With the coronavirus (COVID-19) pandemic sending thousands of homeowners into financial distress, the federal government, as well as many states, cities, local areas, and some mortgage companies, have passed laws and issued orders that impose a foreclosure moratorium for specific types of loans and in many places. This kind of moratorium, depending on the order or law, usually prohibits the initiation or continuation of foreclosures until the public health emergency due to coronavirus ends. But what should you do if your loan servicer initiates or proceeds a foreclosure anyway, while you’re supposed to be protected by a moratorium?
If you were behind in your mortgage payments or already in foreclosure when the virus took off, you need to be aware of your rights. Federal law, some state actions, and various local orders protect homeowners from a foreclosure during this national crisis.
The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act set a 60-day foreclosure moratorium starting March 18, 2020, for federally backed mortgage loans. Likewise, on March 18, 2020, the Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac, announced a suspension of foreclosures and evictions for a minimum of 60 days. On May 14, 2020, FHFA announced it was extending the moratorium until at least June 30, 2020. The foreclosure moratorium applies to Fannie- and Freddie-backed, single-family mortgages. The FHA also extended its foreclosure and eviction moratorium through June 30, 2020, for homeowners with FHA-insured single-family mortgages. The moratorium doesn't include vacant or abandoned properties. VA, too, imposed a foreclosure moratorium on VA-guaranteed loans through June 30, 2020.
Many states and local areas have ordered foreclosure suspensions for a similar period. Some places, like individual counties, have suspended sheriff’s sales indefinitely. Also, various mortgage companies and banks have imposed a moratorium as well.
For information on foreclosure suspensions and court closures in your area or for your loan type, do a basic online search. It's a good idea to try to find the actual law or order that imposes the moratorium so that you can ascertain exactly how long the moratorium lasts and what's prohibited. You'll want to find out if the moratorium applies to initiating new foreclosures, proceeding with current foreclosures, conducting foreclosure sales, or all of these actions. To learn how to look up a particular federal or state law, see Nolo's Laws and Legal Research article. You can usually access state orders that a governor has issued on the official state government webpage.
To learn whether a specific foreclosure-related court hearing will take place, you can contact the appropriate court. Though, you should probably expect longer than normal wait times before you can get answers to your questions.
In most cases, federal law prevents the servicer from initiating a foreclosure until the borrower is more 120 days delinquent on the loan. Whether the federally-mandated 120-day waiting period can run concurrently with a foreclosure moratorium, however, is unclear at this point. So, you should probably assume it does.
State laws might provide you with foreclosure protections, too. See our Summary of State Foreclosure Laws to get information about how foreclosure generally works where you live, and consider talking to a local attorney to obtain information relevant to your particular circumstances.
You might find out through a mailed notice or service of legal process that a foreclosure has started or is continuing against you. You can also call the attorney or trustee that’s handling the case to get specific information about what’s happening in your case. You may also call your loan servicer to get the status of a foreclosure.
If your loan is subject to a moratorium—but the servicer initiates or continues the foreclosure while the moratorium is in place—you may file a complaint with your state attorney general’s office. But filing a complaint with the attorney general’s office won't stop the process from going forward. So, to prevent the premature loss of your home, you should also contact a foreclosure attorney to get advice about what to do in your situation. An attorney can help you enforce your rights under both federal and state law, as well as under any orders or policy changes that have happened as a result of the coronavirus national emergency.
But hiring and dealing with a foreclosure defense lawyer is different now than it was before the pandemic began, and you’ll have to adjust how you communicate, share paperwork, and interact. To get tips on how to locate and work with a foreclosure lawyer while adhering to quarantine and social distancing rules during the COVID-19 outbreak, read How to Find, Hire, and Communicate With a Foreclosure Lawyer During the Coronavirus Crisis.