New York Passes COVID-19 Foreclosure Moratorium Extension

If you’re a New York homeowner, you can get a foreclosure moratorium until August 31, 2021.

On May 4, 2021, New York Governor Andrew Cuomo signed an extension of the "COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020" (S. 6362/A.7175) into law. This legislation permits homeowners facing hardships due to the coronavirus pandemic to get a foreclosure moratorium until August 31, 2021, by filing a hardship declaration with the mortgage lender, court, foreclosing party, or its agent, as appropriate. (A "foreclosure moratorium" prevents a foreclosure from starting or continuing.)

The law also prohibits local governments from conducting a tax foreclosure or tax lien sale in New York until August 31, 2021, if the homeowner files a COVID-19 hardship declaration with the village, town, city, district, county, or other entity that conducts tax foreclosures or tax lien sales. In addition, the law provides other protections to people, like credit reporting protections for homeowners, an eviction ban, and an automatic renewal of property tax exemptions for some seniors and disabled homeowners.

New York's Foreclosure Moratorium Extension

On December 28, 2020, New York Governor Andrew Cuomo signed the "COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020" (A11181/S09114) into law. Initially, homeowners were able to get a moratorium on a mortgage foreclosure, tax foreclosure, or tax lien sale until May 1, 2021. With this recent extension, homeowners in New York can get a moratorium on these actions until August 31, 2021.

Eligibility for a Mortgage Foreclosure, Tax Foreclosure, or Tax Lien Sale Suspension

New York's moratorium extension applies to residential property owners that own ten or fewer dwelling units, including their primary residence. The ten or fewer dwelling units may be in more than one property or building as long as the total aggregate number of ten units includes the primary residence of the person requesting relief and the remaining units are currently occupied by a tenant or are available for rent.

If you own more than ten units, you're excluded from getting a moratorium. The moratoriums also aren't available for:

  • vacant and abandoned properties or
  • mortgage loans made, insured, purchased, or securitized by a corporate governmental agency of the state constituted as a political subdivision and public benefit corporation.

How to Get a Moratorium in New York

The property owner must fill out a standardized hardship declaration form to receive a mortgage foreclosure, tax foreclosure, or tax lien sale moratorium.

Getting a Mortgage Foreclosure Moratorium

To get a mortgage foreclosure moratorium until August 31, 2021, you have to submit a declaration attesting to a coronavirus-related hardship to your mortgage lender or the foreclosing party (or its agent), or the foreclosing court.

You can find a template of the declaration that you need to fill out to get a mortgage foreclosure moratorium in the law's text (see "Mortgagor's Declaration of COVID-19-Related Hardship") or on the New York State Unified Court System's website. The foreclosing party has to send a copy of the form to you along with foreclosure paperwork too.

Getting a Tax Foreclosure or Tax Lien Sale Moratorium

Homeowners who submit a hardship declaration to the applicable village, town, city, school district, county, or other entity or person that conducts tax foreclosures or tax lien sale, can prevent a tax foreclosure or tax lien sale from happening before August 31, 2021. But payments due to the locality are still due.

To postpone a tax foreclosure or tax lien sale, you can find a template of the declaration you need to fill out in the law's text (see "Owner Declaration of COVID-19-Related Hardship"). Also, the New York State Department of Tax and Finance has posted a copy of the hardship declaration on its website (see Form RP-1102-DS, Owner Declaration of Covid-19-Related Hardship).

What's In the Declaration

In the declaration, you'll have to declare, under penalty of perjury, that a financial hardship prevents you from paying your mortgage or property taxes. You'll have to declare that you're unable to pay because of one or more of the following coronavirus-related reasons:

  • you've experienced a significant loss of household income during the COVID-19 pandemic
  • you've had an increase in necessary out-of-pocket expenses related to performing essential work or related to health impacts during the COVID-19 pandemic
  • childcare responsibilities or responsibilities to care for an elderly, disabled, or sick family member during the COVID-19 pandemic have negatively affected your ability or the ability of someone in the household to obtain meaningful employment or earn income or have increased your necessary out-of-pocket expenses
  • moving expenses and difficulty in securing alternative housing make it a hardship to relocate to another residence during the COVID-19 pandemic
  • other circumstances related to the COVID-19 pandemic have negatively affected your ability to obtain meaningful employment or earn income or have significantly reduced your household income or significantly increased your expenses, or
  • one or more of your tenants has defaulted on a significant amount of their rent payments since March 1, 2020.

You'll also have to attest that any public assistance, including unemployment insurance, pandemic unemployment assistance, disability insurance, or paid family leave that you've received since the start of the COVID-19 pandemic doesn't fully make up for the loss of household income or increased expenses.

Will I Have to Repay the Skipped Amounts?

If you get a mortgage foreclosure moratorium, you'll have to repay the missed payments and any lawful fees when the moratorium expires. If you can't afford to get caught up in a lump sum, you might qualify for a repayment plan or a modification that adds the arrearage to the balance of your loan. Or, you might be subject to a foreclosure action on or after August 31, 2021.

If you receive relief from a tax foreclosure or tax lien sale, you'll eventually have to pay the lawful fees, penalties, and interest associated with the unpaid taxes. Or, you might be subject to a foreclosure action or lien sale on or after August 31, 2021. If you can't afford to get caught up in a lump sum, you might be able to work out a repayment plan.

The Extension Also Applies to Tenant Evictions

By submitting a standardized hardship declaration form to the relevant court or landlord, a tenant can prevent or halt eviction proceedings if the tenant has:

  • experienced lost income or had increased costs during the COVID-19 pandemic, or
  • moving would pose a significant health risk for the tenant or a member of the household because of an increased risk for severe illness or death from COVID-19 due to an underlying medical condition.

Once you sign the form and return it to your landlord or the court handling the eviction, the landlord may not file an eviction, or an eviction already underway will be suspended, until August 31, 2021. The law also provides other protections against eviction.

Landlords can, however, evict tenants that are creating safety or health hazards for other tenants and those tenants who don't submit hardship declarations.

Credit Reporting Protections

This law prohibits lending institutions from discriminating against you because:

  • you received a stay (delay) of mortgage foreclosure proceedings, tax foreclosure proceedings, or tax lien sale proceedings, or
  • you're currently in arrears and have filed a hardship declaration.

The law also prohibits negative reporting to any credit reporting bureau under these circumstances. These protections expire on August 31, 2021.

Automatic Renewal of Tax Exemptions for Seniors and Disabled People

Also, under this law, local governments must automatically carry over Senior Citizen Homeowners' Exemption (SCHE) and Disabled Homeowner Exemption (DHE) benefits for 2021. Usually, recipients of these exemptions have to file renewal applications, sometimes by showing up in person at the assessor's office.

The law also requires localities to provide renewal applications via electronic or postal mail for those individuals who might be eligible for a larger exemption in 2021.

Effective date: May 4, 2021