Post-Covid Foreclosure

Courts in New York and New Jersey are managing the backlog created by Covid-19. But there is one area which will experience an onslaught of cases in post-pandemic era: foreclosures and evictions. The following are recent rules enacted in New York.

In New York, on January 15, 2022, provisions of Chapter 417 of the Laws of 2021, (the “Moratorium”) governing foreclosure and eviction proceedings, expired. What happened:

• All cases that had been stayed due to the filing of a Hardship Declaration were immediately restored to active conference and motion calendars.
• The court will accept new foreclosure and eviction proceedings.
• Tax Lien foreclosures were reawakened as well.
• The Homeowner Assistance Fund (nyhomeownerfund.org) started to accept applications on January 3, 2022.

So the time for consumers to delay foreclosure and evictions is just about over. This includes commercial foreclosures and evictions as well.

In addition, foreclosure auctions have reawakened where Judgment and Notice have been entered and issued.

As for advanced eviction proceedings, applications for warrants on judgments issued after March 16, 2020, but prior to September 2, 2021, must be made motion on notice to the tenant to inform them that there will be no further stay.

There is still the issue of the Covid-19 Emergency Rental Assistance Program Protections (“ERAP”), Part BB, Subpart A, §8 of Chapter 56 of the Laws of 2021, as modified by L. 2021, c. 417 which remains fully in effect, though as of this writing, there are no funds left under this program. Homeowners and tenants should still be able to stay the proceedings however.

However, ERAP will not apply in the case of a nuisance by the tenant, where the tenant intentionally causes damage to the property.

In New York City Housing Court, there is also DRP 217, DRP 221 and DRP 222 which supersede the previous administrative orders.

The case to read is the United States Supreme Court decision granting injunctive relief in Chrysafis v. Marks, 141 S. Ct. 2482 (2021).

In general, homeowners and tenants have to get ready for an onslaught of litigation from banks, lenders and their counsel.

However, all is not technically lost yet. There is still something known as the “Hardest Hit Fund Hold” a federal program providing funds to states that have suffered the hardest hit by home value reductions and high unemployment.

The assistance this program offers can be without limitation:

• Mortgage payment assistance for unemployed or underemployed homeowners;
• Principal reduction to allow consumers to afford their mortgages;
• Moving help to assist homeowners in transferring homes to those more affordable;
• Other financial help in acquiring a new home and avoiding foreclosure;

These programs apply to those consumers who have no job and homes that are underwater i.e. with a value less that the debt on the home.

In our practice as of April, 2022, we have already seen bank and investor’s counsel reawaken foreclosure auctions, motions for judgment and motions to appoint a referee to calculate damages. And this is only the beginning. We saw this same onslaught years after the 2009 financial and housing crisis and before Covid and we are seeing it all again now.

As far as the judiciary, throughout New York City and Long Island New York, judges are all too ready to take the homes away from homeowners, and properties from commercial business owners. We have seen an uncomfortable rise in judges fed up with consumers claiming financial hardship. And they are asking questions.

In certain instances previously, we had judges asking how much money a homeowner had in the bank after years of not paying the mortgage or taxes. While consumers are not again in court as they were pre-Pandemic to answer these tough questions, we expect the courts to inquire as to consumers’ finances right now.

Consumers up to now have been protected by the interlocking crises of the housing bubble bursting in 2009 and the Pandemic of 2020 and going forward. It is not exactly clear how the Courts will handle the Post-Covid mortgage foreclosure backlog and litigation. But our firm stands ready to represent consumers as the rules change quickly.

Generally, we have found that leading up to Judgment, New York courts have good at listening to the defenses we put forward for our clients. New York is perhaps unlike most court systems across the country in this vain. But without question, consumer homeowners need competent, experienced and aggressive counsel on their side as they navigate Post-Covid mortgage foreclosure proceedings.

If you are seeking legal help with a foreclosure in and around the New York City boroughs and Long Island, feel free to contact the Linden Law Group, P.C. for free phone consultation at (212) 835-1532.