New York Passes COVID-19 Foreclosure Moratorium Law

A new law protects homeowners in New York against mortgage foreclosures, tax foreclosures, and tax lien sales until May 1, 2021.

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.

This legislation, which is effective immediately, imposes a mortgage foreclosure moratorium for 60 days in New York. Homeowners facing hardships due to the coronavirus pandemic can get a more extended moratorium, until May 1, 2021, by filing a hardship declaration. The law also prohibits local governments from conducting a tax foreclosure or tax lien sale in New York until May 1, 2021, if the homeowner files a COVID-19 hardship declaration.

In addition, the law provides credit reporting protections for homeowners and an automatic renewal of property tax exemptions for some seniors and disabled homeowners.

What Is a Foreclosure Moratorium?

A foreclosure moratorium prevents a foreclosure from starting or continuing.

New York’s Foreclosure Moratorium Law

The New York moratorium law applies to mortgage foreclosures, tax foreclosures, and tax lien sales.

Mortgage Foreclosures

Under the new law, any pending mortgage foreclosure, or any foreclosure started within 30 days of the legislation’s effective date, is stayed (postponed) for at least 60 days to give homeowners an opportunity to submit a declaration attesting to a coronavirus-related hardship and get a longer moratorium, until May 1, 2021.

Tax Foreclosures and Tax Lien Sales

Homeowners who submit a hardship declaration can prevent a tax foreclosure or tax lien sale from happening before May 1, 2021.

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

New York’s moratorium law 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 the law’s protections. 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.

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.

Where to Find the Mortgage Foreclosure Declaration

For a mortgage foreclosure moratorium, you can find a template of the declaration that you need to fill out in the law’s text. The Office of Court Administration will also post a copy of the hardship declaration on its website within 15 days of the law’s effective date. The foreclosing party has to send a copy of the form along with foreclosure paperwork too.

Submit the form to your mortgage lender, the foreclosing party (or its agent), or the foreclosing court.

Where to Find the Tax Foreclosure and Tax Lien Declaration

To postpone a tax foreclosure or tax lien sale, you can find a template of the declaration that you need to fill out in the law’s text. 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).

Submit the declaration to the applicable village, town, city, school district, county, or other entity or person that conducts tax foreclosures or tax lien sales.

How Long Will the Moratorium Last?

The mortgage foreclosure, tax foreclosure, and tax lien sale moratorium will last until at least May 1, 2021.

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.

If you receive relief from a tax foreclosure or tax lien sale, you’ll 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 May 1, 2021. If you can’t afford to get caught up in a lump sum, you might be able to work out a repayment plan.

Credit Reporting Protections Under the New Law

The new law prohibits lending institutions from discriminating against you because:

  • you received a stay 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 May 1, 2021.

Automatic Renewal of Tax Exemptions for Seniors and Disabled People

Under the new 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: December 28, 2020