On December 28, 2020, New York passed a new law entitled the “COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020.” The act places a moratorium on COVID-19-related residential real property mortgage foreclosure actions and residential eviction proceedings until May 1, 2021, where a tenant or homeowner has submitted a “hardship declaration” to the foreclosing party, landlord, and/or the court. The act also places a stay on existing foreclosure actions or eviction proceedings for 60 days to give homeowners and renters an opportunity to declare hardship and gain protection from foreclosure or eviction until at least May 1, 2021. As detailed below, the act gives struggling homeowners and renters some breathing room while COVID-19 cases are at their peak, and it requires that notice will be given in the consumer’s preferred language.
Eligibility Criteria and Definitions
- The act applies to any action to foreclose a mortgage relating to residential real property if the owner or mortgagor of the property is a natural person – regardless of how title to the property is held.
- The act includes in the definition of “real property” shares assigned to a unit in a residential cooperative. It also excludes vacant and abandoned property from the definition of “real property” so long as the property was listed on the statewide vacant and abandoned property electronic registry prior to March 7, 2020, and it remains on that list.
- Homeowners and small landlords who own 10 or fewer residential dwellings may file a hardship declaration with their mortgage lender, other foreclosing party, or a court that would prevent a foreclosure.
- The 10 or fewer dwelling units may be in more than one building but must include the primary residence of the homeowner seeking the relief and the remaining units must otherwise be occupied by a tenant or available for rent.
- The new law does not exclude government-backed loans.
- The new law imposes a stay on actions to foreclose a mortgage for at least 60 days (until February 26, 2021). The stay applies to actions filed on or before March 7, 2020, or commenced by January 27, 2021.
- For pending judicial foreclosure cases, the court is required to issue an order staying the action. The court must mail the mortgagor a copy of the hardship declaration in English and, to the extent practicable, in the mortgagor’s primary language, if other than English.
- If a judgment of sale has been issued but not executed as of December 28, 2020, including actions filed before March 7, 2020, execution of the judgment is stayed until the court has held a status conference. If the mortgagor provides a hardship declaration to the foreclosing party, the court, or an agent of either, prior to the execution of the judgment, the execution is stayed until May 1, 2021.
- Where a judgment of sale has not been issued, if a mortgagor provides a hardship declaration the proceeding is stayed until May 1, 2021.
- New York law now requires the foreclosing party to include a “Hardship Declaration” in the mortgagor’s primary language with every notice provided to the mortgagor pursuant to RPAPL § 1303 (the “Help for Homeowners in Foreclosure” notice) and RPAPL § 1304 (Required Prior Notices – “90-day pre-foreclosure notice”). If a translation of the mortgagor’s primary language is not available on the office of court administration’s public website, it is the foreclosing party’s responsibility to obtain a suitable translation of the declaration.
- The act prohibits initiation of foreclosure proceedings until May 1, 2021, where a mortgagor has provided a hardship declaration to the foreclosing party or an agent of the foreclosing party.
- The act imposes a requirement of additional affidavits when filing new foreclosure actions. Specifically, the foreclosing party must file (1) an affidavit of service demonstrating the manner in which the foreclosing party served a copy of the hardship declaration in English and in the mortgagor’s primary language; and (2) an affidavit attesting that, at the time of filing, the foreclosing party has not received a hardship declaration from the mortgagor.
- The new law also places a moratorium on residential evictions until May 1, 2021, for tenants who submit a “Hardship Declaration” to their landlord.
- Pending evictions as of December 28, 2020, are stayed for at least 60 days (i.e., until February 26, 2021). The stay applies to proceedings filed on or before March 7, 2020, or commenced by January 27, 2021.
- Until May 1, 2021, the court is prohibited from issuing a default judgment authorizing an eviction in a residential eviction matter or authorizing enforcement of an eviction pursuant to a default judgment without first holding a hearing upon motion of the petitioner.
- For pending cases, the court is required to issue an order staying the action, and the court shall mail the tenant a copy of the Hardship Declaration in English and to the extent practicable, the tenant’s primary language, if other than English.
- If an eviction warrant has been issued but not executed as of December 28, 2020, including proceedings filed before March 7, 2020, execution of the warrant is stayed until the court has held a status conference. If the tenant provides a hardship declaration to the petitioner, the court or an agent of either, prior to the execution of the warrant, the execution shall be stayed until May 1, 2021.
- The petitioner in a new eviction must file an affidavit of service demonstrating the manner in which the petitioner served a copy of the hardship declaration in English and the tenant’s primary language, with any rent demand and with any other written notice required by the lease or tenancy agreement, law or rule to be provided prior to the commencement of an eviction proceeding.
- The petitioner must also file an affidavit (1) attesting that at the time of filing the petitioner has not received a hardship declaration from the tenant or any other tenant or occupant of the dwelling unit; or (2) if the petitioner has received a declaration, that the respondent has been engaging in unreasonable behavior that substantially infringes on the use and enjoyment of other tenants or occupants or causes a substantial safety hazard to others.
Credit Discrimination and Negative Credit Reporting
The act does not provide many details about credit reporting requirements but generally requires no negative consequences to consumers.
- The act prohibits lending institutions from discriminating against a consumer’s credit determination because the owner has been granted a stay of mortgage foreclosure proceedings or because the consumer is currently in arrears and has filed a hardship declaration with the lender.
- The act prohibits negative reporting to any credit reporting agency due to the fact that a consumer has been granted a stay of mortgage foreclosure proceedings or is currently in arrears and has filed a hardship declaration with the lender.