New York DFS Implementing Governor Cuomo’s 90-Day Mortgage Relief in Response to COVID-19 Concerns

In a morning press conference on Thursday, March 19, 2020, New York Governor Andrew Cuomo announced that the Department of Financial Services issued a new directive to mortgage servicers to provide 90-day mortgage relief to New York borrowers impacted by the novel coronavirus.

Later in the day, the New York State Department of Financial Services (DFS) issued guidance to New York State Regulated and Exempt Mortgage Servicers urging that they provide relief to New York mortgage borrowers harmed by the coronavirus pandemic.

The guidance, issued by the DFS Executive Deputy Superintendent-Banking, Shirin Emami, urged—but did not mandate—that servicers help to “alleviate the adverse impact caused by COVID-19” on New York mortgage borrowers who “demonstrate they are not able to make timely payments” by:

• Forbearing mortgage payments for 90 days from their due dates;
• Refraining from reporting late payments to credit rating agencies for 90 days;
• Offering mortgagors an additional 90-day grace period to complete trial loan modifications, and ensuring that late payments during the COVID-19 pandemic does not affect their ability to obtain permanent loan modifications;
• Waiving late payment fees and any online payment fees for a period of 90 days;
• Postponing foreclosures and evictions for 90 days; and
• Ensuring that mortgagors do not experience a disruption of service if the mortgage servicer closes its office, including making available other avenues for mortgagors to continue to manage their accounts and to make inquiries; and
• Proactively reaching out to mortgagors via app announcements, text, email or otherwise to explain the above-listed assistance being offered to mortgagors.

The DFS guidance applies to consumers but is not explicitly limited to consumer loans. The DFS encourages New York’s mortgage servicers and banks to “assist these mortgagors under these unusual and extreme circumstances” and requests that New York servicers take these actions, which DFS deems “consistent with safe and sound banking practices as well as in the public interest and will not be subject to examiner criticism.”

Significantly, as of now the DFS did not exercise its rule-making authority and, instead issued a “Guidance document” under New York’s Administrative Procedures Act. A “Guidance document” is not legally binding and only “provides general information or guidance to assist regulated parties in complying with any statute, rule or other legal requirement.”  N.Y. A.P.A. Law §102.

At the press conference, Governor Cuomo said, “If you are not working, or working only part-time, we will have banks and financial institutions waive mortgage payments for 90 days.”  He made clear that servicers would not be asked to waive payments.

“We’re not exempting people from the mortgage payments. We’re just adjusting the mortgage to include those payments on the back end.” The measures will be reassessed at the end of the 90-day period, Cuomo said.

Adam M. Swanson is a partner in the New York and Stamford offices of McCarter & English. David S. Mordkoff is an associate at the firm.