Foreclosure and Receiver Issues in the United States during COVID-19

Bryan Cave Leighton Paisner
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Summary

The following memorandum provides an overview of the responses of courts and local and state governments of certain jurisdictions, as well as of the federal government, to the COVID-19 outbreak. The analysis has a particular focus on mortgage foreclosures and evictions, particularly in the commercial context, although information and guidance remains limited. Effects on residential foreclosures and evictions have been included as governments have tended to provide protection to residential properties first. Eventually, more state and local governments may provide guidance as to commercial foreclosures and evictions

Updated as of May 6, 2020.

The following memorandum provides an overview of the responses of courts and local and state governments of certain jurisdictions in the United States, as well as of the United States federal government, to the COVID-19 outbreak.  The analysis has a particular focus on mortgage foreclosures and evictions, particularly in the commercial context, although information and guidance remains limited. Effects on residential foreclosures and evictions have been included as governments have tended to provide protection to residential properties first.  Eventually, more state and local governments may provide guidance as to commercial foreclosures and evictions. 

In the interim, we would also like to provide certain high-level thoughts on these matters:

  • Most, if not all, of the higher populated states and/or major cities have instituted statewide or citywide moratoriums or limitations with respect to in-person or, in some instances, any state court hearings.
  • While this may not directly impact deed of trust/non-judicial foreclosure states, certain trustees and sheriffs required to conduct foreclosures sales have informed us that they need consents from borrowers/property owners to move forward with these processes in light of COVID-19.
    • In addition, a foreclosure in a deed of trust state is arguably not complete unless and until the deed under power of sale is recorded in the public records. Several clerk’s offices have informed us that they are accepting e-recording or recordation by mail or overnight courier.
    • It is likely that recording will be delayed significantly. Title companies are exercising caution and, except in certain jurisdictions that permit electronic recording, are generally not providing gap coverage.
  • As for court-based foreclosure processes, we expect not only a delay on existing matters, but also issues on filing and obtaining an assignment of a judge in new matters. In certain jurisdictions, while electronic filing will result in a new case receiving a case number, there have been delays in having a judge assigned.
  • With respect to requests for receivers, obtaining relief (either through a court hearing or on an ex parte basis)1 will be (and will continue to be) difficult without an emergency basis for expedited relief. Other than health issues or significant property damage, a court’s willingness to entertain receiver motion practice will be limited until the courts return to normal operation.
  • These delays and limitations will likely apply equally to matters initiated in state or federal court – although we have seen federal judges being more responsive on certain matters pertaining to emergency requests for relief. As such, there may be circumstances where pursuing a new matter in federal court can be more effective from a timing perspective. 
  • Finally, title exams require examiners to be present at the clerk’s office to search the physical records. Court closures may preclude or limit this ability. As a result, government closures may cause lenders to delay foreclosure proceedings because they cannot obtain minutes of foreclosure or similar title products.
  • A mezzanine or other lender that obtained a pledge of ownership interests as security for its loan can still conduct a foreclosure sale under the Uniform Commercial Code (UCC) without the oversight of any court or other judicial body.  However, the UCC requires that all aspects of these sales be conducted in a “commercially reasonable” manner, which may prove challenging or require a different approach than has been commonly utilized in the past.

We have highlighted certain major jurisdictions below, as well as jurisdictions for which information was readily available – analysis on other jurisdictions is available upon request.  Note that the discussion below is based on current orders entered by federal and state courts and federal, state, and local governments as of May 6, 2020.  These issues and orders are very fluid, and we continue to monitor the situation.

Federal Government Action

  • On March 18, the Department of Housing and Urban Development, the Federal Housing Administration, and the Federal Housing Finance Agency announced an immediate moratorium on foreclosure and eviction actions for single family homeowners with FHA-insured mortgages for the next 60 days.
  • The US Department of Agriculture, through its Rural Development program, is attempting to assist single-family homeowners in keeping their residences and is giving authority to applicable lenders to assist and cooperate with borrowers.

State Court, by State (Federal and State), and State and Local Government Action

Arizona

  • Federal Courts: All trials set to commence on or before June 1 are indefinitely postponed.
  • State and Local Government:
    • Constables in Pima County indicated that they will not carry out evictions until they receive guidance from the state Supreme Court and the majority of Maricopa County justices of the peace have agreed to delay eviction proceedings.
    • On March 24, the governor announced a 120 day delay in residential evictions whose causes related to COVID-19. On March 30, the governor announced an agreement with banks to suspend residential and commercial foreclosures and evictions for 60 days.  On April 7, the governor issued an executive order prohibiting evictions of commercial tenants and directing lenders with commercial mortgage loans to provide forbearance opportunities to their borrowers.

