14 | November/December 2021 | BAEC Bulletin In the Public Service
WESTERN NEW YORK LAW CENTER
The Tools Needed to Weather The Storm The Looming Mortgage Foreclosure Crisis in New York State New York homeowners continue to suffer gravely from the effects of the global Coronavirus pandemic. Recent Census Bureau data reveals that as of mid-September, 16.3 percent of New Yorkers were experiencing a loss of employment income. The rate of mortgage delinquencies is currently higher than during the Great Recession with approximately 6.5 percent of New York homeowners behind on their mortgages. Looking at the number of Black homeowners behind on their mortgages, the rate increases to 9.1 percent. These numbers are alarming, considering that at the height of the Great Recession in 2009, the mortgage delinquency rate in New York State was around 3.8 percent. Of New York homeowners currently delinquent on their mortgage payments, 16.6 percent are more than four months delinquent. A foreclosure is typically commenced after four missed payments. We are currently approaching the end of New York State’s foreclosure moratorium, set to expire on January 15, 2022. The moratorium was put in place on December 24, 2020 through the NYS COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020. Initially, it allowed a homeowner to submit a COVID-19 Hardship Declaration form, self- attesting to a hardship caused by the pandemic, which would result in a stay of all court proceedings through May 1, 2021. The stay of proceedings was extended several times. In the most recent extension passed by the New York State legislature on September 1, 2021, the law was amended to allow foreclosing plaintiffs to request a hearing to challenge the homeowner’s assertion of a COVID-19 hardship. This was in response to the United States Supreme Court ruling in Pantelis Chrysafis, et. al. v. Lawrence K. Marks, decided on August 12, 2021. This case was a challenge to New York State’s eviction moratorium and the Court ruled that it was a violation of a landlord’s due process rights to impose a stay at the request of a tenant without an opportunity for the landlord to be heard. In addition to the coming expiration of the moratorium, many homeowners have reached the limit of their allowed forbearance periods with their mortgage servicers. The federal CARES Act required that servicers of federally backed loans offer forbearance plans to homeowners where payments would be suspended for a period of time if a homeowner was experiencing a COVID-19 related hardship. New York State Banking Law 9-X required that all mortgage servicers subject to the oversight of the New York State Department of Financial Services also offer homeowners forbearance plans upon an assertion of a COVID-19 hardship. As a result of these two laws, most homeowners in New York had a forbearance option available to them if they were experiencing a COVID-19 hardship. Many homeowners are now reaching the maximum allowable time for forbearance and will have to apply with their mortgage servicer for a more permanent means of resolving the delinquency. Some of these
AMY GATHINGS Supervising Attorney WNYLC
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