Coronavirus Aid, Relief and Economic Security ("CARES") Act
The Coronavirus Aid, Relief and Economic Security Act ("CARES" Act") was signed into law on Friday, March 27, 2020. As it pertains to the Mortgage Industry, the following are the highlights of the bill:
Definitions: Federally backed mortgage loan includes any loan which is secured by a first or subordinate lien on residential real property, including condominiums and cooperatives, designed principally for the occupancy of from 1-4 families that is insured by the Federal Housing Administrations; insured under section 255 of the National Housing Act, guaranteed under section 184 or 184A of the Housing and Community Development Act of 1992, guaranteed or insured by the Department of Veteran Affairs, guaranteed or insured by the Department of Agriculture, or purchased or securitized by FHLMC or FNMA.
Forbearance: During the covered period a borrower with a Federally backed mortgage loan may request a forbearance by submitting a request to the servicer and affirming the borrower is experiencing a financial hardship during the COVID-19 emergency.
Duration of Forbearance: A forbearance shall be granted for up to 180 days, and shall be extended for an additional period of up to 180 days at the request of the borrower. The borrower may request that the initial or extended forbearance period be shortened. The request for an extension must be made during the covered period.
Accrual of Interest: During the forbearance period, no fees, penalties, or interest beyond the amounts scheduled or calculated as if the borrower had made all contractual payments on time and in full, shall accrue on the account.
Servicer Requirements: Upon receipt of a request, a servicer shall, with no additional documentation required other than the attestations above, provide the forbearance for up to 180 days.
Forbearance Moratorium: Excepting vacant and abandoned property, the following restrictions apply for a period of 60 days beginning on March 18, 2020:
1. Commencement/initiation of a foreclosure action
2. Moving for a Judgment of Foreclosure and Sale
3. Execute a foreclosure related eviction or foreclosure sale.
Multifamily Residential Properties: Additional provisions are included for residential mortgage loan payments for multifamily properties, and it is important to notate the differences. For Multifamily Mortgage loans:
1. The loan must have been current on its payments as of February 1, 2020
2. Upon receipt of a request for a forbearance, a servicer shall provide a forbearance of up to 30 days
3. The forbearance period may be extended for up to 2 additional 30 day periods, and at least 15 days prior to the end of forbearance period
4. Renter protections include restrictions on vacating the dwelling until after 30 days of providing the tenant notice to vacate, and that the notice to vacate may not be issued until after the forbearance period.
Eviction Moratorium: For 120 days after the enactment of the CARE Act, the lessor of a covered dwelling may not initiate a legal action to recover possession of a covered dwelling
Executive Orders
Since the issuance on January 30, 2020 of the initial Executive Order declaring a Disaster Emergency in the State of New York (EO 202), the Governor has issued ten additional Executive Orders (EO 202.1 – 202.10) Each has continued and expanding on the original order. More are expected almost daily.
Most of the Executive Orders invoke the Governor's powers to suspend various laws, rules and regulations so as to empower State agencies to rapidly act to combat the Coronavirus spread. It enables State Agencies to act without complying with many of the laws and procedures that would otherwise apply.
As many of the Executive Orders incorporate by reference the laws, rules and regulations being altered, determining the precise impact on a particular business can require additional guidance.
To aid in evaluating how your business might be impacted, a summary of some of the most significate provisions impacting businesses is set forth below. Links to the relevant Executive Orders and other guidance are also set forth below.
Governor's Executive Orders: https://www.governor.ny.gov/ex...
No. 202.7 includes:
• Allows Notaries to notarize documents utilizing audio-video technology provided: (i) the Notary either knows the person signing or the person displays a valid ID to the Notary during the video signing conference; (ii) the video conference must allow for two way interaction (i.e. no pre-recorded signing); (iii) the person signing must affirmatively represent he or she is physically in the State of New York; and (iv) the person signing must transmit by fax or electronic means a legible copy of the signed document directly to the notary on the same date it was signed. The Notary may notarize the transmitted copy and transmit the same back to the person.
https://www.governor.ny.gov/ne...
No. 202.8 includes:
• Suspends commercial and residential evictions and foreclosures for 90 days;
• Any specific time limit for the commencement, filing, or service of any legal action, notice, motion, or other process or proceeding, as prescribed by the procedural laws of the state, or by any other statute, local law, ordinance, order, rule or regulation is tolled until April 19, 2020.
https://www.governor.ny.gov/ne...
No. 202.9 includes:
• Modifies the Banking Law to allow mortgage payment forbearance for up to 90 days for banks subject to the jurisdiction of the Department of Financial Services;
Litigation Update
With the increasing public health emergency caused by the Coronavirus (COVID-19) pandemic, the Chief Administrative Judge over the New York Court System has issued Administrative Orders that seek to balance the need to resolve important and essential disputes with the suggested social distancing protocols. While the circumstances are in flux, below is an update on these rules and the current impact on pending and contemplated litigation.
In light of the Governor's Executive Orders referenced above, the Chief Administrative Judge of the Court issued an Administrative Order providing that, "effective immediately and until further order, no papers shall be accepted for filing by a county clerk or a court in any matter" except certain matters deemed "essential." Important to note is that while this restricts matters that are eligible for e-filing, we have confirmed that e-recording in the land records, where available, is not restricted by this order. Thus, various items including post sale activity and Third Party closings can continue to be processed.
Notably, the order does not address discovery in pending matters, which is largely governed by agreements between the parties, and for the most part can proceed. Thus, the parties in any contested matters may exchange paper discovery, and the Chief Administrative Judge has provided that parties are encouraged to postpone any deadlines by agreement for a period not to exceed 90 days. The Chief Administrative Judge also strongly discouraged prosecution of civil matters, including discovery that required in person appearances. As such, this recommendation applies to postponing any in person depositions that would otherwise have been scheduled.
Additionally, most courts have imposed restrictions on courthouse access and visitation at this time. The vast majority of courts have adjourned matters until on or after April 30, 2020 already, and we are seeing many appearances being scheduled for early June.
For more information contact:
Attorney: Natalie A. Grigg, Esq.
Phone: 585-445-2610
Email: ngrigg@woodsdefaultservices.com
