If you are suffering a financial hardship and do not have enough money to make your mortgage payment, you could be eligible for a mortgage forbearance. A forbearance is a period of time set by your mortgage servicer, where your monthly payments are temporarily suspended or reduced. This option allows you to deal with a short-term financial problem and get you back on your feet with the hope of bringing your mortgage current once the forbearance is over. For most borrowers, there are no additional fees, penalties, or additional interest (beyond your scheduled amounts) charged to your account during this forbearance period.
A mortgage forbearance can be a lifeline for some borrowers facing hard times, but there can be a concern of whether it’s a good idea. At the end of the day, whether to enter into a forbearance agreement is a personal choice. If your household income allows you to keep making payments, you should, to avoid any additional interest. However, if a forbearance is your only option, make sure to contact your lender and make sure they provide you with the forbearance agreement in writing.
Unless you are under a COVID-19 related mortgage forbearance, even if you have entered into a forbearance agreement with your bank, the missed payments are technically delinquencies and your mortgage lender has the option to report the delinquency to your credit bureaus, but they are not required to do so. Therefore, it is important to ask your lender about their policy before accepting a forbearance agreement so you know what to expect.
In regard to federally backed loans, pursuant to the Coronavirus Aid, Relief and Economic Security (CARES) Act, if you were current on your mortgage when the CARES Act forbearance was granted, your mortgage servicer is required to report your account as “current” during the forbearance period to the Credit Reporting Agencies and therefore the forbearance will have no negative impact to your credit score. However, if you were delinquent on your mortgage prior to requesting the CARES Act forbearance, your forbearance should still be granted but your mortgage servicer is required to maintain the “delinquent” status reported to the Credit Reporting Agencies during the forbearance period. If you are able to bring your mortgage current during the forbearance period, then your mortgage servicer is required to report the status as “current”.
Contact your mortgage servicer to see if your servicer offers forbearances. You will most likely have to provide a brief explanation of your financial hardship and how many months you anticipate your hardship lasting. It is also possible that you will have to provide additional documentation to substantiate your hardship.
If your forbearance is approved, you should receive written notification from your servicer of its approval and the term of the forbearance period.
Generally most mortgage servicers will offer forbearances for 3 month periods of time. However, if you are still struggling financially, most servicers will allow further extensions of your forbearance agreement.
If you qualify for a mortgage forbearance under the CARES Act, you are eligible for a forbearance for up to a year of time, in 3 or 6-month increments. The deadline for requesting a CARES Act forbearance is June 30, 2021.
Forbearance does not equal forgiveness. Once the forbearance period is over, your forbearance payments are not erased or forgiven. Ultimately, it is up to your own mortgage servicer to determine when these payments will be due. Some of the options would include:
Repayment plan: If you can afford to pay more than your regular mortgage payment, then a portion of the amount you owe will be added to your regular monthly mortgage payment.
Deferral or partial claim: If you can resume your regular payments but cannot afford to increase that payment, your servicer could add the missed payments to the end of your loan as a balloon payment or put the missing payments as a subordinate lien repayable only when you refinance, sell or terminate your mortgage.
Loan Modification: If you can no longer afford your regular monthly mortgage payment, applying for a loan modification would be the best step forward. This would allow the bank to review your current financial status to determine if the payment can be lowered, interest rate can be changed and if the loan maturity date can be extended.
Reinstatement: If you want to pay back all of your missed payments at once, at the end of the forbearance period you can make a lump sum payment to your servicer.
Whatever situation you might be facing or if you need help to see if your mortgage is eligible for a forbearance, it is important that you speak to an attorney who has experience in negotiating the best option for you. CGW has been helping borrowers navigate through all stages of ownership for over 40 years. Please give us a call to schedule a free consultation.
On May 4, 2021, Governor Cuomo extended the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020. This extension would extend the moratorium on residential and commercial evictions, as well as residential and commercial foreclosure proceedings until August 31, 2021. Governor Cuomo stated, “As we approach the light at the end of the COVID-19 tunnel, it is critical that we continue to protect both New York’s tenants and business owners who have suffered tremendous hardship throughout this entire pandemic” and “Extending this legislation will help to ensure that vulnerable New Yorkers and business owners who are facing evictions through no fault of their own are able to keep their homes and businesses as we continue on the road to recovery and begin to build back our economy better than it was before.”
