In response to New York Governor Cuomo’s Executive Order 202.9 issued on March 21, the New York Department of Financial Services (DFS) has adopted new regulations to provide emergency relief to individuals who can demonstrate financial hardship as a result of COVID-19.  The new regulations were promulgated as Part 119 to Title 3 of the New York Official Compilation of Codes, Rules and Regulations.

In his Executive Order, Governor Cuomo temporarily suspended or modified, for the period from the date of the Executive Order through April 20, 2020, Section 39 of the state’s Banking Law “to provide that it shall be deemed an unsafe and unsound business practice if, in response to the COVID-19 pandemic, any bank which is subject to the jurisdiction of the Department shall not grant a forbearance to any person or business who has a financial hardship as a result of the COVID-19 pandemic for a period of ninety days.”  The order:

  • Directed the DFS Superintendent to “ensure under reasonable and prudent circumstances that any licensed or regulated entities provide to any consumer in the State of New York an opportunity for a forbearance of payments for a mortgage for any person or entity facing a financial hardship due to the COVID-19 pandemic and …  promulgate emergency regulations to require that the application for such forbearance be made widely available for consumers, and such application shall be granted in all reasonable and prudent circumstances solely for the period of such emergency.”
  • Authorized the Superintendent “to promulgate emergency regulations to direct that, solely for the period of this emergency, fees for the use of automated teller machines (ATMs), overdraft fees and credit card late fees, may be restricted or modified in accordance with the Superintendent’s regulation of licensed or regulated entities taking into account the financial impact on the New York consumer, the safety and soundness of the licensed or regulated entity, and any applicable federal requirements.”

New Part 119 applies to regulated institutions, which are defined as “any New York regulated banking organization as defined under New York Banking Law and any New York regulated mortgage servicer entity subject to the authority of the Department.”  They include the following requirements that apply for the duration of the Executive Order

  • New York regulated institutions must make forbearance applications for any payment due on a residential mortgage of property located in New York “widely available to any individual who resides in New York and who demonstrates financial hardship” as a result of the pandemic and, subject to safety and soundness requirements, must grant such forbearance for a 90-day period.  The requirement does not apply to any mortgage loans “made, insured, or securitized by any agency or instrumentality of the United States, any Government Sponsored Enterprise, or a Federal Home Loan Bank, or the rights and obligations of any lender, issuer, servicer or trustee of such obligations, including servicers for the Government National Mortgage Association.”  (See our alert for more information on the forbearance requirements.)
  • New York regulated banking institutions, for any individual who can demonstrate financial hardship as a result of the pandemic and subject to safety and soundness requirements, must eliminate fees for the use of ATMs owned or operated by the regulated banking institution, eliminate any overdraft fees, and eliminate any credit card late fees.

Regulated institutions are also encouraged to take “additional reasonable and prudent actions” to assist individuals demonstrating financial hardship as a result of the pandemic “in any manner they deem appropriate.”