage forbear- 7 ance granted by a regulated institution pursuant to this section, or any 8 other law, rule or regulation, to the qualified commercial mortgagor as 9 a result of financial hardship during the covered period shall be 10 subject to the following provisions: 11 (a) the regulated institution shall defer arrears accumulated during 12 the forbearance period as a non-interest bearing balloon payment payable 13 twelve months after the end of the forbearance period and shall waive 14 any late fees accumulated as a result of the forbearance; and 15 (b) the total value of the deferred mortgage payment shall be appor- 16 tioned each month to each tenant according to the percentage of the 17 total rents due that their rental obligation represents on the mortgaged 18 property in receipt of the forbearance. Each commercial tenant shall 19 have their pro rata share of the forborne mortgage payment be deferred 20 each month for the duration of the forbearance period. Such deferred 21 rent shall be due within twelve months after the end of the forbearance 22 period, and shall not accumulate interest or be subject to late fees; 23 and 24 (c) no eviction proceedings may be commenced or continued against any 25 residential or commercial tenant for nonpayment of rents that came due 26 during the forbearance period. 27 4. Notwithstanding any other provision of law, adherence with this 28 section shall be a condition precedent to commencing a foreclosure 29 action stemming from missed payments which would have otherwise been 30 subject to this section. A defendant may raise the violation of this 31 section as a defense to a foreclosure action commenced on the defend- 32 ant's property when such action is based on missed payments that would 33 have otherwise been subject to this section. 34 5. Notwithstanding anything to the contrary in this section, this 35 section shall not apply to, and does not affect any mortgage loans made, 36 insured, or securitized by any agency or instrumentality of the United 37 States, any government sponsored enterprise, or a federal home loan 38 bank, or the rights and obligations of any lender, issuer, servicer or 39 trustee of such obligations, including servicers for the Government 40 National Mortgage Association. 41 § 2. This act shall take effect immediately.