President Trump Suspends Evictions and Home Foreclosure Amid Coronavirus Pandemic. What this means for Michigan Homeowners.

Last week President Trump directed the Department of Housing and Urban Development (HUD) to suspend foreclosures through April 2020 as Americans grapple with the fallout of the coronavirus.  At this point, the moratorium will apply only to homeowners with mortgages insured by the Federal Housing Administration, a HUD agency that backs affordable home loans issued through private firms.  Not all home loans and mortgage foreclosures will be covered by the President’s directive.
 

“Today’s actions will allow households who have an FHA-insured mortgage to meet the challenges of COVID-19 without fear of losing their homes, and help steady market concerns,” Dr. Ben Carson, HUD Secretary

This is a great measure to provide immediate peace-of-mind and continuity of housing to those facing an eviction or foreclosure proceeding during this pandemic.  But the purpose of this blog is to advise homeowners on the steps that you may need to be aware of during and after the foreclosure suspension. 

If you are currently scheduled for a foreclosure sale, here are some important factors:

• Is your home loan insured by the Federal Housing Administration?  This would be something that might be on your monthly mortgage statement, your original loan documents or inquire with your lender.
• Is your sale scheduled for April or after?
• If your foreclosure sale is postponed, is the lender or foreclosing party canceling the sale or just adjourning it?
• Will taking advantage of the moratorium help you or will it just put you further behind?

Why did we feel like these were the most important factors?  Let’s break it down.

#1  Is your home loan insured by the Federal Housing Administration? 

If yes, you are protected from an eviction or foreclosure until the end of April.  If not, you need to call your lender to see if they have voluntarily postponed the sale. 

“HUD Deputy Secretary Brian Montgomery said he has not been in any discussions with the Trump administration about urging commercial lenders to suspend mortgage payments in the crisis.”

If your mortgage company has not voluntarily suspended, adjourned or canceled your sale you should take measure to stop the sale.  You have the legal right to file a Chapter 13 bankruptcy to stop the foreclosure sale  as long as it is filed prior to the foreclosure sale.  We can help and offer same day legal protection, even as we work remotely during state-mandated time of social distancing.

#2  Is your sale scheduled for April or beyond?

If you your foreclosure sale is scheduled in April and you are a HUD-backed loan than you are delayed at least for the 60-day moratorium from the date of announcement (3/18/20).  If your foreclosure proceedings just started and a sale is scheduled for beyond moratorium, there is no current information to indicate that you are protected and you should consider taking your own steps to protect your home and stop the sale.  We offer free consultations to discuss your options to file a Chapter 13 reorganization plan to stop the sale and protect your home.

#3  If your foreclosure sale is postponed, is the lender or foreclosing party canceling the sale or just adjourning it?

If the mortgage company cancels the sale (they are not currently being mandated or directly to do so by the government) than you have the assurance that a whole new 5-week noticing period will need to occur before you are in danger of losing your home.

However, if the mortgage company is simply postponing or adjourning the foreclosure sale, then the mortgage company could immediately schedule a foreclosure sale after the moratorium without further notice to the homeowner.  Based on our professional opinion, we rarely see mortgage companies cancel a sale (even when they are actively working with a client on a loan modification, etc.).  Most likely, mortgage companies will choose to simply adjourn the foreclosure sale to avoid:

• additional re-noticing costs;
• time in the process and;
• extended legal rights for the homeowner to seek relief! 

If you are protected by the current executive office suspension of foreclosure sales, we urge you to contact your lender or the foreclosing attorney to verify the exact status of the sale.  If your sale has been simply adjourned, you should consider taking immediate action before the end of April to ensure you are protected.

#4  Will taking advantage of the moratorium help you or will it just put you further behind?

For some people who have had a disruption in income due to Covid19 or Coronavirus-related circumstances, the extra time given with this delay may be all the relief they need.

But for most people, they were already behind and this pandemic and the government-imposed work shutdowns will just put them further behind.  The moratorium may give you a short reprieve from worrying about a looming foreclosure sale, but does it solve the underlying debt problem?

We can help – The advantages of a Chapter 13 plan now and for future financial difficulties

If the extra time before the foreclosure sale is just that, “extra time”, without fixing the underlying issue, then we encourage you to start thinking about your long-term options.  Filing a Chapter 13 debt consolidation plan offers many unique and comprehensive advantages, including:

NOW:

• Immediate court protection from a foreclosure sale, as long as the case is filed prior to the sale or the adjourned foreclosure sale.
• Deferred payment on unsecured debt, such as credit cards, medical bills, personal loans, loan deficiency debt, etc.
• Ability to reduce and eliminate a portion of unsecured debts based on your income, budget and ability to pay.

FUTURE:

• Flexibility!  We have already gotten a myriad of calls from clients wondering how a disruption in their current income situation will affect their plans.  The good news is that we can file plan modifications or excusals for plan payment to help resolve temporary issues without disrupting court protection.
• Continued Court Protection:  The Chapter 13 plan locks in court protection from day one.  If you miss a payment or circumstances change, you are still protected while we work to get you back on track.

We are committed to being a helping hand during these uncertain times.  We offer free consultation (phone or in-office after 4/13/20) to discuss your options and your questions.  Even if you don’t plan to take immediate action based on this moratorium, we are available to help you plan ahead to protect your finances and your home.  Call us today at 866-261-8282 or the office cell at 248-840-3368 to schedule a consultation or speak immediately to a qualified professional.