Don’t Get a False Sense of Security that You Don’t Owe the Bank
New York’s mortgage forbearance law enacted during the pandemic has been extended to May 31, 2021 to stop certain foreclosures, but it does not absolve you of liability for your mortgage payments. It is only a temporary stay of foreclosure proceedings that applies under limited circumstances of financial hardship.
There Are Six Reasons to Stay Foreclosures
On December 28, 2020, New York passed the Emergency COVID-19 Eviction and Foreclosure Prevention Act of 2020 (the “Act”). The Act is at legislation.nysenate.gov/pdf/bills/2019/S9114.
The Act permits a mortgagor in a pending residential foreclosure action to claim a financial hardship related to the COVID-19 pandemic by submitting to the bank a “Mortgagor’s Declaration of COVID-19 Related Hardship.”
There are six limited circumstances that you can ask the bank to temporarily cease foreclosure proceedings during the pandemic. Click to read the Foreclosure-Notice declaration listing those circumstances to stay foreclosures.
If you do not fit into any of the six circumstances of hardship, then you cannot sign the declaration and foreclosure proceedings may continue against your home. T
New York Only Requested Banks to Comply- They Don’t Have to
Remember, the State cannot rewrite your mortgage agreement and make it disappear because it is a legal document made only between you and your bank.
That is why New York’s Banking Superintendent sent a March, 2020 Letter to Banks requesting that they honor a forbearance during the pandemic. It was not a directive. That request has been extended to May 31, 2020. So far Banks have complied.
Whether or not a Bank complies with the forbearance of foreclosures request, you remain responsible for your mortgage payments after the temporary stay is lifted.
Seek a Loan Modification While You Have the Chance
During this time of financial crisis, you should use it to apply to the bank for a loan modification. the modification is a package that you fill out to prove you need your payments restructured. Whether that would be by extending the loan, lowering your monthly payments and/or changing the interest rate, if you have a good reason, such as a financial hardship where you lost your job during the pandemic, then the bank may be willing to work with you. Get your paperwork together for this because you have to attach boy three years of taxes, bank statements and other documentary proof to support a change in your financial circumstances to validate your request for a modification.