Authorizes certain state regulated institutions to offer disaster forbearance agreements to qualified mortgagors whose income has been adversely affected by the outbreak of COVID-19 and is unable to make their mortgage payment.
S05528 authorizes certain New York state-regulated banking organizations and mortgage servicers to offer “disaster forbearance agreements” to qualified mortgagors whose mortgage delinquency is tied directly or indirectly to the COVID-19 emergency. The bill defines a qualified mortgagor broadly to include residential or commercial borrowers who became 60 days or more delinquent between March 7, 2020 and the bill’s effective date, and it allows forbearance structures that defer arrearages to the end of the loan term or extend the loan term with capitalization, deferral, or forgiveness of certain arrears and escrow advances.
The bill requires regulated institutions to automatically offer an initial 60-day forbearance beginning on the effective date, with no documentation required beyond the borrower’s oral or written affirmation of financial hardship related to COVID-19. It also allows borrowers to request extensions of 120 days and then an additional 180 days, for a total forbearance period of up to 360 days, again based on the borrower’s affirmation of hardship. After the forbearance period, lenders and servicers are barred from charging late fees, penalties, or other charges on payments due during the forbearance if those payments are made timely under the agreement, and they may not report adverse credit information for those payments.
The bill would affect state banking and mortgage-servicing practices by creating a new, mandatory loss-mitigation option for regulated institutions under the supervision of the Department of Financial Services. It also directs the superintendent of financial services to adopt any necessary rules and regulations, and it takes effect immediately. In practical terms, the measure would expand borrower protections and impose new servicing obligations on state-regulated lenders and servicers dealing with COVID-related mortgage distress.
The overall sentiment reflected in the bill text and caption is borrower-protective and relief-oriented, with the measure framed as a response to pandemic-related income loss and mortgage delinquency. No committee transcript or vote record was provided, so there is no documented floor or committee debate to indicate broader support or opposition. Based on the structure of the bill, the likely policy goal is to provide temporary payment relief and preserve borrowers’ credit standing during and after the forbearance period.
The main points of potential contention are likely to be the mandatory nature of the offer, the limited documentation requirement, and the potential financial and administrative burden on lenders and servicers. Institutions may object to the automatic extension framework, the prohibition on late fees and adverse credit reporting, and the possibility of loan-term extension or arrearage forgiveness. Borrower advocates, by contrast, would likely support the bill’s broad eligibility, streamlined access, and protections against added charges and credit harm.
The bill would add a new state-authorized COVID-19 mortgage forbearance framework applicable to state-regulated banking organizations and mortgage servicers under the Banking Law and the Department of Financial Services’ oversight. It would not amend a specific existing statute by section number in the text provided, but it would effectively create new servicing requirements and borrower rights, including automatic forbearance offers, extension rights, limits on fees and penalties, and restrictions on adverse credit reporting. The superintendent of financial services would be required to implement the act through regulations.
The bill appears generally supportive of distressed borrowers and is framed as emergency relief for mortgage holders affected by the COVID-19 pandemic. Because no committee transcript or vote history is available, there is no recorded legislative debate to show formal support or opposition. The policy direction is clearly consumer-protective, suggesting likely favorable sentiment among housing and borrower-relief advocates.
Likely areas of contention include whether regulated institutions should be required to automatically offer forbearance, whether oral or written self-attestation is sufficient to establish hardship, and whether the bill goes too far in limiting late fees, penalties, and credit reporting. Lenders, servicers, and banking interests may view the measure as imposing operational and financial burdens, while borrower advocates would likely argue that the streamlined process is necessary to reach households and businesses still affected by pandemic-related delinquency. No specific named opponents or supporters are identified in the provided materials.