Relating to Real Estate

By executive order dated December 17, 2020 (December Order), Maryland Governor Lawrence J. Hogan, Jr. extended the stay on residential foreclosures and the prohibition of certain residential and commercial evictions in response to COVID-19. At the federal level, President Joseph R. Biden, Jr. requested by executive action on January 20, 2021, that certain agencies extend the federal moratorium for similar actions.

Maryland Action

The December Order amends and restates previous executive orders issued October 16, 2020, (October Order) and April 3, 2020; specifies requirements lenders must follow with respect to residential foreclosures; and provides instructions to Maryland courts regarding residential and commercial evictions.

On December 18, 2020, the Maryland Department of Labor’s Commissioner of Financial Regulation (Commissioner) published Interpretational Guidance regarding the December Order.

Residential Foreclosures

The previous executive orders suspended the notice of intent to foreclose registry system (NOI Registry). This effectively stopped the initiation of new residential foreclosures. Under the October Order, the NOI Registry was set to resume January 4, 2021, and that same order mandated that lenders provide borrowers with certain notice requirements before initiating a foreclosure. Specifically, if a residential property is subject to a federally backed mortgage loan, the lender must provide the borrower notice of the borrower’s right to request forbearance under §4022(b) of the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) at least 30 days prior to sending a notice of intent to foreclose under Maryland Code, Real Property Article (RP) §7-105.1(c). 

With respect to a residential property securing a non-federal mortgage loan, the lender must send the borrower a notice that if the borrower has experienced financial hardship due to the COVID-19 pandemic, either directly or indirectly, the borrower may request a 180-day forbearance, which may be extended for an additional 180 days. 

Under the December Order, the suspension of the NOI Registry has now been extended through January 31, 2021. The Commissioner has the authority to further extend suspension of the NOI Registry beyond that date. The December Order also clarified that for non-federal mortgage loans, the borrower has 90 days from the date the lender provides notice of the offer of forbearance to request the forbearance. The Interpretational Guidance advises that the lender must clearly notify the borrower of any termination date in the offer of forbearance.

Section IV of the December Order mandates that the Commissioner must obtain certification from the lender that it has complied with the notice of forbearance rights requirements at the time of submitting a notice of foreclosure. The Interpretational Guidance provided the form of the certification language. In addition, the December Order provides that the forbearance rights notice provisions do not apply to a property that a court has determined to be vacant and abandoned.

Residential, Commercial and Industrial Evictions

In addition to extending the suspension of the NOI Registry, the December Order continues the Governor’s declared state of emergency due to COVID-19. Accordingly, until the state of emergency is lifted, Maryland courts may not grant any judgment for possession or repossession, or issue a warrant of restitution (the document required for an eviction) of residential, commercial, or industrial real property if the tenant can demonstrate to the court that the tenant suffered a “substantial loss of income.” For an individual, “substantial loss of income” is defined as a substantial loss of income due to COVID-19 because of job loss, reduction in compensated hours of work, workplace closure or the need to miss work to care for a homebound, school-age child. For an entity, the term means a substantial loss of income resulting from COVID-19 due to lost or reduced business, required closure or temporary or permanent loss of employees. The fact that a tenant or any permissible cohabitant has a confirmed diagnosis of COVID-19 is not considered “clear and imminent danger” for purposes of permitting a landlord to repossess the premises pursuant to RP Article §8‑402.1(a)(1)(i)2.B.

Federal Moratorium on Foreclosures and Evictions

In one of his first acts in office, on January 20, 2021, President Biden requested federal agencies to extend eviction and foreclosure moratoriums for millions of Americans. In response, the U.S. Department of Housing and Urban Development, the U.S. Department of Agriculture and other federal agencies announced an extension of eviction and foreclosure moratoriums through March 31, 2021. Also, the Centers for Disease Control and Prevention announced the extension of the current order temporarily halting residential evictions until at least March 31, 2021, as a protective public health measure. The moratorium applies to the initiation of foreclosures and to foreclosures in process, as well as actions for eviction.

Conclusion

As the COVID-19 pandemic persists, we anticipate updates to the Governor’s and President’s orders, actions, and related guidance. We will continue to monitor ongoing developments in this area and provide updates accordingly.

Please contact our Real Estate Team with any questions concerning this topic.

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