During this difficult time, the federal government as well as the state government have enacted measures to assist homeowners who are having difficulty making their mortgage payments. However, the relief that has been offered is temporary and merely acts as a band-aid that may place the homeowner in a worse situation down the road. A moratorium has been placed on foreclosures by the federal government and the New York state government. The federal CARES Act provides homeowners with federally backed mortgages relief from foreclosure for a period of sixty days from March 18, 2020. The CARES Act also allows those with federally back mortgages to request forbearance for up to 180 days and after that, an extension may be requested for up to another 180 days. A forbearance is an agreement the borrower enters into with the mortgage lender that allows the borrower to either suspend making regular monthly mortgage payments or reduces the payment for a short period of time. During this time, the mortgage lender agrees to forbear its right to foreclose on the home. At the state level, New York Governor Cuomo issued an Order that stayed the enforcement of evictions and foreclosures through June 20, 2020. The Order further extends the moratorium on evictions and foreclosures another sixty days if nonpayment is by someone who is eligible for unemployment benefits or insurance or is facing financial hardship due to the Covid-19 pandemic. I have found that many are confused as to what this moratorium means. Although foreclosures are stayed from taking place during the moratorium, homeowners are not relieved of their obligation to make their regular monthly mortgage payment that becomes due during the moratorium. So, if you are experiencing financial difficulty because of a loss of income during the crisis and do not make your mortgage payments, when the moratorium expires, you will be responsible to cure the payments that you missed. If you do not cure those arrears, you are at risk of facing a foreclosure action after the expiration of the foreclosure moratorium. Many homeowners who contacted their mortgage lenders were provided with three to six months suspension in which they did not have to make their mortgage payments. However, they were surprised to learn that after that time expired, they had to become fully current with all the payments that were due. How will they be able to pay back three or four months of missed mortgage payments even if the homeowner secures employment during the reopening of the economy. With monthly mortgage payments being so expensive on Long Island, that task is daunting and may not be possible. Apparently, many have been advised by the mortgage lender to not worry about it right now. Well, worry about it. The forbearance terms are simply a band-aid, offering the homeowner temporary relief and probably creating a bigger problem in the upcoming future. Therefore, if possible, before entering into a forbearance agreement, contact an attorney who is knowledgeable in this area and discuss the options. If you have entered into a forbearance agreement and you can not make the lump sum payment that is due, I urge you to seek the advice of an attorney with experience in this area to plan your next steps. Forbearance may only serve as a band-aid offering temporary relief but exacerbating the problem down the road.
#covid19 relief #mortgage payments #bankruptcy
Kimberly Berson is an attorney that has been practicing for over 25 years. Her practice is focused on bankruptcy law and related litigation. She served as an assistant adjunct professor of legal studies and an instructor of paralegal courses. She provides debt relief for individuals and businesses. Please visit her website at kbbankruptcylaw.com. You may contact her at 516-847-5122 or kbersonlaw@gmail.com
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