Mortgage Payment Relief for District of Columbia Homeowners Affected By Coronavirus

The District of Columbia recently passed legislation creating a 90-day mortgage deferment program for residential and commercial mortgage borrowers.

By , Attorney

On April 7, 2020, the Council of the District of Columbia passed an emergency bill called the COVID-19 Response Supplemental Emergency Amendment Act of 2020 (B23-0733/Act A23-0286). Mayor Muriel Bowser signed the law into effect on April 10. This new law directs lenders to develop and implement mortgage deferral programs to assist borrowers who are having trouble making their payments due to COVID-19.

On April 21, the Council passed the COVID-19 Supplemental Corrections Emergency Amendment Act of 2020, amending the new law, and clarifying the requirements regarding the mortgage payment deferment program, described below.

Mortgage Payment Deferment Program in Washington, D.C.

Act A23-0286, the emergency legislation, creates a 90-day mortgage deferment program for residential and commercial mortgage holders in the District of Columbia.

During the mayor-declared coronavirus public health emergency, and for 60 days after that, a lender that makes or holds a residential mortgage loan or commercial mortgage loan under the jurisdiction of the Commissioner of the Department of Insurance, Securities, and Banking (see below), must develop a deferment program for borrowers that:

  • provides a deferment period for mortgage payments for at least 90 days, and
  • waives any late fees, processing fees, and any other fees accrued during the public health emergency.

Also, under the law, the lender can't report any delinquency or other derogatory information that happens as a result of the deferral to the credit reporting bureaus.

The Commissioner has jurisdiction over D.C.-chartered financial institutions and financial institutions that conduct business in the District of Columbia under the D.C. Banking Code. So, basically all lenders and servicers that handle loans in Washington, D.C., must comply with this legislation.

How to Get a Payment Deferral in the District of Columbia

Under D.C.'s new law, the lender has to establish application criteria and procedures for borrowers to apply for the program. The application must be available online and by telephone. Contact your loan servicer and fill out an application to get the 90-day deferment; don't just stop making your mortgage payments.

To qualify for the payment deferment program, you have to:

  • provide evidence to your servicer that you've suffered a financial hardship resulting directly or indirectly from the coronavirus public health emergency, including an existing delinquency or future inability to make payments, and
  • agree in writing to pay the deferred payments within a reasonable time or if you can't agree on what constitutes a reasonable time, five years from the end of the deferment period, or the end of the original term of the mortgage loan, whichever is earlier.

This law went into effect upon the mayor's approval and will remain in effect for no longer than 90 days. So, you should make your request before this time frame expires.

No Lump-Sum Payment Required

The legislation prohibits the servicer from requiring a lump-sum payment from you to get caught up on the deferred payments at the end of the 90 days.

What Happens If You Have Tenants

A borrower who receives a mortgage payment deferral, and has tenants in the property subject to the deferment:

  • must, within five days of the approval of a mortgage payment deferment, provide notice of the deferral to all qualified tenants
  • must reduce the rent charged for the property for any qualified tenant during the time that the mortgage deferral is in place in an amount proportional to the reduced mortgage amount, and
  • may require the qualified tenant to repay the amount of any reduced rent, without interest or fees, within 18 months or at the end of the lease term, whichever occurs first.

A "qualified tenant" means a tenant that has notified the landlord of an inability to pay all or a portion of the rent due as a result of the COVID-19 public health emergency.

Exclusions From the Mortgage Deferment Program

The payment deferral program doesn't apply to properties on which, as of March 11, 2020, the lender has initiated a foreclosure action or exercised its right to accelerate the balance and maturity date of the loan.

Filing a Complaint

If your loan servicer isn't communicative or cooperative, or if your application for a deferment is denied but you meet all qualifications, you may file a complaint with the Department of Insurance, Securities and Banking, and the federal Consumer Financial Protection Bureau.

Effective date: April 10, 2020