A house for sale | AP Photo Cuomo's mortgage relief order spurs confusion, disappointment for homeowners

As the coronavirus crisis was taking hold of New York last month, Gov. Andrew Cuomo made an announcement that prompted many homeowners around the state to breathe a sigh of relief — mortgage payments would be suspended for 90 days for people struggling to keep up with their bills.

But homeowners who have sought that reprieve are finding the reality is more complicated. And advocates worry the March 19 announcement has sparked confusion about the options available to borrowers desperate for assistance as the economic fallout from the crisis grows.


“What we’re hearing from people is they think there’s a mortgage holiday,” said Joseph Sant, deputy general counsel at the Center for New York City Neighborhoods, a non-profit that helps homeowners. “They’ve heard about relief announcements from the governor, but they don’t have the right understanding of what will happen at the end of [the 90-day period].”

An executive order signed by Cuomo in March compelled the state’s financial services agency to require that “any licensed or regulated entities provide to any consumer in the State of New York an opportunity for a forbearance of payments.” The agency later released terms that said financial institutions regulated by the state must offer the option of forbearance, a mechanism through which a lender agrees to temporarily suspend or reduce payments.

“People are under tremendous economic pressure,” Cuomo said at the time. “Making a mortgage payment can be one of the number one stressors. Eliminating that stressor for 90 days, I think, will go a long way.”

Payments would not be entirely eliminated, he noted, but the mortgage would be adjusted so payments were tacked on to the back end. He also promised no late fees or hits to an individual’s credit report.

But homeowners have reported a lack of clarity and some conflicting messages from government agencies and banks on what their options are once the deferment period ends. Some have been told they’ll have to pay a lump sum at the end of the relief period, others were told their credit scores would in fact take a hit. Meanwhile, some borrowers who had previously fallen behind on payments and were on repayment plans to avoid foreclosure have been refused any further assistance.

And since most mortgages are federally-backed — meaning they’re not subject to the state’s regulatory authority — they are under separate guidelines altogether, experts said.

The federal government has directed lenders who service government-insured mortgage loans to allow borrowers the option of deferring payments for up to a year, but the length and terms of forbearance plans have varied bank to bank.

Martin Mundzik, who owns a home in the Rockaways, was disappointed when he reached out to his servicer, M&T Bank, about suspending payments. He works in the film and television industry, while his partner works in Broadway ticket sales — both income sources have dried up in recent weeks due to the pandemic, he said.

After numerous phone calls with M&T representatives, the options he was given for the end of a six-month deferment period the bank is offering appeared to have serious downsides. He could get on a three- or six-month payment plan for the sum he owed on top of his monthly payments, which wouldn’t be financially sustainable, he said. Or, he could have terms of the loan extended, but said the bank told him he would likely hurt his credit score. Another option would create a second loan due at the end of his current mortgage, but he was unclear on many of the specifics. He said none of the outcomes seemed as clear cut as Cuomo’s original announcement suggested.

“I have no idea how I’m going to survive this situation,” Mundzik said. “We personally don’t know when we’re going to be able to start working again.”

Asked about their mortgage relief policies, M&T spokesman David Samberg said in an email, “Every day, we are working closely with our customers and the communities we serve. We listen to their needs and have many programs in place to assist in difficult times, such as repayment plans, loan extensions and loan modifications.”

“As we work together as a community to overcome the challenges brought on by the pandemic, we’ve also begun waiving late fees and suspending negative credit reporting,” he said.

Sant recalled one borrower who reached out through the organization’s assistance hotline in recent days, an Uber driver living in Queens whose income has similarly dried up due to the crisis. His lender, Freedom Mortgage, told him they would postpone his March, April, May and June payments, but that he would owe the four months’ payment altogether at the end of the deferment period.

Freedom did not respond to a request for comment.

Cuomo’s mortgage relief announcement prompted tenant groups and their allies to point to a perceived double standard between renters and homeowners.

“If you called for a suspension or moratorium on mortgage payments, then we should also call for that same treatment on rent payments,” Rep. Alexandria Ocasio-Cortez said in a radio interview on WNYC’s “The Brian Lehrer Show” last week. “We’re kind of creating a class and race issue, we’re essentially rewarding and offering preferential treatment to landowners and folks who are more wealthy.”

But many homeowners are also fighting to make ends meet, and confusion over the mortgage moratorium isn't helping.

“Tenants are saying, well, homeowners are getting a free ride basically, which is not true,” said Yoselin Genao-Estrella, executive director of the Neighborhood Housing Services of Queens, a non-profit that works to preserve homeownership.

Homeowners who were already struggling when the pandemic took hold appear to have limited options.

Terry Herman, a foreclosure prevention attorney at Brooklyn Legal Services, said one client who works in the hotel industry was working her way out of foreclosure through a loan modification when the coronavirus hit. But despite a drastic reduction in her income in recent weeks, she was told by her lender that if she missed a payment at this point, the modification would be canceled and she would again risk losing her home.

“Like everyone else, this has all happened all of a sudden, and then on top of that you still have bills to pay,” said the client, a Flatbush homeowner who declined to give her full name. “I’m not asking to never pay a mortgage again, but what I’m asking for is just an understanding of the situation.”