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

Bryan Cave Leighton Paisner
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Updated as of June 22, 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. Effects on residential foreclosures and evictions have been included as governments have prioritized providing protection to residential properties and tenants while the effects on commercial foreclosures and evictions have been included where available.   

In addition, 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 these moratoriums or limitations have, in some jurisdictions, begun to expire or be lifted they have tended to remain in place longer than in other jurisdictions.
  • 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, 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.  Further, while some courts have begun transitioning to normal operations, they have tended to prioritize emergency or other sensitive or extraordinary matters and proceedings.
  • 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 have caused 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 may begin to see lenders pursue UCC sales and their related auctions (typically handled with a court reporter) via telephone and video conference software to allow these processes to move forward without large gatherings (particularly in states with restrictions on gatherings of more than 10 people). 

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 June 22, 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. This moratorium has since been extended through ”at least” August 31.  Further, on April 1, the Department of Housing and Urban Development announced that mortgage servicers must provide six months of forbearance to borrowers with a financial hardship that makes them unable to pay their mortgage due to the COVID-19 and must provide an additional six months of forbearance if requested by the borrower.
  • The US Department of Agriculture, through its Rural Development program, has authorized lenders engaged in Business and Industry Loan Guarantees, Rural Energy for America Program Loan Guarantees, Community Facilities Loan Guarantees, and Water and Waste Disposal Loan Guarantees to provide 180-day loan payment deferrals without prior agency approval. This authorization is in effect until September 30.

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

Alabama

  • State and Local Government and Courts:
    • While the governor previously issued an executive order prohibiting residential evictions and foreclosures during the duration of the state’s public health emergency, she lifted that prohibition on June 1.
    • Jury trials are suspended until September 14.

Arizona

  • Federal Courts: All jury trials scheduled to be held in the Flagstaff courthouse are postponed until August 1.  Through June 30, proceedings in the Yuma courthouse may only be held if they involve fewer than ten participants.  Trials may be held in the Tucson and Phoenix courthouses.
  • State and Local Government and Courts:
    • The state Supreme Court authorized state and local courts to begin transitioning to in-person proceedings beginning June 1. Jury trials may not resume until the state courts enter “Phase One” of their reopening.  The presiding judge of each county has the ultimate authority to determine when jury trials may safely resume.
    • On March 24, the governor announced a 120 day delay in residential evictions whose causes related to COVID-19.

Arkansas

  • Federal Courts: All trials scheduled to begin before July 6 are postponed indefinitely (W.D. Ark.). The court will revisit this in late June to determine whether further postponement is necessary.
  • State Courts:
    • The state Supreme Court imposed additional pleading requirements for commercial and residential eviction complaints or charges for failure to vacate.
    • No jury trials may be held through June 30.

California

  • Federal Courts: Jury trials have been postponed until July 15 (S.D. Cal.), October 1 (N.D. Cal.), or further notice (E.D. Cal.), and no in-person hearings will be held except on an emergency basis (C.D. Cal.).    
  • State and Local Government and Courts:
    • On March 16, the governor issued an order, in effect until July 28, giving local governments the authority to suspend or halt residential or commercial evictions. Many local governments have issued such restrictions and sheriffs’ offices in many jurisdictions have announced they will suspend or postpone residential 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. 
    • Multiple pieces of legislation are pending that would: prohibit the eviction of tenants from commercial property; prohibit residential foreclosures through 15 days after the end of the state’s state of emergency; and add additional requirements prior to foreclosure sales.
    • On April 6, the Judicial Council of California adopted a rule staying residential and commercial judicial foreclosures until 90 days after the governor ends the state of emergency related to COVID-19. The governor has given no indication as to when he will lift the state of emergency.

Colorado

  • Federal Courts: All trials scheduled to begin through July 31 are postponed indefinitely, except for “pilot trials” as authorized by the Chief Judge.
  • State and Local Government and Courts:
    • The Colorado Supreme Court has encouraged lower courts to postpone or hold telephonically all non-essential hearings. Each local jurisdiction is issuing its own guidance regarding operations during COVID-19.  Jury calls have been suspended through August 2.
    • On June 13 the governor issued an order extending the notice period for residential tenants to cure monetary defaults before their landlord can bring an eviction action.

