Says mortgage servicers must ease burden on New York homeowners to prevent an even greater economic crisis
New York Attorney General Letitia James sent letters to 35 of New York’s major mortgage servicers, calling on them to provide immediate and long-term relief to all New York homeowners struggling to pay mortgages amidst the coronavirus disease 2019 (COVID-19) pandemic. The letters emphasize the responsibility of mortgage servicers to do more to ensure that COVID-19 does not cause unnecessary foreclosures or increase homelessness in New York.
“This pandemic is not only wreaking havoc on our health, but on the pocketbooks of millions of Americans,” James said. “If we plan to rebuild our economy, we must ensure that homeowners are granted the relief they need. We cannot afford to repeat the costly mistakes of the 2008 foreclosure crisis, which is why I am calling on mortgage service providers to take steps to help homeowners impacted by this crisis.”
Mortgage servicers have taken some key first steps, both voluntarily and in response to government action, to help homeowners adversely impacted by COVID-19. However, James’ letters outline additional steps mortgage servicers must take to avoid a foreclosure crisis when the New York state-mandated mortgage forbearance agreements (which permit homeowners to stop making payments for an agreed amount of time) are over.
The attorney general is asking the following of mortgage servicers:
•Automatically waive late fees and place homeowners in a three-month forbearance as soon as a payment is missed, whether or not this action requested by the homeowner;
•Permit homeowners to renew their 90-day forbearance agreements for up to one year, and provide these extensions based on a verbal or written affirmation that a homeowner’s hardship is COVID-19 related without requiring additional documentation;
•Provide a complete and accurate description of post-forbearance options when placing homeowners into a forbearance plan or responding to homeowners’ requests;
•Ensure adequate staffing and resources to process homeowners’ questions and requests; and
•Develop and be prepared to implement long-term solutions that ensure affected homeowners can easily resume payments at the end of these forbearance periods.
With investors such as Fannie Mae and Freddie Mac already requiring servicers to find an affordable solution at the end of the forbearance period, including by placing arrears at the end of the mortgage as additional monthly payments, James is calling for all mortgage servicers to provide similar long-term relief to all homeowners in order to stave off a future foreclosure crisis.
James is working to ensure the mortgage industry and government work together to provide effective long-term relief for homeowners affected by the COVID-19 pandemic. The AG will also be working to connect New Yorkers with information and available services to access loan modifications through the Federal Housing Finance Agency, U.S. Department of Housing and Urban Development, and other mortgage relief programs.