Consumer Alert:
AG James Calls on Mortgage Servicers to Provide Substantial COVID-19 Relief for Homeowners

AG James: Mortgage Servicers Must Ease the Burden on New York
Homeowners to Prevent an Even Greater Economic Crisis

NEW YORK – New York Attorney General Letitia James sent letters to 35 of New York’s major mortgage servicers, calling on them to provide immediate and long-term relief to all New York homeowners struggling to pay mortgages amidst the coronavirus disease 2019 (COVID-19) pandemic. The letters emphasize the responsibility of mortgage servicers to do more to ensure that COVID-19 does not cause unnecessary foreclosures or increase homelessness in New York State.

“This pandemic is not only wreaking havoc on our health, but on the pocketbooks of millions of Americans,” said Attorney General James. “If we plan to rebuild our economy, we must ensure that homeowners are granted the relief they need. We cannot afford to repeat the costly mistakes of the 2008 foreclosure crisis, which is why I am calling on mortgage service providers to take steps to help homeowners impacted by this crisis.”

Mortgage servicers have taken some key first steps, both voluntarily and in response to government action, to help homeowners adversely impacted by COVID-19. However, Attorney General James’ letters outline additional steps mortgage servicers must take to avoid a foreclosure crisis when the New York State-mandated mortgage forbearance agreements (which permit homeowners to stop making payments for an agreed amount of time) are over. 

The Attorney General is asking the following of mortgage servicers:

  • Automatically waive late fees and place homeowners in a three-month forbearance as soon as a payment is missed, whether or not this action requested by the homeowner;    
  • Permit homeowners to renew their 90-day forbearance agreements for up to one year, and provide these extensions based on a verbal or written affirmation that a homeowner’s hardship is COVID-19 related without requiring additional documentation;   
  • Provide a complete and accurate description of post-forbearance options when placing homeowners into a forbearance plan or responding to homeowners’ requests;
  • Ensure adequate staffing and resources to process homeowners’ questions and requests; and
  • Develop and be prepared to implement long-term solutions that ensure affected homeowners can easily resume payments at the end of these forbearance periods.            

With investors like Fannie Mae and Freddie Mac already requiring servicers to find an affordable solution at the end of the forbearance period, including by placing arrears at the end of the mortgage as additional monthly payments, Attorney General James is calling for all mortgage servicers to provide similar long-term relief to all homeowners in order to stave off a future foreclosure crisis.

Attorney General James is working to ensure that the mortgage industry and government work together to provide effective long-term relief for homeowners affected by the COVID-19 pandemic. The Attorney General will also be working to connect New Yorkers with information and available services to access loan modifications through the Federal Housing Finance Agency, U.S. Department of Housing and Urban Development, and other mortgage relief programs.

This matter was handled by Assistant Attorneys General Mark Ladov and Elizabeth M. Lynch under the Supervision of Consumer Frauds Bureau Chief Jane M. Azia. The Consumer Frauds and Protection Bureau is a part of the Division of Economic Justice, which is overseen by Chief Deputy Attorney General for Economic Justice Christopher D’Angelo and First Deputy Attorney General Jennifer Levy. Chief Deputy Attorney General for Social Justice Meghan Faux also provided additional support in this matter.