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NYDFS Emergency Regulation Clarifies Governor Cuomo’s EO on Loan Forbearance

mark.chorazak@cwt.com's picture
Commentary by Mark Chorazak

The New York State Department of Financial Services ("NYDFS") issued an emergency regulation on New York Governor Andrew Cuomo’s Executive Order directing NYDFS-regulated institutions to provide loan forbearance. The executive order - signed on March 21, 2020, and in effect through April 20, 2020 - directs certain institutions to "provide, under reasonable and prudent circumstances, financial relief to consumers in New York experiencing a financial hardship due to the COVID-19 pandemic."

The regulation establishes "standards and procedures that regulated institutions must follow in their review of requests for relief and determinations to provide financial relief to those experiencing financial hardship." Under the regulation, covered institutions are required to "make applications for forbearance of any payment due on a residential mortgage of a property located in New York widely available to any individual who resides in New York and who demonstrates financial hardship as a result of the COVID-19 pandemic."

The regulation explicitly states that it is "not applicable to, and does not affect any mortgage loans made, insured, or securitized by any agency or instrumentality of the United States, any Government Sponsored Enterprise, or a Federal Home Loan Bank, or the rights and obligations of any lender, issuer, servicer or trustee of such obligations, including servicers for the Government National Mortgage Association."

Further, the regulation requires New York regulated banking organizations to provide financial relief to individuals demonstrating financial hardship by eliminating (i) fees charged for the use of ATMs that are owned or operated by a regulated banking organization, (ii) any overdraft fees, and (iii) any credit card late payment fees.

Clients may email Scott Cammarn or Mark Chorazak with questions.

Commentary

The regulation suggests that the loan forbearance is particularly directed at consumer residential loans made to New York residents and, on its face, should not apply to New York licensed branches of foreign banks. While the regulation implements the Executive Order, it does not expressly limit the Executive Order’s scope. Accordingly, lending institutions must continue to reach an interpretation as to how the Executive Order and the implementing regulation apply.

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