COVID-19 has changed our lives as well as our livelihoods. Income sources have taken a massive hit, and with that, rules are having to change, deadlines are having to be extended, and significant changes are being implemented to help families survive during this stressful time.
Although a phased approach is being taken to open the economy back up, it will be a long road back to normalcy and the financial status many maintained before the coronavirus pandemic.
Specific extensions in the CARES Act are designed to help.
The article below details some points about the CARES Act that are important for homeowners.
Section 4022 – Moratorium on Residential Foreclosures
On March 27, 2020, Congress enacted the Coronavirus Aid, Relief and Economic Security Act of 2020, also known as The CARES Act, which provides for financial relief due to the COVID-19 Virus Pandemic. This Act is put into place to do precisely what the name implies. The CARES Act provides care for this who are struggling because of the stress of a halted economy.
Section 4022 focuses on homeowners and provides a moratorium on residential foreclosures for borrowers with federally backed 1-4 family mortgage loans. It addresses the right of a homeowner to request forbearance from payment on these loans.
Understanding the Requirements – Extensions in the CARES Act Regarding the Foreclosure Process
The requirements only apply to federally backed mortgages, which are loans insured or guaranteed by FHA, VA, USDA, or loans that are owned or securitized by Fannie Mae or Freddie Mac. The moratorium does not apply to vacant or abandoned property or private bank loans. Under the Act, no mortgage servicer of any federally backed 1-4 family mortgage loan is permitted to do the following beginning March 18, 2020, and ending May 17, 2020; and now further extended until June 30, 2020:
- Initiate any judicial or non-judicial foreclosure process;
- File a motion for foreclosure judgment or order of sale; or
- Execute a foreclosure-related eviction or foreclosure sale.
Utilizing the Extensions – Requesting a Forbearance
Section 4022 also allows a borrower on a federally backed 1-4 family mortgage loan to request forbearance from payment up to 180 days with the right to request an additional 180-day extension. Section 4023 allows a borrower on certain federally backed multi-family mortgages to request forbearance for up to 30 days with two 30-day extensions. During the term of forbearance, a tenant cannot be evicted or charged late fees. Section 4024 establishes a temporary moratorium on eviction filings for particular single and multi-family housing. During the above referenced period beginning on March 27, 2020, a lessor cannot initiate an eviction for nonpayment of rent. After the moratorium period, the landlord may not evict a tenant unless a 30-day notice is provided to the tenant.
Governor DeSantis also issued Executive Orders 20-94 and 20-121, consistent with the CARES Act, extending the foreclosure moratorium to all foreclosures and tolling residential evictions until June 2, 2020, but did not waive the obligation to make scheduled payments. Many Florida judicial circuits have also entered administrative orders which limit or prohibit foreclosure and eviction actions. These are meant to stave off the process and help families who are struggling to make ends meet.
What About Title Derived Through Foreclosure?
As a result of the federal and state law foreclosure moratoriums, until further notice, you are required to obtain approval from Underwriting to insure the title or issue a policy based on a foreclosure action where the certificate of title or writ of possession was issued after March 18, 2020, but before the expiration of the CARES Act and Executive Orders 20-94 and 20-121, now on June 30, 2020.
Additionally, title to any property derived through a foreclosure initiated during the effective period of the CARES Act and/or Executive Orders 20-94 and 20-121, will not be insurable.
As deadlines get pushed, and laws get stretched to allow for more financial breathing-room, it is essential to keep in mind how these rules apply to your specific situation. We have many questions that come into our office, and we are always honored to take the time and help someone gain clarity. Sometimes, legal rulesets can become cumbersome. That is why our lawyers are professionals at translating the legal jargon into a crystal-clear understanding of the law.
We are here to help you understand how these rules can apply to you. If you have questions, do not hesitate to reach out to us. We can, and we will help you through it.
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