Similarly, the Federal Housing Finance Agency (“FHFA”) directed Fannie Mae and Freddie Mac to suspend foreclosures and evictions for 60 days and also, promulgated temporary guidelines (the “Guidelines”) to enable mortgage servicers to assist borrowers. Effective immediately, the Guidelines are expanding the eligibility for forbearance plans to include those impacted by COVID-19. Forbearance plans provide borrowers with payment relief for up to 12-months and may suspend borrower late charges and penalties. The Guidelines further provide that, for those borrowers receiving a forbearance plan in response to COVID-19, mortgage servicers must initiate contact with the borrower at least 30-days prior to the expiration of the forbearance plan and evaluate each case to determine whether the borrower is eligible for a post-forbearance loan modification.
Additionally, the Guidelines direct mortgage servicers to suspend the reporting of mortgage loan statuses to credit bureaus during active forbearance plans or other repayment plans, so long as the delinquency is related to a hardship resulting from COVID-19.
Similarly, state authorities are issuing orders and implementing policies to assist their citizens in the wake of the COVID-19 pandemic, as follows:
California: On March 16, 2020, Governor Gavin Newsom signed Executive Order No. 28-20, which temporarily suspends any state law or provision preempting or otherwise limiting a local government from exercising its police power to impose restrictions on foreclosure actions. Unless otherwise extended, the suspension of the aforementioned state laws and provisions shall remain in effect through May 31, 2020.
Executive Order No. 28-20 further requests that financial institutions implement an immediate and indefinite moratorium on foreclosures and related evictions with respect to borrowers experiencing financial difficulties caused by the COVID-19 pandemic.
Delaware: On March 13, 2020, the Justice of the Peace Court signed an Order staying all landlord/tenant and eviction actions that were originally scheduled between March 17, 2020 and April 16, 2020. The Order provides that all of the aforementioned matters shall be rescheduled for a date no earlier than May 1, 2020, with exceptions pertaining to: (1) landlord/tenant matters involving essential services and/or harm to person or property; and (2) on a case-by-case exception, which may be ordered at the discretion of the Court.
Indiana: Effective March 19, 2020, Governor Eric Holcomb issued Executive Order No. 20-06 placing a moratorium on all eviction and foreclosure actions in the state. The Executive Order pertains to all foreclosure actions regardless of whether the borrower’s default is related to the COVID-19 pandemic. Nothing in the Executive Order shall be construed to relieve borrowers from their obligations to make mortgage payments or any other obligation under the mortgage. The Executive Order further mandates that the Indiana Department of Financial Institutions and the Indiana Housing & Community Development Authority shall immediately engage in discussions with mortgage lenders to identify methods and means by which to relieve citizens from the threat of residential foreclosure.
Unless extended, the protections issued by this Executive Order shall remain in effect until the expiration of the Indiana State of Emergency.
Kansas: On March 17, 2020, Governor Laura Kelly signed Executive Order No. 20-06 directing all financial institutions operating in Kansas to temporarily suspend the initiation of any eviction and foreclosure proceedings until May 1, 2020. Unless otherwise rescinded, the Executive Order shall remain in effect until May 1, 2020 or until the State of Disaster Emergency is lifted, whichever is earlier.
Kentucky: Effective March 16, 2020, Kentucky Supreme Court issued Order 2020-08, which temporarily suspends all landlord/tenant and eviction matters to April 10, 2020.
Maryland: On March 18, 2020, the Court of Appeals of Maryland promulgated an Administrative Order indefinitely suspending all pending foreclosures of residential properties in the state. The Order further provides that any newly initiated foreclosure action will similarly be stayed upon filing.
New York: By Executive Order, dated March 20, 2020, Governor Andrew Cuomo issued a 90-day suspension on all residential eviction and foreclosure actions in New York. On March 21, 2020, the Governor issued another Executive Order stating that it would be considered an unsafe and unsound business practice for those entities under the jurisdiction of the Department of Financial Services to deny a forbearance on mortgage payments. The Orders also address suspending late fees and adverse credit reporting. In real time, the State Courts have been issuing orders halting all filings except for certain emergency matters.
New Hampshire: On March 17, 2020, Governor Christopher Sununu signed Executive Order No. 2020-04 suspending all judicial and non-judicial foreclosure actions. The Executive Order halts the commencement and continuance of any foreclosure action, and will remain in effect for the duration of New Hampshire’s State of Emergency.
New Jersey: On March 19, 2020, Governor Philip Murphy issued Executive Order No. 106, which suspends the removal of any individual as a result of an eviction or foreclosure action. The Executive Order will remain in effect, at the very least, for the duration of the New Jersey State of Emergency, and may continue for an additional two-months following the lift of the State of Emergency.
The Executive Order, however, does not preclude the commencement or continuance of eviction and foreclosure actions. Rather, the Executive Order only stays the enforcement of all judgments for possession, warrants of removal, and writs of possession. Significantly, the Executive Order carves out an exception, which provides that a party may seek relief from a court to enforce a judgment for foreclosure when necessary in the interest of justice.
North Carolina: On March 15, 2020, Chief Justice Cheri Beasley issued a Memorandum placing a temporary 30-day suspension on matters before the Clerks of Superior Court, which include foreclosure actions.
These orders and mandates are being issued in real time as the impact of COVID-19 continues.
An additional note on the federal front, legislation has just been introduced in the Senate that would amend the Fair Credit Reporting Act to prohibit the reporting of negative information to credit bureaus for at least four months. The bill is designed to protect the credit scores of consumers who suffer financial hardship as a result of the COVID-19 pandemic. We will keep our clients informed of the progress of this and related federal initiatives as more details become available.
Our Reed Smith Coronavirus team includes multidisciplinary lawyers from Asia, EME and the United States who stand ready to advise you on the issues above or others you many face related to COVID-19.
For more information on the legal and business implications of COVID-19, visit the Reed Smith Coronavirus (COVID-19) Resource Center or contact us at COVID-19@reedsmith.com.
Client Alert 2020-142
