On March 21st. Governor Cuomo issued Executive Order 202.9 directing the New York Department of Financial Services (DFS) to create emergency regulations to provide some much-needed cushion to New Yorkers who have suffered financially as a result of the Covid-19 emergency and response. On March 24, DFS promulgated the new regulations with the aim of doing just that. The regulations can be found in their entirety at Part 119 of Title 3 of the Official Compilation of Codes, Rules and Regulations of the State of New York or by following this link: https://www.dfs.ny.gov/system/files/documents/2020/03/re_new_pt119_nycrr3_text.pdf.

What is the State Doing to Help?

For covered institutions, the DFS regulations direct them to make a forbearance application available to New York residents. If a residential mortgage customer can demonstrate on such application a financial hardship brought about by the Covid-19 crisis, then the institution is required to grant the individual a 90-day forbearance on their mortgage payments. The New York Banking Law has been amended to provide that it will be considered an unsafe and unsound business practice to deny a forbearance to a customer who has demonstrated a legitimate Covid-19 related hardship.

In addition, covered institutions are instructed to provide customers who demonstrate a financial hardship as a result of Covid-19 relief from ATM fees (from ATMs operated or owned by the institution), overdraft fees, and late credit card payment fees. The regulation encourages institutions “to take additional reasonable and prudent actions to assist individuals.”

Institutions are directed to “broadly communicate” to their customers an application or other such form by which consumers can request relief within 10 business days of when the regulation was issued, which would require the institution to comply by April 7th, at the latest. Institutions must inform all those seeking relief who are ultimately rejected the reason why they were denied, and that they have a right to file a complaint to DFS if they think that the denial was unjustified.

Who do the Regulations Cover?

DFS’s regulations cover “any New York regulated banking organization as defined under New York Banking Law and any New York regulated mortgage servicer entity subject to the authority of the Department.” All the relief provided for in the new regulations is subject to the limitation that in the event granting consumers such relief conflicts with the institutions pre-existing “safety and soundness” regulations, those obligations shall take priority.

Because the regulations were issued by a New York State agency, they were cautious to specifically exclude mortgage loans made, insured, or securitized by the federal government (it would have no authority to include them). But fortunately for embattled mortgagors, the U.S. Fair Housing Administration put a moratorium on foreclosures of FHA backed-mortgages for a two-month period.

Additionally, pursuant to a separate Executive Order issued March 20, no foreclosures or evictions are to be enforced for 90 days.

Questions and Updates Please do not hesitate to contact the Wladis Law Firm if you have any questions about the above information. We will do our best to provide you with updates and will be available to answer questions as circumstances change. We may be reached at (315) 445-1700 or by e-mailing Attorney Jennifer Huse Granzow at jgranzow@wladislawfirm.com or by reaching out to your everyday firm contacts.