Delaware

  • Federal Courts: All jury trials scheduled to begin before July 31 are indefinitely postponed. 
  • State and Local Government and Courts:
    • Residential evictions and foreclosures are prohibited during the pendency of the state’s state of emergency and public health emergency, which is currently set to expire on July 6.
    • On June 15, Delaware courts entered “Phase Two” of their reopening plan, allowing for, among other things, non-jury civil trials.

Florida

  • Federal Courts: All jury trials are postponed until July 1 (N.D. Fla.) or August 31 (S.D. Fla.).  All jury trials scheduled to begin before June 30 in the Orlando Division are postponed (M.D. Fla.).
  • State and Local Government and Courts:
    • Jury trials scheduled through July 2 have been 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 residential and commercial foreclosures and residential evictions, which has been extended until July 1.

Georgia

  • Federal Courts: No jury trials will be held until after July 3 (N.D. Ga.) or July 13 (M.D. Ga.).
  • State Courts:
    • On June 12 the state Supreme Court issued an order indefinitely suspending jury trials and tolling related deadlines indefinitely. All other deadlines shall be reimposed as of July 14.
    • The Supreme Court has also implemented additional pleading requirements for landlords seeking to bring residential eviction actions for nonpayment of rent, in effect through August 24.

Illinois

  • Federal Courts:
    • All jury trials scheduled to commence through July 17 (C.D. Ill.), July 31 (S.D. Ill.), or August 2 (N.D. Ill.) are postponed.
    • 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 July 17.
  • State and Local Government: 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. The governor has subsequently extended the order through June 27.

Indiana

  • Federal Courts: All jury trials scheduled through July 1 (N.D. Ind.) or July 20 (S.D. Ind.) are postponed. 
  • State and Local Government: Residential foreclosures and evictions are suspended until July 1, except in certain emergency situations.

Iowa

  • Federal Courts: All jury trials scheduled through July 6 (S.D. Iowa) are postponed.  Jury trials will resume on June 1, but parties may request continuance of trials because of continuing public health concerns (N.D. Iowa).
  • State Courts: Non-jury trials and non-emergency in-person proceedings scheduled through July 12 are postponed. Non-jury trials may commence prior to July 13 in a given courthouse if that courthouse meets certain COVID-19 safety protocols.  Jury trials scheduled through September 13 are postponed. 

Kansas

  • State Courts: The state Supreme Court indefinitely suspended all statutes of limitation and statutory time standards or deadlines. Jury trials may only be held in limited circumstances.

Louisiana

  • Federal Courts: All trials and in-person proceedings scheduled before July 1 (M.D. La.) are postponed and all jury trials scheduled to begin before July 1 (W.D. La.) or August 1 (E.D. La.) are postponed.
  • State and Local Government and Courts:
    • No jury trials shall commence before June 30.
    • The governor’s prior order governor suspending all foreclosures and evictions has lapsed by its own terms.

Maryland

  • Federal Courts:
    • All non-emergency civil and bankruptcy proceedings scheduled through June 30 are postponed. As of July 1, some jury trials will be allowed to resume, but the court has not yet set guidance as to when all jury trials will resume.
    • On June 17, the Court announced that on June 22 it would move into “Phase 2” of its recovery plan, which includes the resumption of certain additional operations.
  • State and Local Government and Courts:
    • All residential foreclosure proceedings are stayed until July 25.
    • All statutes of limitations and deadlines are tolled by the number of days that the relevant court was closed to the public.
    • Jury trials scheduled before October 4 shall be rescheduled until on or after October 5.
    • The state court system moved to “Phase Two” of its reopening plan, which allows for in-person proceedings in certain emergency situations.
    • 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, which were renewed on June 3.

Massachusetts

  • Federal Courts: All jury trials scheduled to begin through September 8 are postponed.
  • State and Local Government and Courts:
    • On April 20, a law passed prohibiting certain residential and small business evictions and residential foreclosures. Such prohibitions will last until the earlier of 120 days after the passage of the act or 45 days after the lifting of the state’s COVID-19 emergency declaration.  The COVID-19 emergency declaration and corresponding state of emergency are in effect until further notice, and the governor has not indicated when they will be lifted.
    • All jury trials scheduled to commence before September 8 and all bench trials scheduled to commence before July 1 are postponed.

Michigan

  • Federal Courts: All civil matters requiring in-person appearance are postponed.
  • State and Local Government and Courts:
    • Legislation is pending that would prohibit certain residential foreclosures and evictions during states of emergency.
    • The state Supreme Court has imposed additional pleading requirements for commercial or residential evictions until July 25.
    • The governor issued an executive order prohibiting residential evictions until July 1.

