The inauguration of President Biden on January 20, 2021, and the launch of a new executive administration, brought with it further extensions of the federal moratoria on conducting foreclosures of single-family residential properties and pursing residential evictions due to the ongoing COVID-19 pandemic. The eviction moratorium extended by the federal Centers for Disease Prevention and Control (CDC) applies nationwide to residential properties (unless exempted), and the foreclosure and eviction moratoria extensions by other federal agencies apply to properties with government-backed mortgages or that are owned by the government-sponsored enterprises (GSEs) following a previously-completed foreclosure or deed-acquisition arising from a mortgage default. The extensions, which were widely expected following the November election results and continuing nature of the COVID-19 pandemic, are summarized below. And with a new Congress under Democratic control, they are likely to be followed by a more robust effort by the Biden Administration to extend them until September 30, 2021.
CDC Extends Residential Eviction Moratorium until “at least” March 31, 2021.
On Inauguration Day January 20, 2021, newly installed Director of the federal Centers for Disease Prevention and Control (CDC) Rochelle P. Walensky, MD, MPH announced an extension of the CDC’s Order temporarily halting residential evictions “until at least March 31, 2021.” Director Walensky described the moratorium extension “[a]s a public health measure” caused by “[t]he COVID-19 pandemic [which] has presented a historic threat to our nation’s health” and “triggered a housing affordability crisis that disproportionately affects some communities.” Noting the “continu[ing] spread” of COVID-19 “in America at a concerning pace,” Dr. Walensky stated that the eviction-bar extension was needed “to keep people in their homes and out of congregate settings—like shelters—where COVID-19 can take an even stronger foothold.”
The latest extension of the CDC eviction moratorium Order until “at least” March 31, 2021 follows a prior extension of the Order until January 31, 2021 by the Consolidated Appropriations Act, 2021 enacted by Congress and signed by former President Trump on December 27, 2020. These two recent extensions of the CDC eviction moratorium do not make any changes to the September 4, 2020 CDC Order entitled “Temporary Halt in Residential Evictions to Prevent the Spread of COVID-19” (summarized here), other than to extend its expiration date. The new expiration date is now March 31, 2021 unless extended, modified or rescinded, but absent a dramatic improvement in the nationwide COVID-19 outbreak during the first months of the Biden Administration, we expect further extensions of the CDC Order expiration date.
FHFA Extends Freddie-Mac and Fannie-Mae Moratoria until February 28, 2021.
On January 19, 2021, the Federal Housing Finance Agency (FHFA), which regulates GSEs Fannie-Mae and Freddie-Mac, announced that it was extending the GSE moratoriums on single-family home foreclosures and real estate-owned (REO) evictions from January 31 until February 28, 2021. In announcing this extension, FHFA Director Mark Calabria stated that the extensions were necessary in order “[t]o keep our communities safe, and families in their homes during the COVID-19 pandemic . . . .” The announcement noted that the “FHFA continues to monitor the effect of the foreclosure and eviction moratorium on borrowers, the [GSEs] and their counterparties, and the mortgage market and extend or sunset its policies based on the data and health risk.” It also highlighted that the GSEs “continue to offer comprehensive loss mitigation programs for borrowers with eligible hardships,” including hardships arising from the COVID-19 pandemic, and that they will “remain available even when COVID-19 forbearance flexibilities end.”
This was the fifth extension of the GSE foreclosure and REO eviction moratoria since the onset of the COVID-19 state of emergency in March 2020, and is not expected to be the last.
HUD Had Previously Extended the FHA Foreclosure and Eviction Moratorium until February 28, 2021.
Prior to the change in Presidential administration, in late December 2020, the Department of Housing and Urban Development’s Federal Housing Administration (FHA) announced an extension from December 31, 2020 until February 28, 2021 of its foreclosure and eviction moratorium for single-family FHA-insured mortgages and REO properties due to the COVID-19 pandemic. The FHA moratorium prohibits servicers of its federally-insured single-family mortgages (including reverse mortgages) from initiating or proceeding with foreclosure and foreclosure-related eviction actions, except for mortgages secured by vacant and abandoned properties. This was the fourth extension of the FHA foreclosure and eviction moratorium, and like the GSE moratoria, is not expected to be the last.
The Biden Administration Has Promised Further Moratoria Extensions.
These extensions of the CDC, FHFA and FHA foreclosure and eviction moratoria appear to be interim steps in a more extensive effort by the Biden Administration to stretch them out until at least September 2021. In its $1.9 trillion stimulus package referred to as the “America Rescue Plan” unveiled prior to the Inauguration on January 14, 2021, the incoming Biden Administration called for a nationwide moratorium on residential foreclosures and evictions until September 30, 2021. With a Democratically-controlled Congress, and the Biden Administration’s focus on addressing COVID-19 pandemic impacts in its first 100 days, we should know shortly whether these moratoria are likely to be further extended into the third quarter of 2021.
We will continue to monitor and report on the status of the federal foreclosure and eviction moratoria, as well as state-specific limitations that impact the default remedies available to our banking and financial institution clients.