Mortgage Payments, Foreclosure and Eviction During the COVID-19 Crisis

April 10, 2020
Aaron S. Marines

**UPDATE 5/9/2020**  Governor Wolf ordered all foreclosures and evictions delayed until July 10, 2020.  If a mortgage company, landlord or manufactured home park owner has already sent out the required paperwork to start a foreclosure or eviction (Act 6 or 91 Notice, Notice to Quit, MHCRA Notice, etc.), they have to start all of the time requirements on July 10.  Anyone who has not sent out those notices has to wait until July 10 to send them.  If you keep track of the days from when you sent a notice – and you should – you should revise your reminder dates to start from July 10.  That means, for example, that the soonest anyone can file a complaint in foreclosure (for a property that requires an Act 6 or 9 Notice) will be August 12, 2020.

Another of the many questions that have come up during the coronavirus crisis is: What happens if you cannot make your mortgage or rent payments? Or, if you are a bank or landlord: What can you do if your mortgagor or tenant cannot make their monthly payments?  

CARES Act offers homeowners with federally-backed mortgages forbearance

The CARES Act contains a section on Credit Protection, but it only applies to holders of federally-backed mortgage loans. That means that the mortgage has to be owned or backed by a federal agency. These federal agencies are:

  • U.S. Department of Housing and Urban Development (HUD)
  • U. S. Department of Agriculture
  • Federal Housing Administration (FHA) (Includes reverse mortgages)
  • U.S. Department of Veterans Affairs (VA)
  • Fannie Mae
  • Freddie Mac

If you do not know who holds or services your mortgage, the federal Consumer Financial Protection Bureau (CFPB) has instructions on how to find out.  

None of these federally-backed mortgage holders can take any actions to foreclose against a mortgagor until May 18, 2020.

The CARES Act also says that if a homeowner asks their federally-backed mortgage holder for forbearance – not making mortgage payments – the mortgage holder may give them up to six months, with the option to extend another six months. 

If the mortgage holder does allow the owner to delay payments, the mortgage holder has to report that the owner is up to date to the credit bureaus. 

CARES Act offers landlords with federally-backed mortgages forbearance

If a landlord has a federally-backed mortgage for a 1 to 4 unit building, the landlord can receive the same forbearance as any other mortgagor.  

If the landlord gets forbearance, the landlord may not evict a tenant because of the failure to pay rent. The landlord cannot charge late fees or interest to the tenant.  Also, if the landlord tries to evict a tenant for reasons other than failure to pay rent, the landlord must give 30 days’ Notice to Quit instead of the normal 10. 

Again, these limitations only apply to landlords who receive forbearance from their federally-backed mortgage.

Pennsylvania restricts legal actions for foreclosure and eviction

Even if your mortgage is not a federally-backed mortgage covered by CARES, no one can start legal actions to foreclose or evict anyone. The Pennsylvania State Courts are closed to all “non-essential business.” 

The state has extended this restriction through April 30.

These changes do not mean that a bank or landlord cannot charge late fees or interest to someone who has fallen behind on payments. But there is no place to enforce collection until at least the end of April.  

Lancaster County closes courts

Lancaster County Courts have followed the guidance from the Pennsylvania Supreme Court. That is, Lancaster has closed all of the Court offices and Magisterial District Offices except for certain emergency matters. 

This closure also goes to April 30.

Other Counties also restrict legal actions for foreclosure and eviction

The Pennsylvania Unified Judicial System website has compiled all of the various county court orders. It looks like all of the Courts and District Justice Courts are closed to evictions and foreclosures.  

The way each Court is handling these delays are a little different, so you should check the specific county for changes.  

Associations should consider waiving interest and late fees

Condominiums and Homeowners’ Associations are not covered by the CARES Act. However, the restrictions on starting or following through on any legal action to collect assessments apply to them as well. An Association can send demand letters, but they will not be able to file a District Justice complaint or take any action in their county’s Court of Common Pleas.  

The CARES Act does not prohibit associations from adding interest and late fees to past due assessments. However, I think that Associations should consider waiving these until this crisis passes. The Association can either do this across the board or consider it on a case by case basis.  

Aaron Marines is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University and practices in a variety of areas including BusinessCommercial Real EstateLand Use, Land Planning and Zoning matters.