By executive order dated December 17, 2020, (December Order), Governor Lawrence Hogan, Jr. extended the stay on residential foreclosures and the prohibition of certain residential and commercial evictions in response to COVID-19.
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.
The previous executive orders served the purpose of suspending the notice of intent to foreclose registry system (NOI Registry). This effectively stopped the initiation of new 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 federal mortgage loan, a loan secured by a mortgage or deed of trust that is 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 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 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 been extended through January 31, 2021. The Commissioner is directed to resume the NOI Registry on February 1, 2021; however, the Commissioner has the authority to extend suspension of the NOI Registry beyond that date. The December Order 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 Commissioner’s guidance advises that the lender must clearly notify the borrower of any termination date of the offer of forbearance.
The Commissioner’s guidance further explains that if a lender “offered relief” to a borrower that met the requirements of the CARES Act or placed a borrower in a CARES Act compliant forbearance plan between March 5, 2020, and October 16, 2020, the lender is not required to send a new notice of forbearance rights or make any additional offers of relief. If the lender offered relief not in accordance with CARES Act requirements, it must send additional written notice, so that the complete relief package meets the relief required under the CARES Act. For this purpose, “offered relief” means the lender notified the borrower of its ability to obtain a forbearance by any reasonable means, including letter, billing statement, email, text message or telephone conversation with the borrower.
Furthermore, 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 Commissioner provided the form of the certification language with its guidance. Moreover, the December Order provides that the forbearance rights notice provisions do not apply to a property that a court has ordered vacant and abandoned.
Until the termination of the state of emergency, 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, through documentation or other verifiable means, 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 is defined as a substantial loss of income resulting from COVID-19 due to lost or reduced business, required closure or temporary or permanent loss of employees. Additionally, the fact that a tenant or any permissible cohabitant has a confirmed diagnosis of COVID-19 shall not be considered “clear and imminent danger” for purposes of RP § 8-402.1(a)(1)(i)2.B.
As the COVID-19 pandemic persists, we anticipate updates to the Governor’s orders and related guidance. We will continue to monitor ongoing developments in Maryland and provide updates accordingly.
Please contact Tierra L. Dotson with any questions concerning this topic.
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