Since March of 2020, New York and New Jersey have been acting under COVID-19 emergencies via both legislation and emergency order to prevent people from being evicted from their homes due to the inability to pay during the pandemic. The federal government has also placed moratoriums in place for federally backed loans (FHA, USDA, VA, Fannie Mae and Freddie Mac). In recent months, however, things have been looking up with respect to public health and the economy, which means that the time for moratoriums is coming to an end. Here is what the status is of foreclosures and evictions as of May 17, 2021.
Federally backed mortgages are currently subject to a moratorium on commencement of any foreclosure action with respect to “enterprise-backed single family mortgages.” This was enacted by executive order on February 25, 2021,which extended prior orders imposing same. That means that if you have an FHA, USDA, VA, Fannie Mae or Freddie Mac loan, the lender cannot commence a foreclosure action against you. If one was pending prior to the start of the crisis, the lender will not move to evict either. This moratorium on both foreclosure or eviction ends on June 30, 2021. THIS DOES NOT APPLY TO PRIVATE OR CONVENTIONAL LOANS, MULTIFAMILY UNITS OR COMMERCIAL LOANS
New Jersey Moratoriums
New Jersey has prevented eviction and foreclosures through a series of executive orders, first establishing a moratorium on evictions for both foreclosure situations and lease defaults and then extending that moratorium bit by bit. The moratorium is tied to the present public health emergency declaration that was declared on March 9, 2020 by executive Order 103. The Executive Order 106, which enacted the moratorium expires “no longer than two months following the end of the Public Health Emergency or State of Emergency” that is currently in place. Executive Order 240 extended that Emergency until June 30, 2021. Governor Murphy has announced that if the Legislature enacts legislation that gives him “the necessary tools and flexibility to continue the fight against the pandemic”, he will allow that Emergency to expire. The expiration of the Emergency will allow evictions to recommence.
A side effect of the moratorium on evictions has been that most Sheriff’s departments have stopped conducting the auctions or “Sheriff’s Sales” that conclude the foreclosure process for occupied residential properties. The only properties that are currently being sold through Sheriff’s Sales are vacant, abandoned, or commercial properties (and that is only in some counties). As foreclosures begin to open up and evictions are allowed to proceed, it is anticipated that Sheriff’s sales will resume.
New York Moratoriums
New York, has two statutes dealing the Covid-19 Emergency Eviction and Foreclosure Prevention Act of 2020, enacted on December 28, 2020, and the Covid-19 Emergency Protect Our Small Businesses Act of 2021, enacted on March 9,2021. These two statutes together prevent most foreclosures, evictions, tax sales, tax lien foreclosures and credit discriminations against residential and small business owners who file a hardship declaration. The Hardship declaration must state that the tenant or borrower is experiencing COVID-1 related hardship or that moving would pose a hazard to a vulnerable household member. Businesses must declare that they had either increased costs or decreased revenue (or both) due to the pandemic. That protection was extended on May 5, 2021 to August 31, 2021.
What do the Moratoriums Mean?
Moratoriums on foreclosure or eviction mean that a mortgage holder cannot start or process a foreclosure proceeding due to missed payments. Cases that were in process pre-pandemic cannot proceed to final sale, though a judgment can be entered. If a property was sold at Sheriff’s sale prior to the Pandemic the new owners cannot evict you. If you are behind in your rent, you cannot be evicted for non-payment (though the Landlord can sue you for the money owed). These moratoriums do not mean that past-due payments are not owed or that once the moratoriums end that the lenders will not seek to foreclose and/or evict. There is a huge backlog of homeowners and tenants who are behind. Their arrears accumulate every day. That means that when the protections end, there will be a major uptick in foreclosures and evictions.
If you are behind on your mortgage, now is the time to act before things fall apart completely. Reach out to us to schedule an appointment, check out our YouTube channel to see some more informational videos about the process and what can be done to help. It is likely not too late!