A big thank you to our co-author, Jasmine Pandher, for her contributions.
The foreclosure-related eviction moratorium, foreclosure moratorium and residential eviction moratorium have all been extended and re-extended several times since their inception in 2020. If you’ve been having trouble keeping up with the numerous extensions, we’re here to give you an update on the latest changes in both moratoriums and how they’re affecting the housing and rental markets.
The Foreclosure-Related Eviction Moratorium & Forbearance Program
At the end of July, the Federal Housing Administration (FHA) announced an additional extension of the foreclosure-related eviction moratorium that was set to end on July 31st (it was extended until September 30th). The foreclosure-related eviction moratorium was put into effect to help prevent foreclosures, and the subsequent eviction of homeowners with federally-backed mortgages, and to also provide these homeowners with pandemic forbearance protections. The FHA did not extend the federal moratorium on mortgage foreclosures, which now allows mortgage servicers to initiate foreclosure proceedings; however, they continue to be prohibited from evicting a foreclosed homeowner until at least September 30th, thanks to the foreclosure-related eviction moratorium. With the end of the federal foreclosure moratorium, homeowners are now faced with thousands of dollars of past-due mortgage payments. Fortunately, the forbearance program, which essentially permits homeowners to provisionally stop paying their mortgage payments, will also remain in effect until September 30th. The need for financial assistance is still very much in demand. From the beginning of the pandemic, over 7 million homeowners have enrolled in the forbearance program, and as of early July, 1.75 million still remain enrolled. The FHA is encouraging homeowners to contact their servicer for information on modifying their loan.
The End of the Eviction Moratorium
Back in September of 2020, the Center for Disease Control and Prevention (CDC) imposed a nationwide temporary federal moratorium on residential evictions for nonpayment of rent, specifically in areas experiencing high levels of transmission of COVID-19. Essentially this meant that landlords could not evict a tenant on the basis of failure to pay rent. Tenants were required to assert this protection by providing their landlord with a signed declaration of income eligibility. The moratorium was set to expire on July 31st, but the CDC reimposed the moratorium just three days later. On August 26th, the Supreme Court ended the CDC’s federal eviction moratorium, citing that the CDC had “exceeded its authority” in its imposition. The purpose behind the moratorium was to prevent an increase in evictions (and thus, homelessness) due to an unprecedented nationwide shutdown and health crisis that has caused many individuals to lose their jobs for an indeterminate period of time. The Supreme Court’s rationale in ending the moratorium was not due to an insufficient purpose, but rather that the CDC improperly relied on an authority within the Public Health Service Act. While rarely invoked, this authority typically had been limited to quarantining infected individuals and prohibiting the importation/sale of animals known to transmit diseases, and not to justify an eviction moratorium. As a result of the Supreme Court’s decision, thousands of tenants may be put at risk of eviction. One of the collateral consequences of the nearly year-long federal eviction moratorium is that many landlords are owed tens of thousands of dollars in unpaid rent, causing some to be unable to afford their own expenses. According to the New York Times, as of the end of July, only about $5.1 billion of the $46.5 billion in available rental assistance funds have been disbursed. With the lack of assistance to landlords, and the slow flow of federal/state funds to tenants, there’s a substantial lack of fairness to both parties. The issue then becomes that available protections will expire before states are able to disburse the federal assistance funds.
Marti Law Group will continue to provide updated information on the moratorium and helpful resources to those that have been impacted.