Except certain executive orders, directives, and powers will remain in effect temporarily. (NJ AB 5820)
 
Assembly Bill 5820, signed into law on June 4, 2021, terminates the public health emergency declared by the Governor to address the Pandemic, yet, leaves effective thirteen (13) Executive Orders that would have expired upon termination of the public health emergency declaration.  The thirteen Executive Orders will remain in effect until January 1, 2022.  One of the thirteen Executive Orders is Executive Order 106, instituting the Eviction Moratorium that will now expire on January 1, 2022.  For now, no evictions may take place in the State of New Jersey for the remainder of 2021. 
 
On June 24, 2021, the New Jersey Legislature passed S3691/A5685, which provides financial relief to tenants and provides certain protections from eviction. This bill has been sent to the Governor. The bill provides financial assistance for tenants based upon income level and provides certain protections from eviction for those with the inability to pay rent and who have been or are impacted by the COVID-19 pandemic. This bill also revises Eviction, foreclosure prohibited during certain emergency circumstances, N.J.S.A. 2A:18-59.3, which became law March 2020. Among the newly added provisions to N.J.S.A. 2A:18-59.3, the eviction moratorium, Executive Order 106, prohibiting the removal from a residential property as a result of a foreclosure will now expire November 15, 2021.

The Maryland foreclosure process reopened July 1st when DLLR reopened the portal to allow the filing of the NOI. As a reminder, for those servicers that sent the forbearance letters provided for in Governor Hogan’s order 20-10-16-01 and thereafter restated they will effective July 1st, be able to move forward with the mailing and certification of the mailing of the NOI. This is for non-GSE or government related loans that are not subject to moratoriums which have been extended through July 31, 2021.
 
Those servicers that did not elect to send the pre-foreclosure 180 day forbearance notice will not be able to proceed until the State of Emergency terminates. The State of Emergency in Maryland is currently scheduled to terminate August 15, 2021.
 
The prior emergency orders provide that those lenders who offered forbearance agreements, as outlined below, would be able to proceed when DLLR opened the portal. The portal is now going to open forty-five (45) days prior to the termination of the State of Emergency:

• Residential foreclosures on federally backed mortgage loans: Until the state of emergency is terminated, a sale of residential property shall not be effective unless:
• thirty (30) days prior to NOI, the servicer has sent a written notice to the borrower stating the borrowers right to request a forbearance; and
• the Servicer has complied with all of its obligations under the CARES Act and any GSE imposed requirements.
• Residential foreclosures on non-federally backed mortgage loans: Until the state of emergency is terminated, a sale of residential property shall not be effective unless:  
  • the servicer has sent notice to the borrower of their right to request a 180 day forbearance (if affected by COVID, regardless of delinquency) which may be extended another 180 days;
  • if the borrower requests forbearance, the servicer must provide forbearance without requiring more documents, other than attesting to hardship caused by COVID, or fees, penalties or interest (other than in normal course); and
  • during a forbearance, the servicer has not accrued any fees, penalties or interest beyond scheduled amounts.

​All industry agencies and investors extended pandemic foreclosure and eviction moratoriums through July 31, 2021. Please refer to the below list of industry announcements.
 
FACT SHEET: Biden-Harris Administration Announces Initiatives to Promote Housing Stability By Supporting Vulnerable Tenants and Preventing Foreclosures
CDC Director Extends the Eviction Moratorium for 30 days
FHFA Extends COVID-19 Foreclosure and REO Eviction Moratoriums
Freddie Mac Bulletin 2021-23: Extension of the COVID-19 Foreclosure Moratorium
Extension of Fannie Mae Single-Family Foreclosure Moratorium
VA Circular 26-21-10 Relief for Borrowers Affected by COVID-19
FHA Mortgagee Letter 2021-15 Extension of the Foreclosure and Eviction Moratorium in Connection with the Presidentially-Declared COVID-19 National Emergency, Further Expansion of the COVID-19 Forbearance and the COVID-19 Home Equity Conversion Mortgage (HECM) Extensions, and Establishment of the COVID-19 Advance Loan Modification (COVID-19 ALM)
USDA Extends Eviction and Foreclosure Moratorium, and Offers Guidance on Mortgage Forbearance Deadline

