By Megan C. Vogt, Esq.

Schiller, Knapp, Lefkowitz & Hertzel, LLP

USFN Member (NJ, NY, PA, VT)

The mortgage and foreclosure industry in New York is no stranger to heavy regulation, moratoria, and administrative orders from the courts.  In response to the COVID-19 pandemic, the chief administrative judge in New York did not delay in instituting new protections for borrowers, including stays of foreclosure proceedings and additional conferencing requirements, which became known collectively as “COVID conferences.”  These administrative orders were issued frequently, either adding on or overriding and overlapping previous orders, and it certainly tested the memories of attorneys and court personnel alike in keeping them all straight.

Attorneys, lenders, and servicers doing business in New York were therefore not surprised (OK, maybe some of us were a little surprised) when the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 and Protect our Small Businesses Act of 2021 were signed into law by then-New York State Governor Andrew Cuomo. These acts were extended multiple times, with the latest extension and replacement by Chapter 417 of the New York Laws of 2021 (NY State Senate Bill S50001).  The acts, which were supported and clarified by Administrative Orders 341/20 and later 262/21, stayed foreclosure actions for a set period of time and set forth the Hardship Declaration requirements, which could stay the foreclosure action even longer if an owner/mortgagor certified (without proof) that they were experiencing a hardship due to COVID-19.  The requirements of these acts could be avoided with specific carve outs, mainly for vacant and abandoned properties.

After a long 383 days, Chapter 417 of the New York Laws of 2021 and Administrative Order 262/21 expired as of January 15, 2022.  Hardship Declarations are no longer required to be mailed to owners/mortgagors, and the stays resulting from executed Hardship Declarations were lifted.  The chief administrative judge of New York has issued a new Administrative Order (AO 35/22) making it unequivocally clear that all residential and commercial mortgage foreclosure matters may resume in normal course.  Additionally, “COVID conferences” are no longer required, as the prior administrative orders that required these conferences have been superseded by Administrative Order 35/22, which permits foreclosure actions to proceed without setting forth any further conference requirement.

While the expiration of the law comes as good news for lenders, servicers, and attorneys, there will certainly be new challenges to overcome on the horizon. Some judges may be reluctant to let go of the “COVID conferences” and continue to hold said conferences despite a low possibility of resolution.  Compliance with auction protocols and requirements that vary from county to county remain.  How the courts will handle the flood of new cases in addition to clearing out the backlog of cases that have been pending for years remains to be seen.  Additionally, there remains the possibility of the issuance of new rules and regulations that affect foreclosure actions as the world continues its struggle against the ever-changing virus and infection surges.

 For now, all that can be done is to take it one day at a time, remain current on any changes in the law, and to move forward with cases that can be moved.

Copyright @2022

USFN e-Update - February 2022