Tenants Can’t Pay Rent? No Need for Foreclosure

Are you a New York landlord?
Have your tenants been unable to make their rent as a result of the coronavirus crisis, and now the eviction is suspended for 90 days you can’t do anything about it? Are you having trouble making your mortgage payments?

Being a landlord in NYC is never easy. But don’t panic, for there are a variety of mortgage programs available to prevent foreclosure.

· Reinstatement: If paying your mortgage is a temporary problem, you may consider reinstatement, in which you agree to pay the lender the entire past-due amount, plus any late fees and/or penalties, by a certain agreed-upon date.

· Repayment plan: Under a repayment plan, the lender will divide the late payment(s) up and add them on to future monthly payments.

· Forbearance: Your monthly payments will be reduced or suspended for a period of time, and at the end of the forbearance period, regular payments will resume and the missed payments will be added on.

· Loan Modification: Modification includes lengthening the term of your loan, lowering the interest rate or folding the past due amount into the loan and re-amortizing the new balance. This option may result in reducing / fixing the interest rate temporarily or permanently, extending the term of the loan, deferring or capitalizing past due amounts, deferring principal causing a balloon payment to be due at maturity or some other date, and / or forgiving a portion of the debt with or without any conditions.

· Home Affordable Modification Program (HAMP): If your home is your primary residence, the amount you owe on your first mortgage is no more than $729,750. If you obtained your mortgage before January 1, 2009 and are paying more than 31% of your current gross income on your first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues), then you may qualify for a HAMP modification. If you are unemployed, you may also be entitled to have your mortgage payments temporarily reduced for 3 to 6 months while you look for a new job.

· Home Affordable Foreclosure Alternatives (HAFA) Program: If you live in the home or have lived there within the last 12 months, you have a documented financial hardship, you have not purchased a new house within the last 12 months, your first mortgage is less than $729,750, and you obtained your mortgage on or before January 1, 2009, you may be eligible for HAFA.

· Home Affordable Unemployment Program (UP): If you are unemployed, UP may reduce your mortgage payments to 31 percent of your income or suspend them altogether for 12 months or more.

· Home Affordable Refinancing Program (HARP): If you own a 1–4 family dwelling, your first mortgage does not exceed 125% of the current market value of your home, and you haven’t been more than 30 days late on your mortgage payments in the last 12 months, you may be eligible for refinancing under HARP.

· FHA Refinance Option is designed for homeowners who do not currently have an FHA mortgage and who owe more on their mortgage than their homes are worth. Homeowners must be current on their mortgage and occupy their home as their primary residence.

· Short Sale: If you are experiencing a hardship and have been unsuccessful in selling the home at market value or an amount that covers what is owed, the lender may agree to let you sell the house for less than the outstanding loan amount. The lender then takes the proceeds from the sale and forgives the remaining debt.

· Deed-in-lieu of Foreclosure: If you are in default and don’t qualify for any of the other options, and your attempts at selling the house before foreclosure were unsuccessful, you could surrender the home to the bank and have them sell it.

· Chapter 13 Bankruptcy: Filing for bankruptcy is the last resort, though it will temporarily halt the foreclosure process and may force the mortgage lender to accept a more borrower-friendly repayment plan. But a bankruptcy should only be considered as an absolute last resort, as a bankruptcy will remain on your credit report for ten years.

· Partial Claim: If you have an FHA/HUD loan, you may be eligible for a partial claim. This is a one-time payment to bring your mortgage current. You don’t have to repay until the original mortgage is paid off or you sell your home.

· Emergency Mortgage Assistance: NYC has established a Mortgage Assistance Program (MAP) to keep households at risk of foreclosure in their home. MAP loans can be for amounts of up to $25,000 and are targeted to certain neighborhoods in NYC most affected by the foreclosure crisis.

Governor orders “No foreclosure for 90 days”

In addition to the above programs, Gov. Andrew Cuomo announced that New York homeowners who are not working or working only part-time due to the coronavirus crisis will have a 90-day grace period for paying their mortgages without concern for foreclosure, and that this offer could extend beyond 90 days depending on how the fight against the contagion plays out.

Note that this does not mean the bank would just take out that three months payment from the balance, but it means the bank will provide forbearance for the payments for at least 90 days, and may waive related interest and late fees pertaining to those payments.

Still got questions? Consult us today!

Stay on top of the pandemic

Stay current with comprehensive, up-to-the-minute information, all in one place, at the new Medium Coronavirus Blog. Sign up for our Coronavirus newsletter here.

Sylvia TsaiComment