CARES Act, Foreclosures and Evictions: What You Need to Know

. May 4, 2020.
CARES-Act

By William D. Fergus, Jr., Northwest Title of Family Companies, Inc.

In response to COVID-19, Congress passed and President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (commonly known as the CARES Act). Among other measures, the CARES Act provides relief from foreclosure and eviction for eligible homeowners and renters.  

Eligibility: Who Is Covered?

Homeowners are eligible for a moratorium (i.e. a pause) on mortgage payments and protection from foreclosure if they have a federally backed mortgage loan. These include loans backed by Fannie Mae, Freddie Mac, the Federal Housing Administration, the Veterans’ Administration or the U.S. Department of Agriculture. Most, but not all, first mortgage loans since 2010 are federally backed mortgage loans: check with your loan provider to see if you are eligible.

Renters are eligible for protection from eviction if their landlord is also eligible for foreclosure protection. Residential real estate investors, like landlords, are eligible if they have a federally backed mortgage loan and if their building has four or fewer apartments. 

Pause on Foreclosures

Until at least May 17, 2020, lenders and servicers of federally backed mortgage loans held by eligible property owners or tenants cannot start a foreclosure lawsuit. If they have already started a suit, they cannot get a foreclosure judgement or start a foreclosure sale (this is referred to as a “sheriff’s sale” in Ohio). However, this doesn’t stop all legal proceedings. Again, if they have already filed a lawsuit, a servicer’s attorney can still do things like serving parties with complaints and other legal documents.

Monthly Payment Forbearance

During the COVID-19 emergency declared by the CARES Act, which could last up to a year unless shortened by the President or Congress, eligible property owners may request forbearance – or a pause on payments – for monthly payments of principal and interest. This request can be for up to 180 days, with the possibility of an additional 180-day extension.

To qualify for this, an applicant for forbearance only needs to call their loan servicer and tell them that they are experiencing financial hardship caused directly or indirectly by the COVID-19 crisis. Once the application is approved, all mortgage payments are suspended for the period of forbearance. Interest continues to accrue on the loan, but the loan servicer cannot charge penalties, additional fees or additional interest. 

It’s important to understand that forbearance is not the same as forgiveness. The loan must still be repaid in full when the forbearance period is over.

Pause on Evictions

Landlords of a one- to four- unit residential building who have federally backed mortgage loans are prohibited from filing eviction lawsuits until July 15, 2020. These landlords are also prohibited from issuing notices to tenants who are behind on rental payments to vacate the premises, and are also prohibited from charging fees, penalties or other charges to a tenant related to nonpayment of rent.

How an Attorney Can Help

The CARES Act is new. Certain rights and responsibilities of borrowers, lenders and servicers are not well-defined. Before considering requesting mortgage payment forbearance, borrowers should take into account the possibility that they may be required to pay all back payments to their lender upon demand following the period of forbearance. An attorney who is familiar with this area of law can help borrowers navigate this process.

April 17, 2020

About the Author

William D. Fergus is an OSBA Certified Specialist in residential real property law. He is a partner in the Holfinger Stevenson Law Firm and serves as General Counsel for the Northwest Title Family of Companies in Columbus, Ohio.

Articles appearing in this column are intended to provide broad, general information about the law. This article is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from a licensed attorney.

Trending

Ode to the ZIP Code 2021!

For the sixth year in a row, Adams Street Publishing has teamed up with The Fair Housing Center, The Arts Commission and the Toledo Lucas County Public Library for the Ode to the ZIP Code poetry contest.

January Home Maintenance

By Lisa Alleman Add these home maintenance tips to your 2021 Resolutions The holidays are behind us once again along with December’s flurry of activity and family focus. As we begin another year, the care of our homes is a worthwhile focus. These January Home Maintenance tips will help you start the year out right!

2021 Resolutions: Planning for the world after 2020

A worldwide pandemic, a contentious national election and a renewed examination of racism in America, accompanied by hurricanes, fires and even murder hornets, made 2020 a once-in-a-lifetime year.  “The hardest thing for people to get used to in 2020 was the lack of predictability,” explained Matt Rizzo, CEO and president of A Renewed Mind, a

RESTAURANTS OFFERING HEALTHY OPTIONS Need to take off five pounds after the holidays? 

  Happy New Year!  Did you eat your way through the holidays?  Need or want to shed a few pounds?  Still want to enjoy restaurant fare?  Diets and restaurants are not necessarily incompatible.  The USDA gives these tips for making healthy choices at restaurants.  Drink water, split  meals, pick salads full of vegetables with dressing