Gov. Andrew Cuomo issued an executive order Saturday urging banks to postpone mortgage payments for 90 days for homeowners in financial distress because of the coronavirus pandemic.
The order states that “it shall be deemed an unsafe and unsound business practice” if state-regulated banks do not offer strapped borrowers forbearance on mortgages for 90 days. It demands the superintendent of the Department of Financial services write “emergency regulations” to ensure banks make the applications to receive the benefit widely available to consumers.
The mortgage relief is directed toward homeowners who lose their jobs or are in financial distress because of the coronavirus. It does not apply to commercial loans secured by property.
Cuomo issued the executive order after his top aide Melissa DeRosa told reporters that “some people were detracting” from the measure, which was announced by the governor on Thursday. A memo issued by the Department of Financial Services hours after the announcement showed that postponing mortgages was a suggestion, not mandatory, casting doubt on Cuomo’s ability to dictate banks’ lending practices via press release.
But Saturday morning, DeRosa said that the Department of Financial Services had reached a deal with the banks. The heads of commercial banks had been negotiating directly with Cuomo’s office since earlier in the week, according to sources.
“[Department of Financial Services] actually struck an agreement with the banks. We try to do this in a way where we’re not dictating to them,” said DeRosa at a press conference in Albany.
Indeed, the measure does not specify how the government will ensure the banks comply with the order. But a finding of an “unsafe and unsound business practice” could subject financial institutions to fines by the regulatory agency, which oversees insurers and state-chartered banks.
As for renters, many may face challenges paying rent on April 1. To slow the spread of the virus, Cuomo has ordered that all non-essential workers stay home — leaving many unemployed or without pay.
Landlord groups say that relief for them must also come from the government, in the form of a tax abatement, a direct subsidy to renters or mandatory forbearance of their loans. Tenant groups demanded a suspension of rents during the crisis, but have so far stopped short of a full-blown rent strike. Sen. Michael Gianaris from Queens proposed a bill to forgive 90 days of rent in light of the coronavirus.
The executive order also states the superintendent can draft a regulation to restrict fees for ATM use, overdrafts and late credit card payments during the crisis. But it stops short of demanding the department’s superintendent, Linda Lacewell, do so.
Lacewell was appointed by Cuomo to the department in June of last year. Before that, she was the governor’s chief of staff, after having served as Cuomo’s special counsel since before he became governor.