NY Department of Financial Services Adopts Emergency Regulations for COVID-19 Relief Programs

On March 24, 2020, the New York Department of Financial Services (the Department) adopted emergency regulations, which went into effect immediately.  The regulations were adopted pursuant to Governor Cuomo’s Executive Order No. 202.9, issued March 21, 2020, directing the Department to provide financial relief to New Yorkers under financial hardship due to the crisis.  The emergency regulation is in effect and enforceable for up to 90 days from March 24, 2020, the date of filing.

The regulations implement two COVID-19 relief programs and apply to any New York regulated banking organization and any New York regulated mortgage servicer entity subject to the authority of the Department. Notably, neither of the relief programs are required of any commercial mortgages.

First, the regulations require New York regulated institutions to make widely available applications for forbearance of any payment due on a residential mortgage of a New York property to any resident of New York who demonstrates financial hardship resulting from the COVID-19 pandemic.  Additionally, the regulated institutions must grant this forbearance for 90 days, subject to the safety and soundness requirements of the institution.  However, this requirement does not apply to: (i) any mortgage loans made, insured, or securitized by any agency or instrumentality of the U.S.; (ii) any Government Sponsored Enterprise; (iii) a Federal Home Loan Bank; or (iv) the rights and obligations of any lender, issuer, servicer, or trustee of such obligations, including, for example, servicers for the Government National Mortgage Association.

Second, the regulations require New York regulated banking organizations to provide financial relief to any individual who demonstrates financial hardship resulting from the COVID-19 pandemic, subject to the safety and soundness requirements of the regulated banking organization.  The financial relief must include, at a minimum, but is not limited to: (i) eliminating fees charged for the use of ATMs owned or operated by the regulated banking organization; (ii) eliminating overdraft fees; and (iii) eliminating any credit card payment fees.

The regulations also impose requirements on the implementation of COVID-19 relief programs.  Some of the key requirements include:

• Each institution must broadly communicate (e.g., email, online publication, mass mail) to their customers how to apply for COVID-19 relief and include the relevant contact information.
• When feasible and warranted, each institution must provide written communication to the COVID-19 relief applicants, including whether the application was granted or denied.  If the application was granted, the communication must describe additional steps the applicant must take, and if the application was denied, the communication must provide a reason and a statement that the applicant may file a complaint with the Department if the applicant believes the application was wrongly denied.
• Each institution must process and respond to COVID-19 relief requests no later than 10 business days after the institution receives all of the information reasonably required to process the application.
• Each institution must have procedures for expediting a COVID-19 relief application for any individual who makes such a request and reasonably establishes exigent circumstances.
• Each institution must maintain copies of all files related to the implementation of the regulations for at 7 years.  The files must also be made available to the Department at the Department’s next examination of the institution.