Arkansas

  • Federal Courts: All trials in either District scheduled before May 30 are postponed.
  • State Courts:
    • All in-person proceedings are suspended through May 15.
    • The state Supreme Court imposed additional pleading requirements for commercial or residential eviction complaints or charges for failure to vacate.

California

  • In light of the shelter-in-place order entered in California, it is doubtful any court hearings will move forward over the next two plus weeks.2
  • Federal Courts: All trials have been postponed until May 16 (S.D. Cal.), June 1 (N.D. and C.D. Cal.) or June 15 (E.D. Cal.) and no hearings will be held except on an emergency basis (C.D. Cal.).    
  • State and Local Government and Courts:
    • Courts in numerous counties have altered their operations while others are postponing all scheduled trials and hearings. On March 23, the state Supreme Court suspended all jury trials for 60 days.
    • On March 16, the governor issued an order, in effect until May 31, giving local governments the authority to suspend or halt residential or commercial evictions. The order also requests financial institutions holding commercial or residential mortgages to implement a moratorium on all foreclosure and eviction proceedings and actions whose causes relate to COVID-19.  Many financial institutions have agreed to suspend residential foreclosures.  Legislation is pending that would prohibit the eviction of tenants from commercial property while other legislation is pending that would prohibit residential foreclosures through 15 days after the end of the state’s state of emergency.
    • Numerous cities have issued moratoriums on residential evictions whose causes relate to COVID-19. Many county sheriffs’ offices have announced they will suspend or postpone residential evictions.  The state courts have suspended certain foreclosures and evictions.

Colorado

  • Federal Courts: All trials scheduled to begin through May 29 are postponed indefinitely.
  • State and Local Government and Courts:
    • The Colorado Supreme Court has encouraged lower courts to postpone or hold telephonically all non-essential hearings.
    • The mayor of Denver announced that sheriff’s deputies will be temporarily redeployed away from assisting with evictions. On April 30, the governor issued a moratorium on residential evictions.

Delaware

  • Federal Courts: All jury trials scheduled to begin before May 31 are indefinitely postponed.  All in-person matters to be held in the Bankruptcy Court that are not time sensitive will be postponed until after May 17.
  • State and Local Government: On March 24, the governor issued an order barring eviction and foreclosure proceedings against residential property and extending deadlines for any proceedings commenced prior to the issuance of the order. All landlord-tenant proceedings scheduled through May 14 and all other non-emergency and non-essential proceedings will be rescheduled to at least June 1.

Florida

  • Federal Courts: All trials in the Southern District are postponed until July 6.  All jury trials scheduled to begin before June 30 in the Orlando Division of the Middle District are postponed.
  • State and Local Government and Courts:
    • On March 17, the state Supreme Court ordered that in-person hearings be restricted to matters “essential” or “critical” to the COVID-19 emergency. Each chief judge will direct its respective court to conduct telephonically, reschedule, postpone, or cancel all non-essential and non-critical proceedings and events.  All jury trials scheduled through May 29 are postponed.
    • Numerous counties have suspended residential evictions while others have suspended all evictions and foreclosures. On April 2, the governor issued an executive order prohibiting mortgage foreclosures and evictions of residential tenants until May 17.

Georgia

  • Federal Courts: No jury trials will be held until after May 29 (N.D. Ga.) or July 13 (M.D. Ga.).
  • State and Local Government and Courts:
    • The state Supreme Court tolled all deadlines and other time requirements until June 12.
    • The mayor of Atlanta instituted a moratorium on dispossessory proceedings.

Illinois

  • In light of the shelter-in-place order entered in Illinois (through May 30, 2020), it is doubtful any court hearings will move forward over the next weeks.
  • Federal Courts:
    • On March 30, the Northern District extended all civil case deadlines by 28 days (extended by a further 21 days on April 24) and will reschedule all civil hearings, bench trials, and settlement conferences scheduled through May 29 and all civil jury trials scheduled through June 26.
    • All jury trials scheduled to commence in the Southern District through May 31 are postponed, with all deadlines extended by 30 days.
    • In the Central District all civil hearings, including settlement conferences, shall be conducted by telephone or video conference while all trials have been postponed through May 30.
  • State and Local Government and Courts: On March 13, the Illinois Judicial branch recommended that all courts limit or avoid non-essential in-person proceedings. On April 23, the governor issued an order prohibiting certain residential evictions and directing law enforcement officers to cease enforcing certain orders for evictions of non-residential tenants.

Indiana

  • Federal Courts: The Northern District courts will continue to conduct all “necessary” hearings.  All jury trials scheduled through May 29 (S.D. Ind.) or June 1 (N.D. Ind.) are postponed indefinitely.
  • State Courts: State courts will resume hearing eviction proceedings starting May 18.