On June 28, 2021, the CFPB issued “Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act” (Final Rule). The Final Rule provides additional protections from foreclosures to the borrowers impacted by COVID-19 and it is effective August 31, 2021. Fannie Mae and Freddie Mac requested that servicers shall not make the first notice or proceeding with foreclosure that would be prohibited by the CFPB Final Rule for borrowers affected by the COVID-19 during the period between July 31 and August 31.

• FHFA-06/29/2021-FHFA Protects Borrowers After COVID-19 Foreclosure and REO Eviction Moratoriums End
• Fannie Mae-LL-2021-02-Impact of COVID-19 on Servicing
• Freddie Mac-Bulletin 2021-24-COVID-19 and Other Servicing Updates

The Florida office is providing you with the following case law update for June 2021. These updates are summaries of cases that impact foreclosure issue cases. We have provided the general holding of the case. If any case is of interest to you, please let us know. We are happy to provide a detailed analysis of the facts and holding of the case and how they might apply to your specific situation.
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• VOLYNSKY V. PARK TREE INVS. 21, LLC, 3D19-2197 (Fla. 3rd DCA June 9, 2021)
  The trial court did not err when it overruled the mortgagor’s legally insufficient objections to the judicial sale of the property grounded upon a failure to serve unspecified court notices. The objection reciting that the property was worth more than the sale price was also legally insufficient. The trial court did not divest the mortgagor of due process simply because it refused to afford him an evidentiary hearing. Although section 45.031(8), Florida Statutes, does not require evidentiary hearings to resolve timely-filed objections to sale, under certain narrow circumstances, several of the Third District’s sister courts have concluded such a hearing is necessary in cases alleging grounds sufficient to support equitable relief from the sale (not present in this case). 

• WELLS FARGO BANK, N.A. V. DIAS, 2D19-3256 (Fla. 2nd DCA June 16, 2021)
  The Second District denied rehearing but substituted this June 16, 2021 opinion in place of its opinion dated February 12, 2021. A third party who purchased the property at the homeowners association lien foreclosure sale during the pendency of the senior mortgage foreclosure action did not have the ability to step into the mortgagor’s shoes and argue the mortgagor’s forgery defense in the mortgage foreclosure action because the purchaser lacked standing to do so. The purchaser who took his interest subject to Wells Fargo’s superior interest could not participate in the foreclosure action as if he were a party to the note and mortgage and challenge the mortgage’s validity. Furthermore, the purchaser is estopped from proceeding on an affirmative defense based on the theory of forgery of the mortgagor’s signature. The purchaser’s status does not confer on him the ability to assert any right that inured only to the mortgagor’s benefit under the mortgage contract to which the purchaser was not a party and of which he had notice at the time he purchased the property at the foreclosure sale. As to the mortgagors’ marital status, even if the purchaser had established that the mortgagors’ marriage had been dissolved, that evidence alone would have no legal significance on the viability of the mortgage as between the mortgagors and Wells Fargo. The Court remanded with instructions for the trial court to enter final judgment in favor of the mortgagee and against the mortgagors and the purchaser. 

