Greenspoon Marder LLP Financial Services Client Alert: State of New York – Updated Procedures for New York Foreclosures Following Passage of the Covid-19 Emergency Eviction and Foreclosure Prevention Act

On December 31, 2020, Administrative Order 341/20 was issued by the Chief Administrative Judge, providing further changes to procedures on foreclosures involving residential real property, to reflect new requirements outlined in the Covid-19 Emergency Eviction and Foreclosure Prevention Act (“the Act”).

In short, the most significant changes described in the Order include an immediate stay of pending evictions and residential foreclosure actions, with the exception of vacant and abandoned properties, for sixty (60) days. In addition, the Order provides for a further stay through May 1, 2021 for matters where a mortgagor/owner returns a declaration attesting to hardship related to Covid-19. The Act outlines specific types of Covid-19 related hardships, which the owner/mortgagor must attest to in the declaration, that must be returned to the foreclosing party, the foreclosing party’s agent, or the Court.

Submission of the declaration then creates a rebuttable presumption that the mortgagor is experiencing a Covid-19 related hardship.

New York Foreclosures will now be subject to the following requirements outlined in the Act:

• The Act applies to mortgagors/owners who are a natural person that resides in the property subject to the foreclosure.
• As a result of the stay imposed by the submission of a hardship declaration, the Act provides for an extension of the statute of limitations, stating that “any specific time limit for the commencement of an action to foreclose a mortgage shall be tolled until May 1, 2021.”
• In order to proceed with a new action, following any applicable stay under the Act, the foreclosing party must now file an affidavit of service demonstrating that the mortgagor/owner was served with a copy of the hardship declaration.

In order to reflect the requirements of the Covid-19 Emergency Eviction and Foreclosure Prevention Act, Administrative Order 341/20 implemented the following changes:

1. Residential Foreclosure Proceedings are stayed for sixty (60) days for any action to foreclose a mortgage relating to residential real property as defined in the Act, pending on December 28, 2020, and any action commenced before January 27, 2021.
2. In cases where the mortgagor/owner delivers a hardship declaration to the foreclosing party, or an agent of the foreclosing party, or to the Court, the action is stayed until at least May 1, 2021.
3. In actions where a judgment of foreclosure and sale has been issued on or before December 28, 2020 but has not yet been executed, execution of the judgment shall be stayed at least until the court has held a status conference with the parties. However, if the mortgagor submits a hardship declaration prior to the execution of the judgment, the Action shall be stayed until at least May 1, 2021.

As both the Act and the corresponding Administrative Order have only recently passed, our office will be closely monitoring to determine how the courts are interpreting its various provisions and whether conferences or other administrative matters will continue during any applicable stay. If you have any questions or concerns regarding these recent developments, please feel free to reach out to our office.