In response to New York Governor Andrew Cuomo’s Executive Order 202.9 (EO 202.9 or the Executive Order), issued on March 21, 2020, the Superintendent of the New York State Department of Financial Services (DFS) promulgated a new Part 119 of Title 3 of the Official Compilation of Codes, Rules and Regulations of the State of New York, which takes effect upon the filing of the Notice of Emergency Adoption with the Secretary of State. The new regulations provide needed clarification on a number of issues raised by the Executive Order, including defining the entities that are subject to the Executive Order and regulations, and providing guidance on the implementation of the regulations and processing of requests for forbearance. Here are some of the highlights:

• The new regulations define a “regulated institution” as any New York regulated banking organization as defined under New York Banking Law[1] and any New York regulated mortgage servicer entity subject to the authority of the DFS.[2] However, the new regulations do not apply to and specifically exclude any mortgage loans made, insured or securitized by any agency or instrumentality of the United States; any Government Sponsored Enterprise or a Federal Home Loan Bank; or the rights and obligations of any lender, issuer, servicer or trustee of such obligations, including servicers for the Government National Mortgage Association.[3]
• Regulated institutions are required, as soon as reasonably practical, and in no event later than ten (10) business days following the promulgation of the regulation, to email, publish on their website, mass mail or otherwise broadly communicate to customers how they may apply for COVID-19 relief, and to provide the institutions’ contact information.[4]
• The criteria developed by regulated institutions shall be clear, easy to understand and reasonably tailored to the requirements of the regulated institution to assess whether it will provide – consistent with the goals of the Executive Order, the new regulations, and the principles of safe and sound business practices – COVID-19 relief.[5]
• With respect to processing applications for COVID-19 relief, regulated institutions shall (i) process and respond to requests immediately, and in no event later than ten (10) business days after receipt of all information reasonably required to process the application,[6] and (ii) develop and implement procedures for the expedited processing of applications for any individual who reasonably establishes an exigent circumstance and requests the expedited processing of the application.[7]
• The regulations clarify that the modifications to Section 39 of the Banking Law set forth in EO 202.9 apply only to individuals and residential mortgages.[8] This is somewhat contrary to the language of the Executive Order, which contemplates forbearance for “any person or business who has a financial hardship” (emphasis added).[9]
• The regulations include guidance on the review process of DFS with respect to claims that a regulated institution has engaged in an unsafe and unsound business practice. DFS will “consider the adequacy of the process established by the regulated institution to process such forbearance applications, the thoroughness of the review afforded to the application, the payment history, creditworthiness, and the financial resources of the borrower, the application of any state and federal laws or regulations that would prohibit the grant of a forbearance, as well as the safety and soundness requirements of the regulated institution.”[10]
• The COVID-19 relief program does not apply to any commercial mortgages.[11]

While some uncertainty still remains, the new regulations provide meaningful guidance on a number of the important issues. Please refer to the text of the regulations for further information, which can be found here.

[1] N.Y. Bank. Law § 2 (11). “The term, ‘banking organizations,’ when used in this chapter, means and includes all banks, trust companies, private bankers, savings banks, safe deposit companies, savings and loan associations, credit unions and investment companies.”
[2] 3 NYCRR § 119.2(c).
[3] 3 NYCRR § 119.3(a).
[4] 3 NYCRR § 119.3(c).
[5] 3 NYCRR § 119.3(d)(1).
[6] 3 NYCRR § 119.3(e)(1).
[7] 3 NYCRR § 119.3(e)(2).
[8] 3 NYCRR § 119.3(f).
[9] Executive Order 202.9.
[10] 3 NYCRR § 119.3(f).
[11] 3 NYCRR § 119.3(k).