Among the dozens of COVID-19-related bills being discussed when the state Assembly opened this week is A.10351B/S.8423C, which would require an additional six months mortgage forbearance and allow mortgage lenders and servicers to create an additional 180 days forbearance if they choose to do so to help those who can certify they have lost income during the COVID-19 pandemic. The legislation is sponsored by Assemblywoman Nily Rozic, D-Queens.

Assemblyman Joe Giglio, R-Gowanda, has voted against legislation that would lengthen mortgage forbearance in the state.

Among the dozens of COVID-19-related bills being discussed when the state Assembly opened this week is A.10351B/S.8423C, which would require an additional six months mortgage forbearance and allow mortgage lenders and servicers to create an additional 180 days forbearance if they choose to do so to help those who can certify they have lost income during the COVID-19 pandemic. The legislation is sponsored by Assemblywoman Nily Rozic, D-Queens.

Mortgage payers would have to submit an application for forbearance, which can only be applied to those already in arrears, on a trial period plan or who have applied for loss mitigation, with applications required to be backdated to March 7. Banks would be required to extend the mortgage for the period of forbearance, pay arrears in monthly installments or defer the accumulated amount of money the payer is in arrears as an interest-free balloon payment payable at the end of the loan. Lenders would be prohibited from charging interest or late fees or negatively reporting the decision to any credit bureau.

Non-compliance would be considered a defense to a foreclosure action raised over payments that would be covered under the new law.

This new section would also allow for any mortgagor granted forbearance to choose either to extend their loan for the length of the forbearance, pay their arrears in monthly installments, or to defer the arrears as a lump sum payment due at the maturity of the mortgage. It passed the Banks Committee on Tuesday by a 25-5 vote, and the Codes Committee, 15-6, with Assemblyman Joe Giglio, R-Gowanda, voting against the bill in the Codes Committee. The legislation has not yet been up for a floor vote in the full Assembly.

“While the Governor’s Executive Order provides immediate relief to some homeowners, it still allows for mortgage lenders to collect the back payments as soon as the forbearance period is over,” Rozic said. “Many homeowners will not be able to pay the lump sum of their arrears once forbearance ends if they have been unable to work. This bill requires regulated lenders and servicers to allow mortgagors to either extend their mortgage for a period of time equal to the forbearance, pay their arrears in monthly installments or pay the deferred payments as a balloon payment upon the maturity of the loan. Under this legislation, mortgagors will also be prohibited from: charging interest during forbearance, or on the balloon payment; charging late fees; or negatively reporting the mortgagor’s decision to a credit reporting bureau. Compliance with this law will also be required in order for a foreclosure action to proceed against a mortgagor for payments that would otherwise have been covered by this deferment period.