As the sheer impact of COVID-19 continues to unfold, federal agencies are implementing policies across the country in an effort to lessen the financial burden on Americans. On March 18, 2020, the U.S. Department of Housing and Urban Development (“HUD”) authorized the Federal Housing Administration to place an immediate 60-day suspension on all evictions and foreclosures. HUD Secretary, Ben Carson, is hopeful this moratorium “will provide homeowners with some peace of mind during these trying times[.]”
Mortgage lenders, Fannie Mae and Freddie Mac, contemporaneously 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, local state authorities are implementing policies to assist its residents in wake of the COVID-19 pandemic. On March 19, 2020, New Jersey’s Governor, Philip Murphy, issued Executive Order No. 103, which provides a moratorium on all eviction and foreclosure proceedings in the state. Effective immediately, the Executive Order halts the removal of any individual as a result of an eviction or foreclosure proceeding. As promulgated, the Executive Order will remain in effect, at the very least, until the New Jersey State of Emergency is lifted, and may continue for an additional two-months following the lift of the State of Emergency. New Jersey’s moratorium on foreclosures has the potential to be more extensive than its federal counterpart, given its indefinite timeline.
The Executive Order, however, does not preclude the commencement or continuance of eviction and foreclosure actions. Instead, 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 eviction or foreclosure when necessary in the interest of justice.
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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