COVID-19 has impacted many renters and homeowners in Florida. Help has arrived for most.
The CARES Act (Coronavirus Aid, Relief, and Economic Security Act), went into effect on March 27, 2020. One part of the Act addresses foreclosures, evictions and Mortgage Loan Forbearance. This post will review those sections of the CARES Act.
If you have a federally backed mortgage (2/3 of mortgages fall in this category), help has arrived. The Act provides foreclosure relief for federally-backed loans, for 1–4 family properties. A federally backed mortgage is one that is purchased, securitized, owned, insured, or guaranteed by Fannie Mae or Freddie Mac, or owned, insured, or guaranteed by FHA, VA, or USDA. (If you're not sure if your mortgage is federally backed, please see my blog on that subject.)
Under the CARES Act, a servicer of federally backed mortgage loans may not:
1. Initiate any judicial or nonjudicial foreclosure process,
2. Move for a foreclosure judgment,
3. Order a sale, or
4. Execute a foreclosure-related eviction or Foreclosure sale.
There are two provisions. The first has the shorter relief period. It lasts for not less than the sixty-day period beginning on March 18, 2020. This provision is not limited to borrowers with a COVID-19 related hardship.
The second is for people that have been affected by COVID-19, and have a federally backed mortgage loan. If you fall into this category, you can request and obtain forbearance from mortgage payments for up to 180 days, and then you can request and obtain additional forbearance for up to another 180 days.
During a period of forbearance, no fees, penalties, or interest will accrue on the borrower’s account beyond the amounts scheduled or calculated. It's as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract. The covered period appears to be during the emergency or until December 31, 2020, whichever is earlier.
There is another section of the CARES Act that provides help for persons who have more than 4 properties. It also protects tenants of these properties. If this is your situation, please read section 4023 of the Act.
If you're a renter, the CARES Act offers protections against eviction. There is a 120 day period that started on March 27, 2020. It states that the lessor (landlord) of a “covered dwelling” may not file a court action for eviction or charge additional fees for nonpayment of rent. (Read section 4024(b) of the Act.) After the120-day period, the lessor (landlord) cannot require the tenant to vacate until he/she/it gives the tenant a thirty-day notice to quit. (read section 4024(c) of the Act). So, what is a covered dwelling? It's a building that is secured by a federally backed mortgage loan or participates in certain federal housing programs. (Read section 4024(a) of the Act). A large number of governors have also initiated suspensions of all residential evictions in their states, but Florida Governor Desantis has not. He said he would "consider it." Some counties have done so on their own. Here in Brevard County, Chief Judge Lisa Davidson has stopped eviction and foreclosure proceedings through April 15, 2020.
Homeowners (and tenants) that do not have federally backed mortgages, will have to wait to see if Congress will add protections for them in the next piece of legislation. They may find relief from the Florida Legislature or from Governor Desantis in the future. Some mortgage servicers are offering relief on their own for those not covered by the CARES Act.
Attorney Arna D. Cortazzo practices law in Melbourne, Florida. She has practiced law for 33 years.
Thanks to the National Consumer Law Center for some of the information in this post.