Alert

The End of New York’s Foreclosure Moratorium

January 19, 2022

The hardship stays provided under New York’s COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (EEFPA) officially ended on January 15, 2022. The EEFPA was the legislature’s response to protect New Yorkers affected by a financial hardship caused by the COVID-19 pandemic from the threat of immediate foreclosure or eviction. The EEFPA provided a mandatory stay of any foreclosure or eviction proceeding in which a borrower or homeowner filed a hardship declaration with the court. The EEFPA protections initially took effect on December 28, 2020, were extended by Governor Cuomo in May 2021, and were further extended by the legislature in September 2021. Despite calls for an extension of the hardship stays and protests by housing groups in Albany, the last extension expired on January 15, 2022.

In response to the expiration of the hardship stay, New York’s Office of Court Administration (OCA) issued a memorandum to judges and non-judicial staff along with Administrative Order 35/22 on Monday. For the first time in almost twenty-two months since the pandemic began, the OCA stated that residential and commercial mortgage foreclosure proceedings can now “resume in the normal course.”

What does this mean for lenders and mortgage servicers?

The practical impact of the hardship stay’s expiration is that the courts can now begin processing all active foreclosure matters. This includes:

• Deciding motions that are fully briefed and were previously submitted to the court for a decision;
• Scheduling oral argument or issuing briefing schedules for motions that have not yet been submitted to the court for a decision;
• An increase in the scheduling of settlement conferences pursuant to CPLR 3408; and
• Scheduling foreclosure sales.

Since many foreclosure matters have been stayed or stagnant since the beginning of the COVID-19 pandemic, counsel should be diligent in getting matters back on the court’s active calendars, requesting that aged motions be decided, and getting conferences scheduled so foreclosure actions can proceed. Due to pandemic delays and the number of foreclosure actions in the pipeline, some delays will continue due to the sheer volume of cases that now need to be processed.

Assistance for Delinquent Homeowners Now Available in New York

Last month, Governor Hochul announced the creation of a $539 million fund to help assist homeowners facing foreclosure. New York’s Homeowner Assistance Fund (NYHAF) aims to assist homeowners who are behind at least 30-days on their mortgage payments, property taxes, condo fees, or co-op fees. The application process opened on January 3, 2022 and applications are now being accepted on a first-come, first-serve basis until February 3, 2022. Qualified borrowers may be eligible for a 5-year forgivable grant up to $50,000.

As noted by Chief Administrative Judge Lawrence P. Marks, borrowers who apply to NYHAF may seek an additional stay of individual foreclosure proceedings while their applications are pending review. While it is unclear how long the NYHAF application process will take, one thing is clear: foreclosure proceedings are finally allowed to proceed in New York.