As we are approaching year one of the pandemic, I am issuing this bulletin to keep everyone apprised of the current situation accompanied by information on pending bills in the New York State Legislature.
Federal Moratoriums:
- Fannie Mae/Freddie Mac – As of today, all foreclosures, evictions and REO’s with Fannie and Freddie are stayed through February 28, 2021. The language is limited to 1 family dwellings. I believe they are just treating all residential as being under a stay. This could be further extended as we approach the end of the month.
- VA/HUD/FHA/USDA – As of January 20, 2021, all foreclosures, evictions and REO’s with VA/HUD/FHA/USDA are stayed through March 31, 2021 per Executive Order.
- The new administration is still considering staying all foreclosures through the end of September. We will continue to monitor same.
New York State Covid Act:
On December 28, 2020, Governor Cuomo executed the present Covid Act Memo-Foreclosures-December2020.pdf (nycourts.gov). I am going to break down the specific sections of the Act below and add some commentary after speaking with a foreclosure committee that I am part of.
- This act stayed all pending residential foreclosure matters for a period of 60 days. This did have language that the owner/mortgagor must reside at the premises and be a natural person. However, it noted that it did not matter how title was held. Thus, if a natural person was the mortgagor and then transferred the premises to an LLC but still resided at the premises, the stay would remain in effect.
- Unlike prior Acts, this pulled in Tax Liens as well with some special provisions for same. The language in the Tax Liens was not clear on treatment of Tax Lien Foreclosures handled as a mortgage foreclosure as opposed to an In Rem/Article 11 action. The language seemed to intend to cover the In Rem/Article 11 foreclosures and I think the New York City and Nassau County Tax Foreclosures were merely added as an afterthought. I actually emailed the Office of Court Administration (“OCA”) and questioned the language when the Act was passed and I think they simply added that New York City Tax foreclosures were included in the Court Memorandum issued on December 31, 2020. I have asked OCA to clarify how they wanted to treat the Tax Lien foreclosures without any clear indication to date.
- The Act designated the Court to provide all mortgagors with a Hardship Declaration that the Legislature created. I have been advised that the OCA worked with the State Office of Technology and have mailed same out. This process was problematic as any case where an RJI (a Request for Judicial Intervention) was not filed the matter would not appear on the active case list. In addition, once a Judgment of Foreclosure and Sale has been signed, the court deems that matter disposed of so they have no active record of those matters. I think that the court will either have to be advised of pre-RJI cases or the attorneys for the plaintiff might be burdened with sending the Hardship Declarations out. If a Hardship Declaration is executed by the mortgagor, it stays the matter until May 1st.
- Any action where the Judgment of Foreclosure and Sale has been issued is also stayed for the 60-day period. Prior to the issuance of this Act, courts were holding a Covid Conference to verify if there was any Covid impact. I asked OCA if a prior Covid Conference would negate the requirement for a new conference and the Memorandum specifically addressed by this concern by stating that a prior conference did not satisfy the new conference requirement. The courts following the 60 day stay will have to get new conferences scheduled which will further delay any foreclosure sales. Sales will most likely not become a major factor until May or later unless it is vacant property and was registered on the vacant property list. Federal action foreclosures may be able to move forward but those are on a limited basis.
- The Hardship Declarations must be sent to the Court in English and six other common (non-English) languages in New York City. The link shows said language in English, Spanish and the additional languages. Coronavirus and the N.Y. State Courts – Latest AO (nycourts.gov)
- The Act stated that new cases could be filed until January 27, 2021 but those cases would be stayed 60 days. As of today, any newly filed case would only be accepted by the courts if there is an affidavit of service of the Hardship Declaration and an affidavit from the foreclosing party or agent of the foreclosing party stating no Hardship Declaration has been received from the owner/mortgagor. New cases can be filed if they can comply with this requirement.
- Circling back to Tax Liens, the courts are not to issue the Hardship Declaration. The burden was shifted to the Tax Lien holder to issue same. This does not make sense in the case where the court is handling the foreclosure like a mortgage foreclosure but they have not taken the position that they will issue same. Many of the Tax Lien clients are considering just holding off on any proceedings until the sunset of the Act (May 1st).
Pending Legislation:
There are numerous proposed bills out in the Legislature seeking changes or stays. There is only one proposed bill to stay all foreclosures through mid-July but I was told it is going nowhere. One bill that will pass and get signed is a small business companion bill to the present Act NY State Senate Bill S471A (nysenate.gov). In essence, it mirrors the residential version for small commercial properties. I am attaching same for information herein and will continue to monitor this situation.
Please contact David Schwartzberg, Executive Vice President/Foreclosure Counsel, at
dschwartzberg@advantagegroupny.com or 631.424.6100 with any questions.