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The Bill S4408 has passed the House and Senate in NY and is now being presented to the Governor.  The Bill requires a lender which seeks to foreclose on a reverse mortgage issued under the federal Home equity conversion mortgage program to provide notice to the Department of Financial Services and to the mortgagor; directs the Department of Financial service to provide notice to the Mortgagor of legal service organizations which may assist them with the default or foreclosure; and prohibits lenders from making advance payment of debts upon the mortgage real property.

The goal of protecting senior homeowners and creating greater support and access to legal services being paramount. Lenders would also be required to engage in loss mitigation, as outlined by the Department of Financial Services before foreclosing.  The new requirements would be a condition precedent to bringing a foreclosure action against a HUD reverse mortgage and may result in treble damages and attorney’s fees for non-compliance.  

We will be watching this legislation closely and provide more information if the Governor signs and implements same.  Should you have any questions, please contact Deborah Gallo, Director of Operations, at dgallo@friedmanvartolo.com.

The NYS Court Administration has issued an Administrative Order (AO 157/20)  which lifts the general stay on residential foreclosures as of today, 7/27/20. It sets forth new protocols for pending cases while expanding on previously issued protocols for commencing cases. While AO 157/20 provides more details than previously issued Administrative Orders, we will be seeking additional clarity on a few issues.

In short, in accordance with the Executive Orders easing restrictions in NYS, the court is permitting residential foreclosures to proceed (with additional provisions to follow for auctions), the timeframe for advancement of each action to be controlled by the Court with the requirement that all cases be conferenced before any other activity is undertaken:

• “prior to conducting any further proceedings”, the court must initiate a status or settlement conference (including a CPLR 3408 conference where applicable)
• a failure to appear at a conference will result in a rescheduling of the conference before permitting the furtherance of the action;
• following the conference, the court may direct further briefing of motions as needed and issue decisions on motions (
• no auction shall be rescheduled to occur prior to October 15, 2020;
• the court may entertain “other” foreclosure applications, and, where necessary, conduct hearings, inclusive of CPLR 3408(f) good-faith hearings
• All foreclosure proceedings, shall be conducted remotely to the fullest extent possible
• In accordance with the relevant Executive Orders, all commercial foreclosure for non-payment remain stayed through 8/19/20 where the borrowers are eligible for unemployment insurance or federal/state benefits or are otherwise facing financial hardship due to COVID-19

The specific reference to potential CPLR 3408(f) good faith hearings is of import as it at least implies the court’s focus on the parties pursuing loss mitigation resolutions. It is likely intended to ensure that lenders and servicers have provided any and all relief required by law/regulation to borrowers, as well as to “encourage” plaintiffs to make every effort to pursue a loss mitigation resolution in light of the economic toll COVID-19 has exacted on borrowers and the state’s overall fear that a tidal wave of foreclosures will soon be filed. These are the same concerns previously raised when assessing the application of Banking Law 9-x and explaining the need for affidavits to demonstrate compliance with same.

Additional information will be provided as same becomes available.  For any questions, please contact Deborah Gallo, Director of Operations, at dgallo@friedmanvartolo.com.

The Cares Act seeks to create economic stabilization in numerous ways both for individuals and businesses.  This includes some temporary changes in the bankruptcy code.  

The Act amends the Small Business Reorganization Act to increase the eligibility threshold to file
under subchapter V of chapter 11 of the U.S. Bankruptcy Code to businesses with less
than $7,500,000 of debt. The increase sunsets after one year and the eligibility threshold
returns to $2,725,625.
Amends the definition of income in the Bankruptcy Code for chapters 7 and 13 to
exclude coronavirus-related payments from the federal government from being treated as
“income” for purposes of filing bankruptcy. Sunsets after one year.
Clarifies that the calculation of disposable income for purposes of confirming a chapter
13 plan shall not include coronavirus-related payments. Sunsets after one year.
Explicitly permits individuals and families currently in chapter 13 to seek payment plan
modifications if they are experiencing a material financial hardship due to the
coronavirus pandemic, including extending their payments for up to seven years after
their initial plan payment was due. Sunsets after one year.

For more information on the bankruptcy and other changes that the servicing industry must be aware of contact Director of Operations, Deborah Gallo, at dgallo@friedmanvartolo.com.

Gov. Cuomo has reportedly signed Bill S8243c and S8428 (which slightly modifies the former) into law. The bill, which creates new Section 9-x of the Banking Law, appears to reflect the NY Legislature’s desire to afford NY homeowners with the same forbearance relief that the CARES Act provided on the federal level. As is often the case, the legislature hastily put a concept to paper seemingly without consideration for how it would function in practice. Not surprisingly, it is now up to the judiciary to determine the intent and apply the law as intended.

The statute provides for 180 day forbearances for qualified mortgagors (which can be made retroactive to as early as March 7, 2020) and the ability to extend the forbearance another 180 days upon the demonstration of a continued hardship. A mortgagee can only refuse to grant such forbearance to a qualified mortgagor if it would violate the safety and soundness provision; this is defined as “having sufficient capital and liquidity to meet its obligations and to operate in a safe and sound matter.”

The statute specifically excludes loans “made, insured or securitized by any federal agency, GSE, federal home loan bank.” An amendment has been made to also include “purchased by” as one of the qualifiers. The plain language here infers that any loans you purchased that were originated as a FNMA, FHLMC, HUD loan etc. would not be covered. The addition of “purchased by” will likely be a source of much litigation. One would argue that this extends the exclusion to not only loans originated by GSE/government agencies, but also any loans that have them in the assignment chain.

The statute intends to provide relief for mortgagors that were impacted during the “covered period” commencing March 7, 2020 with a to-be-determined end date. Based on a plain language reading, one would assume that the statute covers any missed payments within that period (as well as relief for those who have been paying but have a hardship and need the forbearance within the covered period).

There are more questions that are raised by the legislation that will result in additional litigation  and the Court’s interpretation of the intent.  For questions, please contact Director of Operations, Deborah Gallo at dgallo@friedmanvartolo.com.

We have received a new Administrative Order in New York as the Court’s re-open regions and share their concerns regarding Eviction proceedings.  As of June 20, 2020:

Commencement documents in evictions must be filed with the Court by NYSCEF (efiling) or mail at this time.

The Court now requires two additional documents with the Petition in commercial and residential evictions proceedings.

• A petitioner’s attorney affirmation that they have review state and federal restrictions and qualifications on evictions proceedings and believe in good faith that the proceeding is consistent with those restrictions and qualifications.
• A notice to respondent-tenant (in English and Spanish) information the respondent-tenant that they may be eligible for an extension of time to respond to Petition in light of directives related to the COVID 19 Pandemic and linking them to a phone number and/or website link for further information.

Whether or note an answer is filed, further hearing is stayed until the Governor’s Executive Order suspending statutory timetables for the prosecution of legal matters expires.  This order continues the suspension of eviction matters with a singular exception:

• Eviction matters commenced on or before March 16, 2020 in which all parties are represented by counsel shall be eligible for calendaring of virtual settlement conference.

It is expected that on or before the expiration of the Governor’s Executive Order suspending timetables, further directives will be issued on how to prosecute these cases. 

For more information on this update please contact Director of Operations, Deborah Gallo, Esq. at dgallo@friedmanvartolo.com.