In May, Governor Cuomo issued an executive order that prevented any new foreclosures until June 20th. Many in the real estate and legal industries were predicting an influx of foreclosures in the New York court system last week. However, after action taken by New York Chief Administrative Judge Lawrence Marks, foreclosure proceedings have been halted once again. [1]
Under Cuomo’s guidance, foreclosures would have been allowed to proceed beginning on June 22nd. The moratorium would only stay in place for those who were unable to make their mortgage payments due to unemployment or financial hardship directly related to the pandemic and resulting stay-at-home orders. This limited moratorium is scheduled to expire on August 20th. It is important to note that a moratorium on evictions and foreclosures does not freeze rent and mortgage payments. The missed payments accumulate and will be owed at the end of the moratorium. [2]
In addition to ending new foreclosure proceedings (excluding empty or abandoned properties), Judge Marks encouraged lenders to drop pending cases. Such advice seems to suggest that the stay on foreclosures may last a while longer.
Lenders, attorneys, and residential and commercial property owners alike have been left confused and uncertain in the face of mixed guidance from the courts and the Governor’s office. Parties on both sides of foreclosure proceedings are seeking clear and consistent information from the executive and judiciary branches regarding the issue. It is one of the few areas of uncertainty that can be alleviated for lenders and property owners alike during the pandemic.
The issue cannot be avoided forever. The uncertainty concerning foreclosures extends to the realm of evictions, where the Office of Court Administration has issued a similar pause in new eviction proceedings. The fate of residential and commercial properties and their occupants is one of the most pressing effects of the public health and resulting economic crisis.
[1] Kromrei, J. (June 2020) New York Courts Put the Kibosh on Foreclosures from The Real Deal https://therealdeal.com/2020/06/25/new-york-courts-put-the-kibosh-on-foreclosures/?utm_medium=social&utm_source=email&utm_campaign=single_content_share Accessed June 29 2020
[2] Calistri, A. and Doherty, T. (May 2020) UPDATED: New York State Stays Evictions and Foreclosures Due to the COVID-19 Pandemic from JD Supra https://www.jdsupra.com/legalnews/updated-new-york-state-stays-evictions-63093/#:~:text=Recent%20Executive%20Orders%20by%20New,until%20further%20order%20of%20the Accessed June 29 2020