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Mortgage holders catch break as Cuomo tells banks to back off

Governor Andrew Cuomo announced a break for New Yorkers with mortgages, through April 20.

Under executive order, the Superintendent of the Department of Financial Services has told banks to work with residential mortgage holders struggling to pay their bills as a result of unemployment or pay cuts as a result of the corona virus crisis.

Applications are to be made “widely available” to consumers and “such application shall be granted in all reasonable and prudent circumstances solely for the period of such emergency.”

The governor’s office said that it would be “deemed an unsafe and unsound business practice… if a bank subject to 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 90 days.”

A national forbearance plan for borrowers with loans backed by Fannie Mae, Freddie Mac, the Federal Housing Administration was passed by the Senate and House last week and signed into law by President Trump.

However, banking groups are already voicing concern about how they will be able to communicate with distressed customers Under the Telephone Consumer Protection Act (TCPA) that prohibits companies from placing autodialed, prerecorded, or artificial voice calls and text messages unless the recipient grants permission.

The American Bankers Association and six other financial trade groups filed a petition requesting that the Federal Communications Commission issue an ruling or waiver confirming that financial institutions’ COVID-19-related calls are exempt from the TCPA.

Treasury Secretary Steven Mnuchin

“If financial institutions cannot freely communicate with consumers, it will thwart the directives issued by the [CFPB] and the federal banking agencies encouraging financial institutions to ‘work constructively’ with consumers impacted by COVID-19,” the groups wrote.

“Constructive engagement with consumers is best achieved by proactive communication via automated phone call or text message by the institution.”

In the fourth quarter of 2019, only 1.07 percent of mortgages were at least 90 days delinquent, more than eight times low, according to data from the Federal Reserve Bank of New York.

The Mortgage Bankers Association has estimated that if about a quarter of all borrowers requests and are granted loan forbearance for six months or longer, demands on servicers could exceed $75 billion, which could bankrupt the mortgage finance system.

The MBA has written to Federal Reserve chairman Jerome Powell and Treasury Secretary Steven Mnuchin, asking for cash to support mortgage servicers.

On March 20, Governor Cuomo signed the New York State on PAUSE executive order which included a 90-day moratorium on any residential or commercial evictions

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