COVID-19: MORTGAGES & FORECLOSURES
I have an auction date scheduled. What should I expect?
No auctions may be scheduled until at least October 15, 2020.
When can the Lender begin a foreclosure action?
In NYS, the Governor issued an executive order extending the moratorium on new foreclosures through August 20, 2020, for homeowners facing financial hardship due to the COVID-19 pandemic.
New York State law has long required the service of a ninety (90) day notice to the homeowner before the mortgage holder may start a foreclosure action. The lender cannot start a foreclosure action until the end of the 90-day notice period. If you have received forbearance, your loan should be considered current. This means no 90-day notice should be served and no foreclosure proceeding should be commenced until after the forbearance period ends.
There is a foreclosure moratorium on federally backed mortgage loans through December 31, 2020. The moratorium governing federally backed mortgages applies to virtually all foreclosure-related activities.
What if I have a pending foreclosure action?
Most activity in foreclosure actions pending in New York state court was suspended between March 2020 and August 20, 2020. The few foreclosure cases pending in federal court have not been suspended, though the federal and State moratoriums effectively suspended court activity in federal court foreclosure proceedings as well.
Foreclosure cases are now proceeding. Before any additional proceedings in the case, the court will hold a status or settlement conference depending on the status of the case. Watch your mail for a letter from the court scheduling a conference. If you are not already represented by an attorney, contact Nassau Suffolk Law Services to see if you may be eligible for assistance with the conference.
I have a reverse mortgage. What should I do if I am unable to pay my property taxes?
Contact your servicer to let them know if you will not be able to pay your property taxes or insurance. HUD instructed reverse mortgage (HECM) servicers not to start the foreclosure process for six months, with an additional six-month delay available with HUD approval.
I received a Summons and Complaint or other documents that say I have to answer or appear in court. What should I do?
All court deadlines in foreclosure cases pending in New York State court are suspended between late March and September 4, 2020. The courts on Long Island are accepting documents for filing again. You will not be penalized for missing a New York State trial court deadline that fell between March and September 4, but your time to respond will start running again after September 4 (unless Governor Cuomo continues to extend this date. Check this page frequently for updates.).
If your case is pending in federal court, these rules do not apply.
Contact Nassau Suffolk Law Services for more information on what to expect in your case (631) 232-2400 (Suffolk) or (516) 292-8100 (Nassau).
What other options are there if I am having difficulty making the monthly payments?
There are several other loss mitigation options to consider. The primary option to avoid foreclosure is a loan modification. A loan modification changes the some of the note terms. A loan modification can reduce the interest rate, extend the loan maturity date, or establish a balloon payment of some of the remaining principal balance at the end of the loan.
Written guidance for loan modification eligibility and criteria for federally backed mortgages are online, through HUD, the VA, Fannie Mae and Freddie Mac. Loan modification terms and conditions for privately held loans are subject to the rules of individual investors or loan owners.
Reinstatement of the existing loan terms, by paying all the arrears, is another option to consider, though you will need to have a sufficient lump sum to satisfy the amount due.
Non-profit legal service programs, including NSLS, and housing counseling agencies, provide free assistance to homeowners seeking all loss mitigation options. The NYS Department of Financial Services website lists free housing counselors.
When should I seek forbearance?
If you are not able to pay your mortgage you should contact your lender and ask for help as soon as possible, preferably before you miss your first payment. However, forbearance may not be the best option for you.
Most homeowners include payments for property charges (taxes and/or homeowner’s insurance) with their monthly mortgage payments. These are identified as escrow payments. These expenses are not subject to forbearance.
Homeowners should make sure to communicate with mortgage services on how property charges will be paid during forbearance. Depending on the timing of the forbearance period, property charges may not be due for several months. Nonetheless, mortgage servicers are required to have a sufficient sum in the escrow accounts through the course of the year. A forbearance of any length will result in a shortfall that will need to be made up.
If you can continue your monthly mortgage payments, you should.
Am I entitled to a forbearance if I was in default on my mortgage before the CARES Act?
