COVID-19 continues to affect Maryland residents, and the Federal government and the Maryland governor and judiciary have put into place protections from eviction and foreclosure, as well as forbearance periods for borrowers. However, these protections are temporary, and once the protections expire, Maryland residents will face a crisis when dealing with their rent and mortgage payments.
Federal Moratoriums Against Eviction
On March 27, 2020, the CARES Act put in place a moratorium on evictions through July 24, 2020. Effective September 4, 2020 through December 31, 2020, the Center for Disease and Control and Prevention halted all residential evictions to prevent the spread of COVID-19. On December 27, 2020, the President signed into law the Consolidated Appropriations Act which extends the expiration date of this order through January 31, 2021, and on January 27, 2021. President Biden extended this through March 31, 2021.
In order to take advantage of this eviction moratorium, a tenant must complete this CDC form, and must earn less than $99,000 per year for one person or $198,000 for couples and must make additional certifications. The signed form must be given to the tenant’s landlord.
However, this order specifically “does not relieve any individual of any obligation to pay rent, make a housing payment, or comply with any other obligation that the individual may have under a tenancy, lease, or similar contract.” Additionally, “Nothing in this Order precludes the charging or collecting of fees, penalties, or interest as a result of the failure to pay rent or other housing payment on a timely basis, under the terms of any applicable contract.” What this means is that although there is a temporary stay on evictions, tenants will have to pay back what they owe after the moratorium has expired, including fees, penalties and interest.
Federal Moratoriums Against Foreclosure
The CARES Act puts into a place a moratorium on foreclosures for a period of 60 days for federally-backed loans including FHA, VA, USDA, Fannie Mae, and Freddie Mac loans. On March 18, 2020, the U.S. Department of Housing and Urban Development instituted this foreclosure moratorium for a period of 60 days. This moratorium was extended on May 14, 2020, again on June 17, 2020, and recently on December 17, 2020, which extended the foreclosure moratorium on federally-backed mortgages through February 28, 2021. On January 21, 2021, pursuant to President Biden’s executive order, HUD extended this moratorium through March 31, 2021. This moratorium means that lenders cannot foreclose on a home during this time period for a federally-backed loan. You can check if your loan is backed by Freddie Mac here and Fannie Mae here.
Maryland Moratorium Against Eviction
On March 16, 2020, Governor Hogan issued an Executive Order that stops residential evictions as long as Maryland has declared a state of emergency if a tenant “can demonstrate to the court, through documentation or other objectively verifiable means, that the tenant suffered a substantial loss of income resulting from COVID-19 or the related proclamation of a state of emergency and catastrophic health emergency, including, without limitation, due to job loss, reduction in compensated hours of work, closure of place of employment, or the need to miss work to care for a homebound school-age child.” This order was amended on April 3, 2020 to include both commercial and residential tenants.
Maryland Moratorium Against Foreclosure
Governor Hogan’s April 3, 2020 executive order also directs the Commissioner “to suspend the operation of the Commissioner’s Notice of Intent to Foreclose Electronic System, and to discontinue acceptance of Notices of Intent to Foreclose until the state of emergency is terminated and the catastrophic health emergency is rescinded.” Since Maryland is still in a state of emergency, new foreclosures cannot start. However, foreclosures that were started before the pandemic hit can still continue, as long as the lender provides additional notice to the borrower that they can apply for a mortgage forbearance.
Section 4022 of the CARES Act mandates that a borrower who requests a forbearance from their federally-backed lender or servicer must be given a 180-day forbearance, and that during the forbearance period, no fees, penalties, or interest shall accrue other than as if the borrower had made payments on time. This section also allows a borrower to request an additional 180-day forbearance.
What Happens After the Moratoriums and Forbearances Expire?
This is perhaps the most important question that renters and homeowners should be thinking about. For FHA loans, a borrower can request a COVID-19 Standalone Partial Claim, as long as the borrower was current or not less than 30 days late as of March 1, 2020. This places a junior lien with no interest or fees on the home instead of requiring payments. Borrowers can also contact their lenders to arrange for a repayment plan. However, conventional loans do not have the option to place a junior lien, and must work something out directly with their lender, subject to the lender’s requirements.
Should I Consider Bankruptcy Now or Later?
If you are thinking about bankruptcy, it is best to get ahead and plan for the future. Once the foreclosure moratorium expires and Notices of Intent to Foreclose resume, homeowners in Maryland will have to figure out a way to keep their homes. The various moratoriums and forbearance options are merely bandaids on a serious problem, and unfortunately, the ultimate problem has not been resolved. If you have questions about bankruptcy, please call Steiner Law Group at (410) 670-7060 to schedule a consultation.