Skip to Content

Translate | Disclaimer

Press Release

For Immediate Release: March 06, 2013

State of New York | Executive Chamber
Andrew M. Cuomo | Governor

GOVERNOR CUOMO ANNOUNCES REVIEW OF BANKS’ POST SANDY MORTGAGE PRACTICES

Action Follows Complaints that After Allowing Homeowners to Skip Mortgage Payments Due to Hardship from Storm Sandy, Some Banks are Requiring Immediate Full Repayment

Governor Andrew M. Cuomo today announced that the Department of Financial Services is initiating a review of practices by banks and mortgage servicers to determine whether homeowners hit hard by Superstorm Sandy and allowed to forgo mortgage payments are now being unfairly burdened by being required to make up all past payments in immediate lump sum repayments. The Department is asking banks to allow more time for homeowners to make back payments and checking if banks have delivered on their promise not to use late payments to start foreclosure proceedings or hurt homeowners’ credit ratings.

The Department obtained agreements in November and December from major banks and servicers promising to offer forbearance on mortgage payments to certain homeowners struggling to make their payments as a result of Superstorm Sandy. The banks agreed to let these homeowners go without making payments for three to six months and without requiring lump sum balloon payments at the end of the forbearance period. The banks and servicers also agreed that homeowners’ credit ratings would not be negatively impacted.

Now that the initial three-month forbearance periods are expiring, the Department is receiving reports from some homeowners saying they are being asked for full lump sum payments. In addition, some homeowners say they are receiving pre-foreclosure notices based on missed payments during the forbearance period and are being reported to credit agencies for missed payments.

“Many New Yorkers were hit hard by Superstorm Sandy and couldn't pay their bills due to lost income, home repair expenses, or relocation costs, so banks offered relief to homeowners in the form of forbearance on mortgage payments,” Governor Cuomo said. ”It would be illogical to offer that relief and now expect lump sum payments from financially-strapped homeowners. A homeowner who could come up with three months in mortgage payments all at once probably didn't need forbearance in the first place. Everyone else needs more time to repay.”

Benjamin M. Lawsky, Superintendent of Financial Services, said, “We are investigating to determine if the complaints we have received are isolated incidents or part of a disturbing trend. Banks can’t just say they will help homeowners hurt by Sandy, they must deliver.”

In letters to the institutions, the Superintendent asked for information on the number of homeowners who asked for and received forbearance, lenders’ forbearance-related policies and practices, how the institutions implemented forbearances internally, and whether they would consider offering forgiveness of principal and interest payments for up to 12 months post-storm and under what circumstances.

In its survey, the Department is asking banks and mortgage servicers to provide information to the Department by March 12. The specific information the Department is seeking includes:

· How lenders changed their internal processes so that homeowners receiving forbearance would not receive erroneous customer statements or pre-foreclosure notices, and would not be reported as being late on payments to credit agencies.
· Whether the institutions provided a written description of forbearance terms to borrowers.
· Foreclosure and pre-foreclosure activity taken or suspended by the institutions during the forbearance period.

Homeowners participating in forbearance programs, as well as all other homeowners with banking or insurance questions related to the storm, are urged to visit a Disaster Assistance Center staffed by the Department or call the Department’s storm hotline. Assistance centers are listed on the Department's website, www.dfs.ny.gov. The storm hotline, (800) 339-1759, is staffed from 8 a.m. to 8 p.m., Monday through Friday, and from 10 a.m. to 5 p.m., Saturday and Sunday.

###

Additional news available at www.governor.ny.gov
New York State | Executive Chamber | press.office@exec.ny.gov | 518.474.8418

About DFS

Contact DFS

Reports & Publications

Licensing

Connect With DFS

DFS Facebook page

Follow NYDFS on Twitter

AccessibilityContact UsDisclaimerPrivacy PolicySite MapPDF Reader Software