## Facts

- Windward Bora LLC brought a mortgage foreclosure action against David Cohen (and a co-defendant), arising from a residential mortgage default that began in 2012.
- After several years of litigation, Windward Bora obtained summary judgment against one defendant and a default judgment against another.
- In August 2021, the court entered an amended judgment of foreclosure and sale, appointed a referee, and scheduled a sale for September 21, 2021.
- On September 20, 2021, Cohen filed a hardship declaration under New York’s COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (CEEFPA), as amended and extended in 2021.
- Windward Bora challenged the declaration by order to show cause and sought injunctive relief to allow the sale to proceed; the court stayed the sale temporarily and held a hardship hearing.
- Cohen testified that he had not made mortgage payments for many years, initially defaulting while trying to obtain loan-modification relief, and that he was unemployed and unable to pay even immediately before the pandemic.
- Cohen’s employment changed in 2019, followed by a layoff and unemployment benefits; he later started a business that was negatively affected by pandemic conditions, and he had not yet drawn a salary from it.
- Cohen’s reported income fell markedly from 2019 to 2020, with 2020 income largely from unemployment insurance.
- Cohen relied on statutory hardship grounds tied to pandemic-related income loss and pandemic-related impediments to earning income or securing employment.

## Issues

1. Whether CEEFPA’s foreclosure-sale stay applies when a mortgagor’s original payment default long predates COVID-19 but the mortgagor claims additional, qualifying COVID-related hardship.
2. Whether the lender established a sufficient basis to invalidate the mortgagor’s hardship declaration after a contested hardship hearing.
3. Whether the court should permit a scheduled foreclosure sale to proceed notwithstanding the hardship declaration.

## Decision

- The court held that CEEFPA’s protections were not categorically unavailable to borrowers who defaulted before the pandemic.
- The court found, after the hardship hearing, that Cohen established a qualifying COVID-related hardship within the statutory grounds asserted.
- The court denied Windward Bora’s request to invalidate the hardship declaration and to proceed with the foreclosure sale.
- The court ordered the foreclosure sale stayed through January 15, 2022, consistent with the statutory extension.

## Legal Principles

- Under amended CEEFPA, a mortgagor’s eligibility for a temporary foreclosure-sale stay turns on whether the mortgagor is experiencing a qualifying COVID-related hardship affecting ability to pay, not on whether COVID-19 caused the initial default.
- The amended statute permits a lender to contest a hardship declaration and obtain a judicial hearing; the court must determine whether the asserted hardship fits statutory criteria based on the evidence presented.
- A showing that the borrower was already in default or financially distressed before the pandemic does not, by itself, defeat a properly supported declaration where pandemic conditions materially worsened the borrower’s financial situation.
- When qualifying hardship is established, CEEFPA requires a stay of foreclosure-sale activity for the duration specified by the statute.

## Conclusion

The court interpreted amended CEEFPA to protect mortgagors whose pre-pandemic defaults were followed by genuine, statutorily defined COVID-related hardship, and it stayed the foreclosure sale through the statute’s then-applicable expiration date after finding the borrower’s hardship declaration valid.


Windward Bora LLC v. Cohen, 570 F. Supp. 3d 53 (E.D.N.Y. 2021)