Minnesota

  • Federal Courts: All jury trials and related deadlines are postponed through July 5. All other civil hearings that cannot be conducted remotely are continued through July 5.
  • State and Local Government and Courts:
    • On March 24, the governor issued an order halting eviction proceedings on residential property until the end of the state’s peacetime emergency, which is set to expire on July 13.  Legislation is currently pending that would further delay residential evictions.
    • Jury trials will not be held before September 1, except for limited “pilot trials.”

Missouri

  • Federal Courts: All jury trials are suspended through July 5 (E.D. Mo.) or July 6 (W.D. Mo.).
  • State Courts:
    • Some counties have delayed the issuance of writs related to foreclosure and eviction.
    • Courts may not resume jury trials until they have entered “Phase Three” of their reopening. The status varies by county, although most courts have entered Phase Two or Phase Three.

Nevada

  • Federal Courts: All civil trials are indefinitely suspended.
  • State Courts:
    • All oral arguments are postponed indefinitely.
    • A moratorium on residential and small business evictions is in place through June 30.

New Hampshire

  • Federal Court: All jury trials scheduled before August 1 are postponed and judges have the discretion to remotely hold other civil hearings during this period.
  • State and Local Government and Courts:
    • On March 17, the governor issued an executive order prohibiting certain residential evictions or foreclosures for the duration of the state’s state of emergency. On June 11, the governor issued a subsequent executive order terminating the prohibition, effective July 1.
    • Jury trials in the Superior and Circuit Courts are suspended indefinitely while most other in-person proceedings are suspended through July 6.

New Jersey

  • Federal Courts: All trials scheduled before August 31 are postponed.
  • 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.  This prohibition will remain in place no longer than two months following the end of the state’s state of emergency, which is currently set to expire on July 5.
    • Several pieces of legislation are pending that would: allow municipalities to prohibit residential and non-residential evictions during the COVID-19 pandemic; empower the governor to suspend residential evictions and foreclosures during the pendency of certain emergency circumstances; require creditors to grant temporary mortgage forbearances to residential borrowers upon request in certain circumstances; and suspend certain residential evictions during the pendency of a public emergency.
    • On June 22, the state courts entered “Phase Two” of their reopening, which means, in part, that jury trials may resume upon the agreement of all parties and the approval of the Chief Justice.

New York

  • Federal Courts:
    • Trials in the Southern District have been delayed indefinitely. Jury trials scheduled to commence before July 15 (W.D.N.Y.), August 11 (N.D.N.Y.), or September 14 are postponed (E.D.N.Y.).
    • Compliance with trial-specific deadlines shall be at the discretion of the presiding judge and no in-person bench trials may be held without consultation with the Chief Judge (E.D.N.Y.).
    • Case by case exceptions to the postponement of jury trials may be ordered at the discretion of the presiding judge after consultation with counsel (N.D.N.Y.).
  • State and Local Government and Courts:
    • The governor issued a moratorium on foreclosure and eviction actions against residential and commercial mortgages and tolled all limitations period. This moratorium is in effect until August 20.
    • The New York Department of Financial Services has issued industry guidance urging, but not mandating, lenders it regulates to support adversely affected residential and small business borrowers. It is unclear when this guidance will expire, but it will likely remain effective at least through the state’s state of emergency, which is in effect until September 7.
    • Legislation is pending that would prohibit certain foreclosures and evictions during states of emergency.
    • On June 22, the Chief Administrative Judge issued guidance and procedures for commercial and residential eviction proceedings, which include additional pleading requirements and stay further hearings until the governor’s suspension of statutory timetables for the prosecution of legal matters is lifted or expired. The suspension is currently in effect until July 6.

North Carolina

  • Federal Courts: All jury trials scheduled through August 3 (M.D.N.C.) are postponed indefinitely.  Effective June 1, judges may resume jury trials in their discretion (W.D.N.C.).
  • State Courts: All jury trials have been postponed until after July 31.

Ohio

  • Federal Courts: No jury trials will be held through at least the month of August (N.D. Ohio).
  • 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. This order is set to expire on June 30.
    • Legislation is currently pending that would temporarily prohibit the initiation of certain residential foreclosures and delay certain ongoing residential foreclosures.

Oregon

  • Federal Courts: All jury trials and in-person proceedings scheduled to commence before July 15 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.
    • Court operations began resuming on June 1 based upon such court’s re-opening status.

