The state of New York will allow some homeowners to skip their mortgage payments for three months in response to the spread of COVID-19.
On Thursday, the New York Department of Financial Services (DFS) sent a letter to mortgage servicers directing them to provide several relief options in response to the outbreak, including suspending mortgage payments for up to 90 days.
“As the outbreak continues to spread, a growing number of companies have started to warn markets about the adverse impact of COVID-19 on their financial conditions,” DFS said in the letter. “Companies in certain sectors are already laying off employees and taking other drastic actions in response to the crisis which is likely to cause more financial stress on local communities and consumers.”
As a result, DFS said it was issuing guidance to mortgage servicers to “do their part” to alleviate the impact of the outbreak on borrowers who can demonstrate that they cannot make timely payments. DFS has instructed mortgage servicers to support New York borrowers by:
- Forbearing mortgage payments for 90 days from their due dates
- Not reporting late payments to credit-rating agencies for 90 days
- Offering borrowers an additional 90-day grace period to complete trial loan modifications, and ensuring that late payments during the COVID-19 outbreak do not affect borrowers’ ability to obtain permanent modifications
- Waiving late fees and any online-payment fees for 90 days
- Postponing foreclosures and evictions for 90 days
- Ensuring that borrowers don’t experience a disruption of service in the event the servicer closes its office, including making available other ways to manage their accounts and make account inquiries
- Proactively reaching out to borrowers through app announcements, text message, email or other means to explain the assistance being offered to borrowers
“The Department believes that reasonable and prudent efforts by your institutions during this outbreak to assist mortgagors under these unusual and extreme circumstances are consistent with safe and sound banking practices as well as in the public interest and not subject to examiner criticism,” DFS said in the letter.
Earlier this week, the Department of Housing and Urban Development and the Federal Housing Finance Agency issued a 60-day moratorium on foreclosures and evictions in response to the COVID-19 outbreak.
Source: Mortgage Professional America – 20 Mar 2020