Homeowners who miss mortgage payments due to the coronavirus pandemic would get more time to catch up, under measures proposed by state and federal lawmakers representing Long Island.
State Sens. Todd Kaminsky (D-Long Beach) and Brian Kavanagh (D-Manhattan) introduced legislation Monday that would require New York-regulated lenders to let homeowners delay up to three months of missed mortgage payments by extending their loan terms.
Rep. Kathleen Rice (D-Garden City) said in a statement Monday that she supports including measures in a future stimulus package prohibiting lenders from demanding lump-sum payments as soon as a mortgage forbearance period ends, and allowing all homeowners — not just those with federally backed loans — to get loan reprieves.
The $2.2 trillion federal pandemic stimulus package gave homeowners with federally backed loans up to six months of mortgage forbearance, or temporary relief from making payments, with an option for an additional six-month extension. Last month, the state Department of Financial Services mandated that state-regulated lenders give homeowners up to 90 days of relief.
Those measures did not require lenders to let homeowners move the missed payments to the end of loan terms.
The proposals announced Monday come in response to a Newsday article about local homeowners who said lenders are requiring them to make up any missed mortgage payments within months. The homeowners, who have lost jobs due to the pandemic, said they do not believe they could make up the missed payments as soon as the forbearance period ends, since they do not know when they will be able to resume working.
The pandemic has caused more than 100,000 Long Islanders to lose their jobs, as nonessential work has been shut down to slow the spread of the deadly virus.
“We are hearing from many homeowners throughout Long Island who are in real distress and who are dreading the period when forbearance ends and they’ll have to make a giant mortgage payment,” Kaminsky said in an interview Monday. “We want people to be getting back on their feet and back to their jobs and not caught up in an endless debt cycle … once this emergency period ends.”
In a statement, Rice said Long Islanders “should be solely focused on keeping their families safe and healthy, not worried about losing their homes.”
Nationwide, many homeowners are struggling to pay their mortgage bills. The Mortgage Bankers Association reported Monday that the share of mortgages in forbearance has soared from 0.25% in early March to 5.95% by April 12.
Homeowners could "breathe a lot easier" if they could get more time to catch up on missed mortgage payments, as the state and federal proposals would allow, said Michelle Abreu, director of counseling at the Long Island Housing Partnership in Hauppauge. "Every household has been affected by this pandemic one way or another ... . Unless the [mortgage] servicers and lenders defer the payment, homeowners will be losing their homes."
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