Iowa

  • Federal Courts: All jury trials scheduled through  May 31 (N.D. Iowa) or July 6 (S.D. Iowa) are postponed.
  • State Courts: The state Supreme Court postponed all non-emergency, civil non-jury trials to June 15 and jury trials to August 3.

Kansas

  • State and Local Government: On March 23, the governor prohibited all residential evictions and foreclosures whose causes relate to COVID-19 until May 14.

Louisiana

  • Federal Courts: All trials and in-person hearings scheduled before July 1 (M.D. La.) are postponed and all jury trials scheduled to begin through July 1 (W.D. La.) or until August 1 (E.D. La.) are postponed.
  • State and Local Government:
    • On March 18, the governor suspended all foreclosures and evictions.

Maryland

  • Federal Courts: All non-emergency civil and bankruptcy proceedings scheduled through June 5 are postponed indefinitely and all filing deadlines during that period are extended 84 days. 
  • State and Local Governments and Courts:
    • All residential foreclosure proceedings are stayed indefinitely.
    • The governor issued executive orders prohibiting foreclosures of residential property and evictions of residential, commercial, or industrial tenants during the pendency of the state’s state of emergency and catastrophic health emergency.

Massachusetts

  • Federal Courts: All jury trials scheduled to begin through May 29 are postponed indefinitely.
  • State and Local Governments and Courts:
    • On April 20, the governor signed a bill into law prohibiting certain residential and small business foreclosures and evictions.
    • All jury trials scheduled to commence before July 1 and all bench trials scheduled to commence before June 1 are postponed.

Michigan

  • Federal Courts: All civil matters requiring in-person appearance are postponed.

Minnesota

  • Federal Courts: All jury trials and related deadlines are postponed through June 14. All other civil hearings that cannot be conducted remotely are continued through May 17.
  • State and Local Government: On March 24, the governor issued an order halting eviction proceedings on residential property.  Legislation is currently pending that would further delay residential evictions

Missouri

  • Federal Courts: All jury trials are suspended through May 31 (E.D. Mo.) or through July 6 (W.D. Mo.).
  • State Courts: Some counties, including Jackson County, have delayed the issuance of writs related to foreclosure and eviction.

Nevada

  • Federal Courts: All civil trials are indefinitely suspended.
  • State and Local Government and Courts:
    • All oral arguments are postponed indefinitely.
    • Courts in certain cities, including Reno and Las Vegas, have temporarily suspended eviction proceedings.
    • On March 29, the governor issued an executive order prohibiting residential and commercial foreclosures and evictions during the pendency of the state’s state of emergency.

New Hampshire

  • Federal Court: All jury trials scheduled through June 1 are postponed and judges have the discretion to hold any other civil hearings during this period remotely.
  • State and Local Government: On March 17, the governor issued an executive order prohibiting residential evictions or foreclosures.

New Jersey

  • Federal Courts: All trials scheduled through May 31 are postponed indefinitely.
  • State and Local Government and Courts: On March 19, the governor prohibited all residential evictions and foreclosures.  Landlords and creditors can still initiate such proceedings, but they cannot carry out removal until after the prohibition is lifted.  Trials and landlord/tenant proceedings are postponed until after May 31.

New York

  • In light of the shelter-in-place order entered in New York state, it is doubtful any court hearings will move forward over the next weeks.
  • Federal Courts: All trials scheduled through May 12 (W.D.N.Y.), May 15 (N.D.N.Y), or June 15 (E.D.N.Y.) have been delayed.  Trials in the Southern District have been delayed indefinitely.
  • State and Local Government and Courts:
    • The governor issued a 90-day moratorium on foreclosure and eviction actions against residential and commercial mortgages and tolled all limitations period and the New York Department of Financial Services issued industry guidance urging, but not mandating, lenders it regulates to support adversely affected mortgagors.
    • On March 22, the state Supreme Court announced that courts will not accept filings except in certain emergency situations (e.g. mental health issues or domestic violence). Generally, fully submitted motions will be decided without argument while partially submitted motions will be administratively adjourned.  The appellate divisions have suspended all oral arguments and, other than for May and June terms in the First Department, have suspended all filing deadlines.
    • New York and Kings Counties have indicated that all foreclosure auctions are postponed and all foreclosure conferences (including settlement conferences) will be administratively adjourned.
    • State legislators proposed amendments to the Real Properties Actions and Proceedings Law to give the courts new powers to prevent evictions and foreclosures during a state disaster emergency.

North Carolina

  • Federal Courts: All jury trials scheduled through June 7 (M.D.N.C.) are postponed indefinitely.
  • State and Local Government and Courts:
    • On April 2, the state Supreme Court ordered all proceedings to be rescheduled to no earlier than June 1.
    • On March 16, the state Supreme Court issued an order suspending all eviction and foreclosure actions in North Carolina courts for the next 30 days. On March 31, the governor issued an executive order reaffirming these suspensions.