For tenants who have endured a COVID related hardship, this legislation places a moratorium on residential evictions until August 31, 2021. Tenants must submit a hardship declaration to either the landlord or Court to prevent the eviction. Landlords can proceed with evictions however for tenants who do not submit a hardship declaration or if the tenant is causing nuisance, safety or health hazards for other tenants.
For commercial tenants who have endured a COVID related hardship, this legislation places a moratorium on commercial evictions until August 31, 2021. This legislation applies to small business with under 50 employees that demonstrate a COVID related hardship. Commercial tenants must submit a hardship declaration to either the landlord or Court to prevent the eviction.
For borrowers in default on their mortgage payments, this legislation places a moratorium on foreclosure proceedings until August 31, 2021. Borrowers who own 10 or fewer residential dwellings can file a hardship declaration with their mortgage lender or the court to prevent or stay their foreclosure.
The legislation places a moratorium on commercial foreclosure proceedings until August 31, 2021.
The legislation prevents local governments from engaging in tax lien sales or a tax foreclosure until at least August 31, 2021.
If you are late on rental payments or your mortgage payments, now is the time to talk to an attorney. We can help you navigate through this difficult time and come up with solutions to best fit your needs. Please give us a call at 914.472.6202.
Our very own Wendy Marie Weathers is being honored by the Mayors of the City of White Plains and City of Yonkers for her accomplishments and tenure as the President of the Westchester County Bar Association. On May, 1, 2021, the City of White Plains and on May 5, 2021 the City of Yonkers have officially proclaimed each day to be known as “Wendy Marie Weathers’ Day”. We are so excited to be honoring her and her many accomplishments!
For more information on Wendy’s accomplishments during her presidential term, please read her farewell message in the Westchester magazine.
On March 9, 2021, Governor Cuomo signed the COVID-19 Emergency Protect Our Small Business Act of 2021 establishing eviction and foreclosure protections for small businesses who have suffered COVID related hardships, which expands on commercial eviction and foreclosure protections already in place. The Act also will help protect small businesses who are delinquent on taxes.
“New York has gone to extraordinary lengths to protect and strengthen our economy throughout the war on COVID, and it is critical that we continue to provide support as we ramp up our vaccination efforts across the state,” Governor Cuomo said. “By signing the COVID-19 Emergency Protect Our Small Business Act of 2021 we are strengthening the backbone of our economy – our small businesses that have faced unprecedented hardships – and this legislation will be instrumental in helping build New York’s economy back better than ever before.”
The new legislation will apply to small businesses with under 50 employees, as well as small businesses with 10 or less units. It will allow these small business tenants, as well as commercial mortgagors to declare to either a landlord or mortgagee that they have experienced a financial hardship and thus qualify for protections under this Act.
If you are a commercial tenant or facing a foreclosure on your small business due to delinquent mortgage payments or taxes, please call our office for more information, 914-472-6202. We are here to help you through this difficult time.
As millions of Americans face continued hardship from the COVID-19 pandemic, President Biden has extended the foreclosure moratorium for federally backed mortgages from March 31, 2021 to June 30, 2021. He has also extended the mortgage payment forbearance enrollment window until June 30, 2021 for borrowers who wish to request a forbearance. This is the second time President Biden has extended the ban, after having signed an executive order on his first day in office pushing the original January 31, 2021 deadline to the end of March.
There are 11 million federally backed government mortgages nationwide, of which approximately 2.7 million homeowners are currently in a COVID forbearance.
If you are in foreclosure or have defaulted on your mortgage payments, now is the time to reach out to an attorney to help create a strategy moving forward. Contact Clair Gjertsen & Weathers PLLC at [email protected] for more information. We look forward to working with you.
Hudson City Sav. Bank v DePasquale, 189 AD3d 1558 (2d Dept. 2020)
On December 30, 2020, the Supreme Court of the State of New York Appellate Division, Second Department entered a Decision and Order reversing judgment of foreclosure and sale and remanding the matter back to the lower court for the purposes of having a hearing as the referee’s findings were not substantially supported by records that clearly described the amount owed.
This Decision allows the Borrowers the opportunity to contest the amount allegedly owed to the bank and potentially reduce said figure. Furthermore, the Decision permits the Borrowers to remain in the home that they have lived in for the last several decades without fear of an upcoming foreclosure sale.
The Firm’s team that represented the Borrowers was led by Brett M. Milchman.