• WVMF FUNDING V. PALMERO, SC19-1920 (Fla. S. Ct. June 24, 2021)
  Roberto Palmero was the borrower on a reverse mortgage. He was defined as the sole borrower in the note and mortgage and was listed as the only borrower in four of the five documents related to the home equity conversion mortgage. Although only Mr. Palmero signed the note, the signature block of the mortgage contained preprinted lines with Mr. and Mrs. Palmero’s names and the word “Borrower.” Mrs. Palmero signed a non-borrower spouse certification. After the death of Mr. Palmero, the reverse mortgage became due and the lender started foreclosure proceedings. Although the trial court ruled Mrs. Palmero was not a co-borrower, it nevertheless denied the lender foreclosure under certain 2014 federal rules. The Third District rejected the trial court’s approach regarding the federal rules, but affirmed (the denial of foreclosure) on the basis that since the mortgage listed Mrs. Palmero as a borrower, she was, in fact, a borrower, thereby precluding foreclosure while she was still alive and residing in the property. 
  
  In a 5-2 decision, the Florida Supreme Court relied on the general rule of foreclosure actions dating back nearly 100 years that the note and mortgage should be construed together and if there is a conflict in terms, the promissory note takes precedence over the mortgage. The Court extended these rulings to reverse mortgage legal proceedings. The Court found the note unambiguously defined Mr. Palmero as the sole borrower. Because the Third District erred in affirming the trial court’s denial of foreclosure by finding Mrs. Palmero was a surviving co-borrower, it quashed the Third District’s decision and ordered foreclosure of the mortgage. 

• COHEN V. US BANK TRUST, N.A., 4D20-392 (Fla. 4th DCA June 2, 2021)
  The Court held it was error to enter summary judgment in the bank’s favor where the only evidence that the prior servicer had mailed the default notice was an affidavit executed by its successor servicer’s employee whose affidavit did not at least facially demonstrate that the employee had sufficient personal knowledge of the prior servicer’s practices of mailing default notices in order to establish that the prior servicer had mailed the default notice. 

• GARTNER V. REVERSE MORTG. SOLUTIONS, INC., 1D20-772 (Fla. 1st June 30, 2021)
  The First District, relying on recent decisions from the Florida Supreme Court and the Third District Court of Appeal, ruled that the attorney fee reciprocity provision of section 57.105(7), Florida Statutes, applies when (1) the contract includes a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract, and (2) the other party prevails in any action, whether as plaintiff or defendant, with respect to the contract. This reciprocity provision also applies to prevailing borrowers on underlying nonrecourse loans even though such borrowers have no personal liability upon default of the note. 

 The trial court did not err when it overruled the mortgagor’s legally insufficient objections to the judicial sale of the property grounded upon a failure to serve unspecified court notices. The objection reciting that the property was worth more than the sale price was also legally insufficient. The trial court did not divest the mortgagor of due process simply because it refused to afford him an evidentiary hearing. Although section 45.031(8), Florida Statutes, does not require evidentiary hearings to resolve timely-filed objections to sale, under certain narrow circumstances, several of the Third District’s sister courts have concluded such a hearing is necessary in cases alleging grounds sufficient to support equitable relief from the sale (not present in this case). 

CFPB did not finalize the initially proposed pre-foreclosure requirements; instead, the final rule provides temporary and a more tailored procedural protection to minimize avoidable foreclosures. Final § 1024.41(f)(3) requires a servicer to ensure that one of three temporary procedural safeguards have been met before making the first notice or filing because of delinquency:

• the borrower submitted a completed loss mitigation application and § 1024.41(f)(2) permits the servicer to make the first notice or filing;
• the property securing the mortgage loan is abandoned under state law; or
• the servicer has conducted specified outreach and the borrower is unresponsive.

The CFPB proposes to refer to these protections as Temporary Special COVID-19 Loss Mitigation Procedural Safeguards. These safeguards are applicable only if

• the borrower’s mortgage loan obligation became more than 120 days delinquent on or after March 1, 2020; and
• the statute of limitations applicable to the foreclosure action being taken in the laws of the State where the property securing the mortgage loan is located expires on or after January 1, 2022.

​This temporary provision will expire on January 1, 2022, meaning that the procedural safeguards in § 1024.41(f)(3) would not be applicable if a servicers makes the of the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process on or after January 1, 2022.
 
The final rule is effective on August 31, 2021.

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