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Highlight Updates State Laws Setting Substantive Requirements for COVID-19 Mortgage Relief

Significant Law Change

Legislatures in several states have gone beyond moratoria on foreclosure activities and enacted laws that direct servicers to implement certain loss mitigation options designed to protect borrowers impacted by COVID-19. Some of these laws established both substantive loss mitigation requirements and procedures for borrowers to follow in order to obtain them. An important distinction among the state laws is the scope of the loans they regulate. Oregon132 and Massachusetts133 have enacted statutes that apply to a wide range of loans, including those that are not federally-backed. California’s law focuses primarily on federally-backed loans and aims to have servicers implement the federal COVID-19 loss mitigation guidelines that apply to these loans.134 Legislation in New York135 and the District of Columbia136 applies to entities subject to regulation by the New York and District of Columbia banking agencies.

Each of the five state laws referred to above mandates that the servicer approve some form of forbearance for a borrower whose a loan is subject to the law and whose ability to pay has been impacted by the pandemic. New York’s law “requires New York State regulated institutions to offer forbearance on privately serviced loans relating to residential mortgages on properties located in New York. . .”137 The borrower has to demonstrate a COVID-19 related hardship, but the borrower need not be current as of March 7, 2020 to be eligible. Under Oregon’s law, a mortgage borrower who notifies a mortgage lender of a COVID-19 hardship preventing payment will not be considered in default up through the emergency period of the law (currently December 31, 2020).138

The New York, Massachusetts, Oregon, and District of Columbia laws specifically address post-forbearance relief for borrowers impacted by COVID-19. All require, at a minimum, that the borrower have the opportunity to pay off forborne payments at the end of the scheduled loan term, without penalty or other negative contractual consequence. The California statute requires that the servicer of a federally-backed loan offer the borrower a post-forbearance option consistent with the guidelines of the federal insurer or guarantor.139

Several of these laws provide borrower’s with specific remedies upon the servicer’s failure to comply.140 The California statute authorizes the borrower to bring an action to stop a foreclosure sale scheduled in contravention of the law. The borrower who prevails in such an action may recover damages and attorney fees.141 In addition to injunctive relief, a borrower who is harmed by a material violation of the California statute may recover damages, restitution, “and any other remedy to redress the violation.”142 The Oregon statute creates a private right of action for the borrower who suffers a loss of property or money from noncompliance to recover damages, including attorney fees.143 The New York statute makes compliance with the statute a condition precedent to a foreclosure action based on a payment default that would have been subject to forbearance.144


  • 132 Or. HB 4204 (2020), available at

  • 133 Mass. HB 4647 (2020), available at

  • 134 Cal. A.B. 3088 (2020), available at

  • 135 N.Y. S 8428 (2020), available at

  • 136 D.C. Act 23-286 (2020), available at

  • 137 N.Y. S 8428 (2020), available at

  • 138 Or. HB 4204 (2020), available at

  • 139 Cal. A.B. 3088 § 3273.11(c) (2020), available at

  • 140 See also National Consumer Law Center, Home Foreclosures § 5.14a (2019), updated at, discussing potential foreclosure defenses that raise non-compliance with state COVID-19 relief measures.

  • 141 Cal. A.B. 3088 § 3273.15(a), (b) (2020), available at

  • 142 Cal. A.B. 3088 § 3273.15(a) (2020), available at

  • 143 Or. HB 4204 § 8 (2020), available at

  • 144 N.Y. S 8428 Part C, § 4 (2020), available at