The CARES Act allows all homeowners with a federally backed mortgage loan to request forbearance for an initial 180 days and an extension of up to another 180 days if they have suffered a financial hardship related to the COVID 19 pandemic. The CARES Act does not distinguish between those who also suffered a previous financial hardship. So, homeowners who were already in default, including homeowners already in the midst of a pending foreclosure proceeding, should have the right to request forbearance.
What is a forbearance?
Forbearance allows you to delay making monthly payments for a specified period. Forbearance is not forgiveness of any part of the debt. You still have to make these payments during the life of the loan. Under both the CARES Act and the State directives, you should not be charged late fees, though interest, at the loan’s regular rate, will accrue. Under the CARES Act, many homeowners with federally backed mortgages will have the option to add the forbearance period (up to one year) to the end of the loan, or to make extra make-up payments over the remaining loan term. Learn more from the New York State Attorney General.
Homeowners with loans held by NYS regulated institutions or other private lenders, may have to make a lump sum payment at the end of the forbearance period (90 days). However, if your servicer requires you to make a lump sum payment or does not help you to work out a reasonable repayment plan, you can make a complaint to the New York State Attorney General.
What are my options if I am unable to make my monthly mortgage payments?
Governor Cuomo enacted a moratorium on new foreclosure cases for homeowners experiencing financial hardship because of COVID-19. This moratorium ended August 20, 2020, however some homeowners may be protected by federal foreclosure moratoriums that last until the end of the year.
If you cannot pay your mortgage because of the coronavirus pandemic, contact your mortgage servicer to request forbearance. Your servicer is the organization that sends your monthly statements. You should make the request in writing, explain that it is related to the public health emergency, and keep a copy of the letter along with proof of sending (whether by mail, fax, or email).
While many lenders have special programs to help homeowners avoid foreclosure during the current crisis, the details will vary by lender and are still evolving. Contact a housing counselor for more help understanding forbearance and modification options.
Federally backed mortgages (Fannie Mae, Freddie Mac, FHA, VA, etc.)
The federal CARES Act allows homeowners with federally backed mortgage loans to request a forbearance on their monthly payments. Forbearance delays your obligation to make monthly payments. Homeowners with federally backed mortgage loans are entitled to receive an initial forbearance of up to 180 days and an additional 180 days, if they have experienced a financial hardship due to the COVID 19 emergency. Additional late fees should not be incurred during this period, but regular interest and escrow charges will continue to accrue.
Requests for forbearance must be made to the mortgage servicer. Federally backed loans are those either insured, or guaranteed by federal agencies (FHA, HUD or VA), or purchased by Fannie Mae or Freddie Mac after loan origination. Loans insured or guaranteed by the FHA, HUD or VA, are identified on the note and mortgage. To learn whether Fannie Mae or Freddie Mac purchased your loan after origination, you will need to go on their respective loan lookup tools (Fannie Mae Lookup or Freddie Mac Lookup), with the borrower’s name, last four digits of the borrower’s social security number and the residence address. (Read More about FHA Mortgages – Understanding your options)
FHA, Fannie Mae and Freddie Mac have also agreed not to conduct foreclosure related activity until at least 2021.
Lenders regulated by New York
Institutions regulated by the State of New York’s Department of Financial Services (“DFS”) hold a small number of mortgage loans. On March 24, 2020, the Governor issued Executive Order 202.9, and DFS issued emergency regulations allowing homeowners with mortgage loans held by these New York regulated institutions to obtain a forbearance of mortgage payments for 90 days, if they are facing financial hardship due to COVID 19.
Other private lenders
For other privately held mortgages, you will need to check with the mortgage servicer for available options if you are unable to make the monthly payments due to financial hardship.
If your lender refuses to give you forbearance contact Nassau Suffolk Law Services at (631) 232-2400 (Suffolk) or (516) 292-8100 (Nassau), another legal services provider, a non-profit housing counselor or the New York State Attorney General’s office at 1-800 771-7755.
Where can I go to learn more about programs to help people through the public health emergency?
- Department of Financial Services: Coronavirus: Mortgage and Foreclosure
- Additional Resources: Click here to learn see additional resources and learn about the economic stimulus payment.
Last updated August 31, 2020. The situation is changing rapidly. Please check back for updates.
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