The Truth About Florida’s COVID-19 Foreclosure Moratorium
You may have recently seen the news that Florida Governor Ron DeSantis has suspended foreclosure and evictions.
This is only partially true.
Here is the exact text from Executive Order Number 20-94, signed by Gov. Desantis on April 2, 2020:
I, RON DESANTIS, as Governor of Florida, by virtue of the authority vested in me by Article IV, Section (1)(a) of the Florida Constitution, Chapter 252, Florida Statutes, and all other applicable laws, promulgate the following Executive Order to take immediate effect:
Section 1. I hereby suspend and toll any statute providing for a mortgage foreclosure cause of action under Florida law for 45 days from the date of this Executive Order, including any extensions.
Section 2. I hereby suspend and toll any statute providing for an eviction cause of action under Florida law solely as it relates to non-payment of rent by residential tenants due to the COVID-19 emergency for 45 days from the date of this Executive Order, including any extensions.
Section 3. Nothing in this Executive Order shall be construed as relieving an individual from their obligation to make mortgage payments or rent payments.
So, exactly what does EO # 20-94 mean for Floridians?
No new foreclosures for 45 days
There is a 45 day pause for new foreclosures, whether residential or commercial. No new mortgage foreclosures will be filed until May 8, 2020, which is the 46th day after April 2, 2020. This appears to apply to both RESIDENTIAL and COMMERCIAL foreclosures.
No new evictions for 45 days
If you rent your home, your landlord cannot file a new eviction case until May 8, 2020, which is the 46th day after April 2, 2020. EO # 20-94 DOES NOT APPLY to commercial leases.
NOT APPLICABLE to pending foreclosures or eviction proceedings
Foreclosures and evictions filed before April, 2, 2020 ARE NOT suspended by EO # 20-94.
The judicial branch controls all pending foreclosure actions and evictions. If you have an ACTIVE foreclosure or eviction case, it DOES NOT stop. The Florida Supreme Court has the power to stop pending court case, but they have not done so, as of yet.
This means that the fate of all pending foreclosure and eviction cases is dependent upon the judge of each case. As a practical matter, a presiding judge can refuse to set hearings or continue a hearing already set. However, DO NOT ASSUME your presiding judge will delay your hearing, and DO NOT ASSUME your judge will not set a foreclosure sale date or an eviction date.
In many Florida counties, like Duval, St. Johns and Clay, foreclosure judges automatically set Case Management Conferences (a.k.a. “CMC”). In response to Center for Disease Control recommendations, many courthouses are currently closed, except to courthouse employees, and most CMC hearings have either been postponed or set to be heard telephonically. If you have a pending foreclosure case, you must find out exactly what your county courthouse is doing about CMC hearings.
If you have a pending Florida foreclosure or eviction case, the attorneys of Parker & DuFresne, P.A. will review your court docket for you and let you know whether your case has a hearing currently set on the calendar, and we will recommend a course of action. This analysis is free to our community.
You are still obligated to pay rent and mortgage
EO # 20-94 does not allow you to stop paying your mortgage or rent. This means you still owe the payment due, even if you do not have the ability to pay it.
“But I heard that the government suspended my mortgage payments!”
In response to the economic impact of COVID-19, Congress enacted the CARES Act, which suggests that mortgage borrowers with federally backed loans can seek forbearance for up to six months and an additional 6 months of suspended payments. This would mean that homeowners who are proactive and contact their mortgage servicer can avoid foreclosure for up to one year if they cannot make payments on their home loan.
However, news outlets are reporting that many servicers of mortgages secured by Freddie Mac, Fannie Mae or other government agencies are sending emails to their customers offering 90-day forbearance plans. In one reported case, when a furloughed worker called Wells Fargo to ask for help with her FHA loan, she was advised that, “at the end of those three months, all my mortgage payments would be due at once.”
Needless to say, mortgage servicers are slow to acknowledge the reality of this economic crisis. Then again, think back to the “Great Recession” of the last decade. The government’s handling of that mortgage crisis was abysmal. I would expect nothing different this time around.
Why won’t mortgage servicers comply with the CARES Act forbearance initiatives? Because there’s a hidden problem with the plan. Your mortgage servicer is required to make contractual payments to investors who own the securities back by your mortgage. Most MBSs are issued by the government agency Ginnie Mae and the government-sponsored enterprises Fannie Mae and Freddie Mac. They are owned by institutional investors and indirectly owned by ALMOST EVERYBODY with a mutual fund.
After years of representing literally thousands of homeowners, one thing is for sure: You cannot trust your mortgage servicer to give you accurate or ever truthful information. So, the most important thing you can do when dealing with your mortgage servicer in this time of crisis is BE SKEPTICAL of EVERYTHING your servicer tells you. Get any offer or information in writing, and review everything before you sign a document sent by your servicer.
If you have a private mortgage loan, the CARES Act does not apply to your mortgage. This does not mean you are out of luck. It just means you need to find out what relief is available to you.
“I can’t make my mortgage payment. What should I do?”
You should immediately reach out to your mortgage servicer and find out what options are available now. Communication with your servicer often delays any negative action by your servicer.
If you are currently represented by Parker & DuFresne, we are monitoring your foreclosure case, and you will be updated as your situation changes.
“What will happen to my credit score if I choose to defer my mortgage payment?”
While your credit score shouldn’t be the thing you are most concerned about at this time, there is currently NO GUIDANCE on credit reporting during this pandemic. If you choose to defer payments on your mortgage (or other bills for that matter) your credit score will likely be negatively impacted for years to come. Maybe mortgage servicers will report your account with some sort of statement that indicates your payment history is affected by the pandemic, which could possibly help protect your credit history and credit scores. Again, without any coordinated guidance on this issue, the effect of the pandemic on your credit score is anyone’s guess.
Do you need advice?
If you have questions about how the COVID-19 pandemic affects you, please continue to check www.jaxlawcenter.com, as we are working to update it with the latest impact of COVID-19 on foreclosures and bankruptcy cases. In addition, you can schedule a free appointment with one of our lawyers to discuss your specific economic circumstances and the relief available to you. Please call (904) 733-7766 for an appointment.