New York State has extended its moratorium on residential foreclosures, giving people facing foreclosure until May 1 before they face the possibility of being removed from their homes. This relief came just as the residential moratorium was set to expire, which would have resulted in a wave of foreclosures during the middle of winter. However, the pressures caused by COVID-19 remain, and tenant advocates fear this is only delaying an increasingly inevitable crisis.
Explaining the Residential Foreclosure Moratorium
The moratorium on residential foreclosures is a measure that makes it illegal for landlords to foreclose on homeowners for failing to pay their mortgages due to the coronavirus pandemic. In effect, it means that someone who has not been able to pay their mortgage due to being out of work or being furloughed cannot be kicked out of their home until the moratorium expires on May 1. However, the moratorium does not protect people who are foreclosed on for reasons other than failure to pay their mortgage, such as people who violate the terms of their loan agreement.
The moratorium was first put into place in March 2020 when it became clear that many businesses were going to be forced to close or limit their services due to the COVID-19 quarantine. The moratorium was intended to ensure people would be able to stay in their homes while the pandemic was ongoing, instead of potentially forcing people into crowded homeless shelters while a dangerous infectious disease was going around. That way, people could at least comply with stay-at-home orders, even if they were unable to pay their mortgages.
Mixed Opinions on the Foreclosure Moratorium
People’s opinions on the foreclosure moratorium are mixed, to say the least. On the one hand, a moratorium on foreclosures at least means people will be able to stay in their homes, and will not be forced into the streets in January, during one of the coldest months of the year. On the other hand, the moratorium does little to address the severe financial strain caused by the coronavirus pandemic, which is still being felt by many homeowners across New York. Many homeowners have hoped for more substantial financial relief from the government, but thus far, no such relief is forthcoming.
Mortgage lenders and holders are not much happier about the moratorium on foreclosures, either. While most mortgage holders would much rather be paid by their mortgagees than foreclose on their homes, right now they are simply not being paid anything for the mortgages they hold. As it is, they are stuck with mortgages they cannot collect on, and which they cannot even foreclose on to try and make some of their money back. Without the ability to remove delinquent mortgagees from their mortgaged property, they are stuck waiting until May to begin the process of simply trying to recoup their losses.
At David J. Lorber & Associates, PLLC, we assist clients throughout New York who are at risk of losing their homes to foreclosure. We will explain your options and guide you in making the best decision for your circumstances. Call us at (631) 750-0900 or contact us online to schedule your Free consultation at our Setauket office.