Pennsylvania

  • Federal Courts:
    • All jury trials scheduled to commence through August 31 (E.D. Pa.) or September 8 (W.D. Pa.) are postponed.
    • All in-person hearings, including jury trials, in the Middle District are postponed through June 30. On June 17, the Middle District issued its COVID-19 recovery guidelines, which indicate that jury trials will not commence until the District enters “Phase Three” of its recovery.  The District is currently in “Phase One,” and will be evaluating its status every fifteen days.
  • State and Local Government and Courts:
    • On May 7, the governor issued an order suspending the commencement of residential foreclosures, including single-family and certain multifamily dwellings, which is in effect until July 10.
    • Legislation is pending that would prohibit commercial evictions and foreclosures during the pendency of the state’s disaster emergency, and for 90 days thereafter.
    • Jury trials are indefinitely suspended.

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 Government and Courts:
    • Legislation is pending that would delay commencement of residential evictions.
    • The state Supreme Court requires additional information to be submitted with any foreclosure or eviction actions to ensure compliance with the Coronavirus Aid, Relief, and Economic Security Act.
    • All jury trials are postponed indefinitely.

Tennessee

  • Federal Courts: All jury trials scheduled to commence through July 31 are postponed and no other in-person proceedings may be conducted except in certain extraordinary circumstances (W.D. Tenn.).  In the Middle District, some jury trials scheduled through June 30 will be allowed to commence and the District recommends that parties prepare as if all trials will be held.  In the Eastern District, limited jury trials will resume after June 14 in the Court’s discretion.
  • State Courts: Jury trials are suspended through July 3.

Texas

  • Federal Courts:  Jury trials scheduled to commence through July 17 (N.D. Tex., Dallas Division) and all trials scheduled to commence through July 31 (W.D. Tex.)  have been postponed.  Certain Divisions of the Southern District have postponed jury trials through June 30 (Victoria and Laredo), July 3 (McAllen), and August 3 (Corpus Christi, Houston, and Galveston), while the other Divisions are now holding jury trials.
  • State Courts:
    • The state Supreme Court tolled all deadlines that would have expired on or before July 1 until August 15. Jury trials may not be held prior to August 1.  Non-essential in-person proceedings may resume on June 1.
    • The Supreme Court has implemented additional pleading requirements for residential eviction proceedings filed through July 25.

Virginia

  • Federal Courts: Beginning on June 11, certain in-person proceedings will resume in the Eastern District, including bench trials, but no jury trials will be held until further notice. On June 29, in-person proceedings will resume in the Western District except for civil jury trials, which are postponed until August 31.
  • State and Local Government and Courts:
    • The state government enacted legislation staying residential eviction proceedings and foreclosure proceedings related to homeowners and landlords owning one to four family residential units affected by COVID-19 for the duration of the state’s state of emergency. The governor issued an executive order on May 26 declaring that the state of emergency remains ongoing and will remain in effect indefinitely.
    • All statutes of limitation and other case-related deadlines (excluding discovery deadlines) for cases in the district and circuit courts are tolled through June 28. All jury trials are suspended indefinitely.
    • The state Supreme Court has suspended all residential eviction actions through June 28.

Washington (State)

  • Federal Courts: All in-person hearings and jury trials scheduled before August 3 are postponed (W.D. Wash.).
  • State and Local Government and Courts:
    • The governor issued a proclamation prohibiting residential and commercial evictions through August 1.
    • All jury trials are suspended until after July 6.

Washington, D.C.

  • Federal Courts: All jury trials scheduled to commence before August 1 are postponed. Other civil proceedings scheduled to occur before July 15 are postponed.
  • Local Government and Courts:
    • On March 13, the Superior Court suspended all residential evictions and foreclosures.
    • The Superior Court will not conduct trials until further notice.
    • 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 was recently enacted that prohibits certain residential foreclosures during the pendency of a public health emergency.

West Virginia

  • Federal Courts: All jury trials scheduled through June 30 are postponed (S.D. W.Va.).
  • State Courts: Jury trials are postponed until June 29.

Wisconsin

  • Federal Courts: All jury trials scheduled through June 30 are postponed (E.D and W.D. Wis.).
  • State and Local Government and Courts: Jury trials may only resume in each court once that jurisdiction has submitted a plan regarding the resumption of in-person proceedings and that plan has been approved by the chief judge of the governing judicial district.

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

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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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