On February 25, 2021, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac again extended its single-family foreclosure and REO eviction moratorium for distressed mortgage borrowers through June 30, 2021. The FHFA issued a press release extending this moratorium. Additionally, select Fannie Mae and Freddie Mac borrowers who are already in a COVID-19 related forbearance plan as of February 28, 2021, may be eligible for an additional three-month forbearance extension.
The Fannie and Freddie foreclosure moratorium only applies to single-family mortgages, while the eviction moratorium applies to real estate owned properties acquired by Fannie and Freddie via a foreclosure or a deed-in-lieu of foreclosure. The FHFA continues to urge borrowers struggling to make their mortgage payments or facing foreclosure to contact their loan servicers, as homeowners impacted by COVID-19 may be eligible for forbearance plans or a reduction or suspension of their mortgage payments under the CARES Act. In a bulletin dated August 27, 2020, Fannie Mae stated, “[d]uring the period of the extension, servicers may not, except with respect to a vacant or abandoned property, initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure sale.”
As previously noted, following President Joe Biden’s executive order, the Centers for Disease Control and Prevention (CDC) and the Department of Health and Human Services (HHS) extended its eviction moratorium through March 31, 2021. The CDC’s Director, Rochelle P. Walensky, M.D., M.P.H., released a statement extending the eviction moratorium.
Although the latest $1.9 trillion-dollar COVID-19 relief bill, the American Rescue Plan Act, passed through Congress Wednesday, March 10, 2021, this bill does not extend the CDC eviction moratorium.
U.S. District Court Judge Finds the CDC’s Eviction Moratorium Unconstitutional
On February 25, 2021, in Lauren Terkel et al., v. Centers for Disease Control and Prevention et al., No. 6:20-cv-00564. 2021 WL 742877 (E.D. Tex. Feb. 25, 2021), Judge J. Campbell Barker of the U.S. District Court for the Eastern District of Texas ruled that the CDC’s federal eviction moratorium was unconstitutional, finding that the CDC exceeded its “Article I power to regulate interstate commerce and enact laws necessary and proper to that end.” In his opinion, Judge Barker reasoned that the federal government has never before invoked its power over interstate commerce to impose a residential eviction moratorium and that doing so fails to pass the “substantial-effects test.” In his analysis, Judge Barker stated, “[r]eal estate is inherently local” and ultimately refused to find that a nexus existed between the rental housing market and the regulation of commerce among the states. Judge Barker entered summary judgment granting declaratory relief for the plaintiffs. Accordingly, the court’s ruling prohibits application of the eviction moratorium to the plaintiffs. However, the ruling does not reach beyond the parties—the moratorium otherwise remains in effect. The Department of Justice (DOJ) has appealed Judge Barker’s ruling but there is no indication of when the appellate court will hear the case. A copy of the opinion and CDC’s notice of appeal are both available.
Pennsylvania’s Rental and Utility Assistance Grant Program
On February 5, 2021, Governor Wolf signed Senate Bill 109 into law. The law provides an additional $912 million dollar aid package for COVID-19 pandemic relief. The law also established the Rental and Utility Assistance Grant Program (the Grant Program), codified at 72 P.S. § 102-D, which is administered by the Department of Human Services of the Commonwealth (the Department). All counties are eligible for funding from the Grant Program, and each county will receive an amount equal to the population proportion as determined by a formula articulated in the statute. The Department, on March 9, 2021, distributed $552.7 million dollars across the counties for rent and utility assistance. Each county is responsible for determining eligibility for participation in the Grant Program. The Grant Program allows for direct payments to be made from the county directly to the landlord or utility company to which the tenant owes. A landlord or utility company is not required to waive any outstanding rent or utility payments as a condition to participating in the Grant Program. Additionally, if a landlord or utility company chooses not to participate in the Grant Program, any grant funds received by a tenant must be forwarded to the landlord or utility company to reduce the tenant’s obligation. You can access a map showing the amount of funds distributed to each county as well as additional guidance published by the Department on how to apply for the Grant Program.
The Coronavirus Task Force at Klehr Harrison stands ready to assist you in your business and legal needs. We will continue to provide additional information and guidance as the COVID-19 situation develops.