The months of financial hardship during the global pandemic are starting to take their toll among New York City homeowners. Despite numerous federal and state moratoria on evictions and foreclosures, Real Estate Weekly reports that NYC is currently among the top cities in the nation in the number of foreclosures.
While foreclosure rates typically drop during the holidays—and have done so this year, as well—there were still more than 14,000 foreclosure filings nationwide during November 2020. Among those, NYC saw 454 foreclosure starts in November—topping the list among cities in the U.S. with populations greater than 1 million people.
Why Are Foreclosures Increasing in NYC?
Why are we seeing this spike in foreclosures, especially since there is still a moratorium in place that should be preventing them? Let's look at some possible reasons:
- Federal foreclosure protection only applies to government-backed loans. Under the CARES Act, only federally backed loans like FHA, VA loans, and Fannie Mae/Freddie Mac loans are temporarily covered against foreclosure. Privately backed loans aren't covered in the federal moratorium.
- Many homeowners don't know how to qualify for New York State protections. Here in New York, the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 places a moratorium on all foreclosures due to COVID-19 hardship through May 1, 2021. However, these protections aren't automatic—the homeowner must file a hardship declaration with the lender demonstrating why they are struggling or unable to pay. Homeowners who fail to do so may still face foreclosure.
- Some lenders are flouting the law. A few dishonest lenders are simply attempting to ignore the moratorium, banking on the homeowner's ignorance of the law to push it through.
What to Do If You're Facing Foreclosure in NYC
If you have received notice that your mortgage lender is pursuing foreclosure, the worst thing you can do is nothing. Here are some steps you can take to keep from losing your home:
- Get clear on the laws that protect you. Is your loan federally backed? Can you prove that you're going through financial hardship as a result of the pandemic? Find out if your mortgage falls under a moratorium or forbearance protection, and if so, politely inform your lender.
- File a hardship claim with your lender as soon as possible. The sooner you file this paperwork, the better your chances of avoiding foreclosure.
- Try negotiating directly with the lender. If you aren't going through a COVID-19 related hardship but are still struggling to pay your mortgage, reach out to the lender to see if a forbearance plan is available.
- Hire an attorney to deal with aggressive lenders and explore other possibilities. Sometimes, the only way to get a lender's attention is to hire legal representation. In addition, a foreclosure defense attorney may be able to identify other options to help you avoid foreclosure.
There's no need to become the next victim of the current spike in NYC foreclosures. If your lender is threatening you with it, don't go through it alone. Call our offices today to explore your options for saving your home.
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