As the COVID-19 pandemic continues to upend our lives, let’s take a break from #QuarantineBaking and the #BigOnlinePar to talk about new laws that might help you hang on to your home during this perilous time. The good news is that both homeowners and renters are protected; the bad news is that, for some, that protection expires at the end of May.
If You’re a Homeowner
On March 27, 2020, the Wisconsin Department of Health Services (DHS) issued Emergency Order #15 prohibiting foreclosures for 60 days. This barred lenders from filing new foreclosure cases or scheduling sheriff’s sales for existing cases. Likewise, sheriffs may not conduct sales or remove homeowners and their belongings. The only exception to the ban is for properties that have been abandoned, meaning no one is living in or taking care of the property.
On the federal side, the CARES Act also bans foreclosures but covers properties with “federally backed” mortgage loans only. A loan is “federally backed” if it is owned, insured or guaranteed by Fannie Mae, Freddie Mac, the Federal Housing Administration (“FHA”), the Department of Veterans Affairs (“VA”) or the Rural Housing Service (“RHS”). For context, approximately 70% of all outstanding mortgages are “federally backed.” Unfortunately, the CARES Act ban expired on May 17, 2020, but on May 14, 2020, the FHA extended the foreclosure ban on its mortgages until June 30, 2020. The VA and RHS may similarly expand relief for homeowners. You can check the National Consumer Law Center’s comprehensive list of COVID-19 consumer protection laws for updates here.
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Mortgage Payments Postponed
The CARES Act gives another big benefit to some homeowners: mortgage payment forbearance for up to 360 days, even if you were behind prior to COVID-19. Under the Act, owners of one-to-four family properties with “federally backed” mortgage loans can receive an initial forbearance for 180 days and can renew for another 180 days. But, to take advantage of this forbearance, you have to contact your mortgage servicer and ask for it—it is not automatically applied to your account. You also must attest that you have a financial hardship because of COVID-19 (but you don’t have to prove the hardship).
During forbearance, no fees, penalties or interest will be charged to your account. The deadline to ask for forbearance is unclear but appears to be Dec. 31, 2020 unless the federal government declares that the COVID emergency is over before then.
To be clear: your servicer is required to grant your forbearance request as long as you meet the basic requirements. If you believe that your servicer wrongfully denied your forbearance request, file a complaint with the CFPB and with the Wisconsin Department of Financial Institutions.
Of course, you should keep making your mortgage payments if you can. Missed payments under forbearance are not forgiven or waived. After forbearance, you will have to work out a repayment plan or loan modification to get caught up. Typically, the options are: (1) paying the missed payments in a lump sum; (2) making larger monthly payments; or (3) extending the loan term and adding the missed payments to the loan’s principal. But your options will depend on your loan’s details and who your servicer is.
If You’re a Renter
If you’re a renter, you’re also covered by the Wisconsin DHS emergency order. Starting on March 27, 2020 and lasting for 60 days, landlords cannot: (1) serve notice terminating tenancy; (2) file new eviction cases; and (3) deliver court orders to the sheriff to remove a tenant. Sheriffs also can’t act on any eviction order. The only exception is where the eviction will prevent “serious physical harm to another person.” But this does not mean that you get to live rent-free—you still owe rent. If you don’t pay, the order just delays eviction.
The federal government’s CARES Act also prohibits evictions, but only for properties receiving federal subsidies or where the owner has a “federally backed” mortgage. So covered properties include most types of public housing, such as Section 8 homes, as well as those with mortgages owned, insured, or guaranteed by Fannie Mae, Freddie Mac, FHA, VA or RHS. If you live in a covered property, the landlord cannot, between March 27 and July 25, 2020: (1) file an eviction case for non-payment of rent or other fees; (2) charge any fees related to non-payment of rent; or (3) issue a notice to vacate. And a notice to vacate issued after July 25 must give the tenant at least 30 days from the notice date to actually vacate the unit.
Like Wisconsin’s order, the CARES Act does not waive missed rent payments. If you’re behind on your rent, it just delays eviction. And if you break your lease in a manner other than not paying rent (e.g., unauthorized people living in the unit, causing damage, etc.,), the CARES Act does not stop your landlord from evicting you.
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Public Housing or Section 8 Voucher
You know if you live in public housing or use a Section 8 voucher. But as a tenant, there is no way to find out if your landlord has a “federally backed” mortgage. So, if your landlord files an eviction case during the CARES Act 120-day ban, the landlord should have to prove that their property does not have that type of mortgage.
Bottom line: keep paying your rent or mortgage if you can. If you can’t, and your servicer or landlord moves to foreclose or evict during the prohibited periods described above, use the new laws as a defense in court. And, most importantly, be proactive! If you’re a homeowner, contact your servicer (and visit the servicer’s website) to find out what assistance is available to you.
Even if your mortgage is not covered by the CARES Act, your servicer may have relief options. If you’re a renter, contact your landlord to work out a plan to get caught up, if possible. Up next in this series: debt collection and credit reporting.
Always Verify
Is my mortgage “federally backed”? Your loan servicer should be able to tell you, but sadly, loan servicers are not always competent or trustworthy. So you should independently verify any information your servicer gives you. First, use the Fannie Mae and Freddie Mac online loan lookup tools (you’ll need to enter the property address and last four digits of the borrower’s Social Security number):
If the loan lookup tools don’t show that either Fannie or Freddie owns your loan, then you have to do some detective work to determine if your loan is “federally backed” by the FHA, VA or RHS.
- If you have a copy of your HUD-1 form from closing, or your note or mortgage, there should be language indicating the involvement of the FHA, VA or RHS. If you don’t have any of these documents, you can get a copy of your mortgage from your local recorder of deeds office.
- If you’re still not sure, send a “Request for Information” (“RFI”) to your mortgage servicer asking for the identity of the mortgage owner. Critically, an RFI must be sent to the servicer’s “exclusive address” for receipt of RFIs. See the CFPB’s website for more guidance on how to send an RFI.
Attorney Amanda Adrian owns Adrian Consumer Law, LLC, a Milwaukee-based consumer rights law firm specializing in student loans, foreclosure defense, credit reporting errors, and debt collection defense. She is also launching a new workshop, “Student Loan 411-911,” to help people better understand and manage their student loans. You can find her at www.adrianconsumerlaw.com.
