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The New York Department of Financial Services (“NYDFS”) promulgated regulations (“Part 119”) on March 24, 2020, to provide financial relief to individuals who can demonstrate a financial hardship as a result of the COVID-19 pandemic (the “Mortgage Forbearance Regulation”). The regulation establishes the scope of requests that regulated institutions must consider, and standards and procedures that regulated institutions must follow in their review of requests for relief.
On March 21, 2020, Governor Cuomo signed an Executive Order, No. 202.9, Continuing Temporary Suspension and Modification of Laws Relating to Disaster Emergency (the “Executive Order”) which modifies Section 39(2) of the New York Banking Law to provide that it is an unsafe and unsound business practice for any bank subject to the NYDFS to not grant a forbearance to any person or business who has a financial hardship as a result of the COVID-19 pandemic for 90 days. The Mortgage Forbearance Regulation was adopted pursuant to that Executive Order.
Applications for Forbearance to be Made Widely Available. Under the Mortgage Forbearance Regulation, regulated institutions are required to (i) make applications for forbearance of any payment due on a residential mortgage of a property located in New York widely available to any individual who resides in New York and who demonstrates financial hardship as a result of the COVID-19 pandemic; and (ii) subject to the safety and soundness requirements of the regulated institution, grant such forbearance for a period of ninety (90) days to any such individual.
Fee Forbearance. Under the regulation, New York regulated banking organizations must also provide the following financial relief to any individual who can demonstrate financial hardship from COVID-19 (subject to safety and soundness considerations):
Additional Reasonable and Prudent Relief Efforts. Regulated institutions are also encouraged to take additional reasonable and prudent relief efforts for individuals, consistent with safe and sound banking practices.
Publication Requirement. Regulated institutions must, within ten (10) business days following March 24, 2020, e-mail, publish on their website, mass mail or otherwise similarly broadly communicate to customers how to apply for COVID-19 relief and provide their contact information.
Regulated institutions must develop criteria to determine whether an applicant is eligible for COVID-19 relief that is “clear, easy to understand and reasonably tailored to the requirements of the regulated institution.” The regulation sets forth the contours of the procedures related to the processing of applications for COVID-19 relief as follows:
The regulation details the manner in which the NYDFS will determine whether a regulated institution has engaged in such “unsafe and unsound” business practices in receiving and reviewing mortgage forbearance requests. Specifically, the NYDFS may consider:
In addition, NYDFS examiners may not criticize prudent and reasonable efforts to grant forbearance of residential mortgage payments pursuant to the regulation and safe and sound practices.