When the pandemic first hit in early 2020, the Trump administration placed a moratorium on foreclosures and evictions. While the moratorium was extended last year, it was set to expire on January 31, 2021. Fortunately for homeowners who are falling behind on their mortgage payments, President Biden signed an executive order on the first day of his presidency that is going to extend the moratorium once again. Now, the moratorium on foreclosures and evictions is set to last at least until March 31, 2021.
While the news is a relief for hundreds of thousands of homeowners around the country, there are certain things everyone should know about the new order, what it means for their mortgage payments, and the requirements with which lenders must comply.
What Does the Moratorium Order Cover?
Like the moratorium order that was in place prior to the extension, the executive order applies only to federally-backed mortgages. Still, there are over 11 million mortgages guaranteed by Veterans Affairs, the Department of Agriculture, and Housing and Urban Development, which means the order still brings relief to homeowners throughout Florida and the rest of the country.
Prior to the executive order, the Federal Housing Finance Agency had already extended moratoriums on single-family foreclosures and real estate owned evictions until February 28, 2021. This moratorium prohibits mortgage loans backed by Fannie Mae and Freddie Mac.
While these moratoriums have resulted in foreclosures being at record lows, it is estimated that delinquent mortgages are still 1.8 million above pre-pandemic levels. It has also been estimated that approximately one in 10 homeowners is behind on their mortgage payments.
Like the past moratorium placed on foreclosure proceedings, the latest executive order applies only to foreclosures and evictions based on non-payment. Foreclosures based on non-compliance with other terms, such as noise restrictions, are still able to go forward. In the event that a property is abandoned or vacant, mortgage servicers and lenders can still foreclose on a property.
Homeowners who have a federally-backed mortgage can still expect lenders to provide them with relief as outlined in the CARES Act by offering them forbearance of the guaranteed loan payment for up to 180 days. In addition, when a borrower makes a request, the initial forbearance period can be extended an additional 180 days. Lenders should also offer potential solutions that may be available once the forbearance period is over. Lenders should also notify borrowers that a lump-sum payment for the arrears is not required.
When a borrower has used a forbearance option, the lender should not apply any accrual of fees, interest, or other penalties that exceed the amount calculated if the homeowner had made all contractual payments in a timely fashion.
Once the forbearance period is over, lenders should also work with borrowers to determine if the homeowner can continue making regular payments. When homeowners are able to start making payments again, they should be offered an affordable repayment plan or an extension to defer any delinquent payments to the end of the loan. In the event that the borrower is not able to start making regular payments again, the lender should evaluate the homeowner for all available loss mitigation options.
Common Foreclosure Defenses in Florida
While the extension of the foreclosure moratorium will bring much-needed relief for many homeowners, it will expire at some point in the future. Additionally, the order only applies to federally-backed mortgages, leaving homeowners without a guaranteed mortgage still at risk for foreclosure. Fortunately, there are still many foreclosure defenses available for these homeowners.
Some of the most common defenses used in foreclosure cases include:
- Lack of standing: For a lender to be successful with a foreclosure lawsuit, they must prove that they have proper standing to bring the legal action. This means that the lender is the holder of the title or the note and has something to lose if the borrower does not pay their mortgage. It is often difficult for a bank to prove that they have proper standing to file a lawsuit because they often bundle and sell their mortgages, which results in them no longer having standing to file a foreclosure lawsuit.
- Lack of adequate notice: Most mortgage loans require lenders to notify the homeowner that they have defaulted on their loan prior to filing a lawsuit. This condition is usually found in paragraph 22 of the mortgage loan and typically states that lenders must provide the homeowner with a minimum of 30 days notice, and provide them with options to bring their loan current.
- Unclean hands: Lenders are not allowed to use fraudulent or illegal actions to force a homeowner into foreclosure. For example, a lender cannot tell a homeowner that they do not have to make payments for two months, and then foreclose on the property when those payments are missed. When lenders use such strategies, they have unclean hands, which provides an affirmative defense for the borrower.
- Failure to comply with the Florida Consumer Collection Practices Act: Florida law requires that lenders notify homeowners every time their mortgage is transferred, and the notice must be given within 30 days of the transfer. When lenders do not comply with this law, it can serve as a foreclosure defense.
- Failure to record mortgage payments appropriately: Federal law requires loan servicers to apply payments and charges to mortgage loans. When lenders and servicers fail to properly credit payments, they cannot successfully win a foreclosure lawsuit.
After reviewing the specific facts of a case, a Florida foreclosure defense lawyer will advise on the most appropriate defense.
Our Foreclosure Defense Lawyers in Florida Can Help with Your Case
If you are facing foreclosure, or have missed some mortgage payments and are worried about losing your home, our foreclosure defense lawyers in Fort Lauderdale can help with your case. Our skilled Foreclosure attorneys know the best defenses to use in these cases, and we will put our experience to work for you. Call us today at (954) 807-1361 or fill out our online form to schedule a free consultation and to learn more about how we can help.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.