Coronavirus: Foreclosure Relief

In response to the coronavirus (COVID-19) outbreak, the federal government and some states, localities, and companies have imposed a foreclosure moratorium—a temporary halt in the initiation or continuation of foreclosure procedures—for specific kinds of loans and in a number of areas.

You might consider using this time to apply for a loss mitigation option, like a loan modification, if you haven't already. Federal and perhaps state laws could potentially help you as you seek foreclosure relief. And, even if you've already asked for an alternative to foreclosure, you might want to make another request considering the emergency situation that COVID-19 is causing.

(If you're current on payments, or recently fell behind, and need mortgage-payment relief due to coronavirus, read How to Get Mortgage Payment Relief During the Coronavirus Outbreak.)

Foreclosure Suspensions

Again, the federal government, as well as numerous cities, counties, states, courts, and companies, are imposing a foreclosure moratorium for particular kinds of mortgage loans and in different locations across the United States.

Federal Foreclosure Moratorium for Fannie Mae, Freddie Mac, FHA-Insured, VA, and Other Federally Backed Loans

The federal stimulus plan—the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act” (H.R. 748)—which President Trump signed into law on March 27, 2020, imposes a 60-day foreclosure moratorium starting March 18, 2020, for federally backed mortgage loans.

A federally backed mortgage loan is one that is:

• insured by the Federal Housing Administration (FHA)
• insured under section 255 of the National Housing Act
• guaranteed under section 184 or 184A of the Housing and Community Development Act of 1992
• guaranteed or insured by the Department of Veterans Affairs
• guaranteed, insured, or made by the Department of Agriculture, or
• purchased or securitized by Fannie Mae or Freddie Mac.

Under this Act, a servicer of a federally backed mortgage loan that's secured by a first or subordinate lien on residential real property, including individual units of condominiums and cooperatives, designed principally for the occupancy of from one to four families, may not initiate any judicial or nonjudicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction or foreclosure sale for not less than the 60-day period beginning on March 18, 2020.

This moratorium covers the majority of residential mortgage loans in the country. Vacant and abandoned properties aren't included, though.

If you loan isn't federally backed, then you aren't covered by the CARES Act. You might, however, be covered by a moratorium imposed by your state or local area, or mortgage company.

State Foreclosure Suspensions

Multiple states have imposed a temporary foreclosure moratorium. For example:

• In California, Governor Gavin Newsom issued Executive Order N-28-20 authorizing local governments to stop any foreclosures through May 31. Also, JP Morgan Chase, Citi, US Bank, Wells Fargo, and a number of credit unions and state banks agreed to give homeowners who can prove they've been impacted by the COVID-19 pandemic a 90-day forbearance on mortgage payments. (Bank of America agreed to 30 days.) As part of the agreement, late payments won't be reported to credit rating agencies.
• In Colorado, the Governor’s Executive Order 2020-12, issued March 20, 2020, effective for 30 days, extends various foreclosure deadlines, like the deadline to file a Notice of Intent to Cure and the deadline for tendering funds to cure, under the Colorado foreclosure statutes, for 30 days.
• Delaware Governor John Carney issued a modification to his State of Emergency declaration, part of which prevents lenders from starting residential foreclosures until at least May 15. Foreclosures that began before the declaration won't move forward until the 31st day following the termination of the emergency declaration, at the earliest.
• Indiana Governor Eric Holcomb signed an executive order imposing a moratorium on residential foreclosures.
• Kansas Governor Laura Kelly signed Executive Order #20-06, which temporarily stops foreclosures in that state until May 1, 2020.
• As of March 23, 2020, Massachusetts is advancing a bill (HD. 4935) to protect homeowners from foreclosure.
• In Maine, pursuant to an emergency order effective March 18, 2020 to May 1, 2020, no foreclosure proceedings will be scheduled or heard.
• On March 17, 2020, Governor Chris Sununu signed an emergency order prohibiting foreclosures in New Hampshire for the duration of the declared state of emergency.
• New Jersey Governor Phil Murphy signed A-3859 into law, which explicitly provides authority to the Governor to issue an executive order declaring a moratorium on removing individuals from their homes pursuant to an eviction or foreclosure proceeding. The Governor then immediately signed Executive Order No. 106, which imposed a moratorium.
• New York Governor Andrew Cuomo announced the state will ensure banks and other financial institutions waive mortgage payments for residential loans for 90 days if you're facing a financial hardship due to the coronavirus and hold off on foreclosures. However, guidance from the Department of Financial Services simply urges servicers to suspend mortgage payments and foreclosures—a payment waiver and foreclosure moratorium isn't mandatory.

