If you’re facing a foreclosure in South Carolina, but the foreclosing party doesn’t complete a CARES Act certification or does it incorrectly, you might have a defense to the action.
Foreclosures in South Carolina are judicial, which means a court handles the process. On May 6, 2020, the state supreme court issued an administrative order (Order No. 2020-05-06-01) requiring a foreclosing party to file a specific form certifying its compliance with the Coronavirus Aid, Relief, and Economic Security (CARES) Act in court as part of the official foreclosure procedures in South Carolina.
If you're facing a foreclosure in South Carolina, you might be able to defeat or stall the process if the foreclosing party uses a defective certification, or didn't file one at all, in its lawsuit against you.
Foreclosure Moratoriums Due to Coronavirus End
The CARES Act, as well as a previous state order (Order No. 2020-03-18-01), imposed a foreclosure moratorium—a temporary suspension of foreclosure procedures—when the coronavirus outbreak started. The federal moratorium ends on May 17, 2020, and the state moratorium ends on May 15, 2020.
What South Carolina Will Now Require in a Foreclosure
The South Carolina Supreme Court's most recent order requires any party pursuing an eviction or foreclosure in a trial court to submit to the court a signed, original Certification of Compliance with the CARES Act.
Here are the new rules:
- For evictions and foreclosures filed on or after May 6, 2020, the Certification of Compliance must be submitted along with the initial filing (that is, with the complaint for foreclosure).
- For evictions and foreclosures filed before May 6, 2020, the Certification of Compliance must be filed with the court before proceeding with an eviction or foreclosure.
If the foreclosing party doesn't file this certification with the court, the foreclosure must terminate with no further action.
Also, master-in-equity courts can't hold a foreclosure sale, or issue a judgment of foreclosure, writ of assistance, or writ of ejectment in a foreclosure action until the foreclosing party complies with this order. Magistrate courts can't issue a writ or warrant of ejectment in an eviction action until the party pursuing the eviction has filed the certification form. (In some South Carolina counties, foreclosures go through an equity court judge, called a master-in-equity, or through a special referee.)
What the Foreclosing Party Must Certify
The certification form requires the party seeking foreclosure to verify in writing that the property is not subject to the restrictions, limitations, and requirements of the CARES Act.
Under the CARES Act, homeowners with a federally backed mortgage loan can get a forbearance. So, the approved certification form requires the foreclosing party to state that either:
- the mortgage loan is not a federally backed mortgage loan as defined in the CARES Act or
- the mortgage loan is a federally backed mortgage loan, the CARES Act foreclosure moratorium has expired, and the property and mortgage are not currently subject to a CARES Act forbearance.
If the Certification is Defective, You Might Have a Defense to the Foreclosure
The certification requires the foreclosing party to verify, subject to punishment by contempt, to the truth of the statements in the document. The information in the form must be true, accurate, and adequately supported by file documentation.
You could potentially challenge a foreclosure if:
- the foreclosing party fails to file the certification
- the foreclosing party says that you don't have a federally backed mortgage loan, but you really do, or
- the foreclosing party certifies that you have a federally backed mortgage loan, and you're not in a CARES Act forbearance, but you actually are in this type of forbearance plan.
If the foreclosing party says that you don't have a federally backed mortgage loan, the certification also has to identify which database or the other information was used to make this determination. You should review this information on the form as well, to make sure the data is correct. If not, you can argue that the document is flawed.
You might also be able to challenge the foreclosure if you can show that the certification was robosigned. (To learn more about robosigning as a defense to foreclosure, read Robosigning in Foreclosures: What Homeowners Can Do About It.)
Getting Help
If you're facing foreclosure and think that the foreclosing party failed to file a CARES Act form, or filed a defective certification, consider talking to a qualified attorney who can advise you about what to do in your circumstances.
Any given foreclosure or legal situation has many potential claims and defenses. A local lawyer or a legal aid organization can help you explore all possible options that might be available in your particular situation.
Effective date: May 6, 2020