Ohio

  • Federal Courts: All jury trials and in-person hearings scheduled in the Southern District through June 1 are postponed. Jury trials scheduled through June 12 are postponed in the Northern District.
  • State and Local Government: On April 1, the governor issued an executive order requesting, but not requiring, landlords to suspend rent payments and provide a moratorium on evictions of small business commercial tenants and lenders to provide an opportunity for forbearance to commercial real estate borrowers.

Oregon

  • Federal Courts: All jury trials and in-person proceedings scheduled to commence before June 1 are postponed.
  • State and Local Government and Courts:
    • On March 22, the governor issued an executive order staying all residential evictions for 90 days. On April 1, the governor issued an executive order reaffirming the prohibition on residential evictions and expanding the prohibition to non-residential tenants, effective until June 30.
    • All trials and non-essential proceedings scheduled before June 1 are postponed.

South Carolina

  • Federal Courts: All jury trials and in-person proceedings scheduled to commence through July 5 are postponed, although non-trial in-person proceedings can be held remotely.
  • State and Local Governments and Courts:
    • Legislation is pending that would delay commencement of residential evictions.
    • All jury trials are postponed indefinitely.

Tennessee

  • Federal Courts: All civil proceedings and jury trials are delayed until after May 30 (W.D. Tenn.) and all trials scheduled to commence through  May 30 (E.D. Tenn.) or May 31 (M.D. Tenn.) are postponed.

Texas

  • Federal Courts:  Jury trials scheduled to commence through May 31 (E.D., W.D., and N.D. Tex.) have been postponed.  Each Division of the Southern District has separately postponed jury trials through: May 31 (McAllen, Laredo, Victoria, and Corpus Christi), June 1 (Brownsville), and July 6 (Houston and Galveston).
  • State Courts: The state Supreme Court tolled all deadlines through July 15 and no actions for residential evictions may occur until after May 18.

Virginia

  • Federal Courts: All non-emergency in person proceedings, including trials, are suspended through June 10 (W.D. and E.D. Va.).
  • State and Local Governments: Legislation is currently pending that would provide a stay on residential eviction proceedings and foreclosure proceedings related to homeowners and landlords owning one to four family residential units.

Washington (State)

  • Federal Courts: All in-person hearings and jury trials scheduled through May 15 (E.D. Wash.) or before July 1 are postponed (W.D. Wash.).
  • State and Local Governments and Courts:
    • On March 18, the governor issued a proclamation prohibiting residential evictions until June 4. The mayor of Seattle also issued an order prohibiting residential evictions until May 15.
    • All jury trials are suspended until after July 6 and all non-emergency civil matters may be postponed until after June 1.

Washington, D.C.

  • Federal Courts: All jury trials scheduled to commence before June 11 and all other proceedings scheduled to occur before June 1 are postponed.
  • Local Government and Courts:
    • On March 13, the Superior Court suspended all residential evictions and foreclosures.
    • The Superior Court extended all civil deadlines through May 15.
    • On April 7, the Washington, D.C. Council passed a bill that requires mortgage servicers holding servicing rights to residential or commercial mortgage loans to, among other things (a) develop and offer a program that includes mortgage payment deferment of at least 90 days and waives any fees the borrower has incurred during the District’s public health emergency and (b) extend, until as late as the maturity of the loan, the repayment period of any principal deferred under such plan. Any mortgagor-landlords receiving the benefit of such a plan must, in turn, reduce rent for its tenants at the effected property.
    • Legislation is pending that would prohibit certain residential foreclosures and foreclosure sales during the District’s public health emergency.

West Virginia

  • Federal Courts: All jury trials and in-person proceedings scheduled through May 31 are postponed (S.D. W.Va.).
  • State Courts: All non-emergency proceedings and deadlines through May 15 are stayed.

Wisconsin

  • Federal Courts: All jury trials scheduled through May (18 (W.D. Wis.) or June 1 (E.D. Wis.) are postponed.
  • State and Local Government and Courts:
    • All jury trials scheduled through May 22 are suspended.
    • On March 27, the governor issued an order, in effect for 60 days, barring all residential or commercial evictions and writs of restitution for failure to pay rent. The order also prohibits mortgagees from initiating foreclosure actions against real property or from requesting sheriff’s sales of mortgage property and bars sheriffs from conducting sales of mortgaged property or acting on or assisting orders of foreclosure.

1.  The method for obtaining relief will differ based on jurisdiction and circumstances.

2.  Not all of the shelter-in-place orders entered in various states have definite deadlines.  Where available, such deadlines are included within.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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