New foreclosure suspensions are announced almost daily. Due to the rapidly-changing nature of the current situation, this list isn't complete. For general information on foreclosure suspensions and court closures in your area or for your loan type, check online or contact your loan servicer.

Court Foreclosure Postponements

Courts, too, in various states, are shutting down to halt the spread of the virus and are postponing foreclosure hearings as part of the process. For example:

• In Connecticut, a statement from the Chief Court Administrator says that foreclosure sales previously scheduled to happen in April or May 2020, are rescheduled to June 6, 2020. Also, a judgment in any foreclosure action in which the court set a “law day” to run on any date in April or May is amended with the first law day now set for June 2, 2020.
• Maryland's chief judge has issued an administrative order to halt foreclosures and suspending residential eviction matters.
• In North Carolina, an Order from the Supreme Court extends deadlines for filing pleadings, motions, notices, other documents and performing required acts in civil proceedings, including special proceedings (foreclosure proceedings) until April 17, 2020.
• The Pennsylvania Supreme Court issued an order closing courts at least through April 3, 2020. (Pennsylvania foreclosures are judicial.)
• A Supreme Court order in South Carolina sets a statewide moratorium on foreclosure hearings, foreclosure sales, writs of ejectment, all matters relating to foreclosures until further order by the Chief Justice.
• In Washington, D.C., a judiciary order suspends evictions of all tenants and foreclosed homeowners until May 15, 2020, and continues (postpones) hearings on foreclosures.

Again, due to the evolving national emergency, this list is not complete. Check with your local court to find out if a moratorium has been established in your area.

County Foreclosure Postponements

Locally, some places, like individual counties, are suspending sheriff’s sales and evictions indefinitely as a result of the COVID-19 outbreak.

Company Foreclosure Suspensions

Some mortgage companies, like Wells Fargo, are suspending residential property foreclosure sales and evictions.

What to Do If You Have Questions

To get specific information about what’s happening in your foreclosure and whether it is subject to a moratorium, call the attorney or trustee that’s handling the case. You can also call the servicer. To learn whether a court hearing will take place, you may contact the court as well. Though, you should probably expect longer than usual wait times before you can get answers to your questions.

Getting Foreclosure Relief

Considering a foreclosure moratorium won’t delay the process forever, consider applying for a more permanent loss mitigation option, like a loan modification, if you expect your financial hardship to last indefinitely.

If you send the servicer a complete loss mitigation application before foreclosure starts, the servicer can’t start the foreclosure unless and until:

• it tells you that you’re not eligible for any foreclosure alternatives (and any appeal has been exhausted)
• you turn down all loss mitigation offers, or
• you don’t meet the terms of a loss mitigation agreement, like if you don’t make the payments on a trial modification.

If you’re already in foreclosure and you send the servicer a complete application after foreclosure starts—but more than 37 days before a foreclosure sale—the servicer can’t ask a court for a foreclosure judgment or order of sale, or conduct a foreclosure sale, until one of the three conditions mentioned above has been satisfied.

Under federal law, the servicer generally doesn't have to review more than one loss mitigation application from you unless you bring the loan current after applying. But considering what’s happening with the pandemic, even if you already applied, it's worth contacting the servicer again to find out if additional help has become available. If your loan is owned or insured by Fannie Mae, Freddie Mac, FHA, VA, or the Rural Housing Service, you can contact that entity too to find out about foreclosure relief.

State Laws Might Provide More Foreclosure Protections

State foreclosure laws require the servicer to complete specific steps to foreclose. In addition, state law—along with the federal and contractual rights you get in a foreclosure—might provide you with more foreclosure protections.

Getting Help

A local foreclosure lawyer can advise you about your legal rights under federal law and tell you about any state laws that could protect you in a foreclosure. A HUD-approved housing counselor can provide you with helpful information (at no cost) about ways to avoid a foreclosure.

To get information about handling your other debts during the epidemic, see Coronavirus: Dealing With Debt. To find out about different kinds of potential relief if you can’t make payments on a personal loan, small business loan, or credit card debt, read Dealing With Loans and Credit Card Debt You Can't Pay After COVID-19.

Also, while this article addresses mortgage foreclosures, if you're behind in paying your property taxes, certain counties are declaring a moratorium on property tax foreclosures and tax sales. Call your county treasurer’s office or tax collector's office, or look online, to see if your area has a moratorium.