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Advocates: Homeowners Still in Danger of Foreclosure Despite State, Federal Orders

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Despite an executive order allowing Maryland homeowners to request forbearance on their mortgage payments due to the financial stress brought on by the pandemic, advocates say some homes are still being sold at foreclosure.

Gov. Lawrence J. Hogan Jr. (R) put a temporary halt to new foreclosures for Marylanders who’ve taken a financial hit from the COVID-19 pandemic in an executive order earlier this year. 

That order also allows homeowners who are having trouble paying their mortgage due to coronavirus-related issues to ask their loan servicer for a 180-day forbearance, with the option to extend that for up to an additional 180 days. 

But Scott Webber, a Montgomery County resident embroiled in a foreclosure battle of his own, said some homes are still going to auction despite Hogan’s orders. His own home was scheduled to be sold in a foreclosure auction on Tuesday, although that sale was canceled at the eleventh hour. 

Webber said he asked for the forbearance allowed in Hogan’s order, but his request was “completely ignored.” He warned that the governor’s executive order isn’t being applied consistently, and some foreclosure actions are moving forward despite the statewide moratorium.

“There’s chaos in how foreclosures are supposed to be handled right now,” Webber told Maryland Matters

Hogan’s order put a stop to “Notice of Intent to Foreclose” letters until Jan. 4, 2021 for homeowners who don’t have a federally-backed mortgage. Once those letters resume, Marylanders will still be able to request a coronavirus-related forbearance until Maryland’s state of emergency ends. 

It also requires mortgage servicers to notify borrowers that they can request the forbearance, which would amount to a temporary pause or reduction on mortgage payments.

Marylanders with federally-backed mortgages, like those from Fannie Mae and Freddie Mac, are protected from foreclosure through the end of the year under the federal Coronavirus Aid, Relief and Economic Security (CARES) Act. Other federal agencies have also put protections in place, including the Department of Veterans Affairs.

Homeowners with federally-backed mortgages can also request forbearance, according to the Consumer Finance Protection Bureau website.  

If a homeowner receives a “Notice of Intent to Foreclose” from their mortgage servicer after Jan. 4, and the foreclosure process continues even after they’ve asked for a forbearance, the foreclosure “will not be considered effective under Maryland law” until the state of emergency ends, according to the Maryland Department of Labor website

But despite those protections, some servicers are reportedly going ahead with foreclosures. According to Strategic Housing Solutions, a Prince George’s county-based non-profit affiliated with the local NAACP, at least one homeowner had to head to court to stop their mortgage servicer from auctioning off their house. 

That homeowner’s motion relied on the 180-day forbearance allowed by Hogan’s order, according to the nonprofit.

“It appears that the servicers and the attorneys filing foreclosure actions are either unaware of the governor’s Executive Order or are ignoring it, to the detriment of homeowners,” Liz Johnson, the housing chairperson of the State of Maryland NAACP and the director of Strategic Housing Solutions, said in a news release.

Foreclosures that began before Hogan’s stay have been proceeding in some cases, Amy P. Hennen, the director of advocacy and financial stabilization at the Maryland Volunteer Lawyers Service, said. 

“If it’s been filed in the court, it’s able to move forward,” Hennen said, “Unless the court is otherwise not able to move it forward because of closures.”

Lenders that want to move forward with a foreclosure that was “pending or initiated” during Maryland’s state of emergency need to prove to court officials that the property is exempt from state and federal moratoriums, according to an order from Maryland Court of Appeals Chief Judge Mary Ellen Barbera.

Hennen said it’s difficult to tell whether every loan servicer is complying with Hogan’s order when it comes to notifying homeowners about the option for forbearance. She said homeowners should reach out to a lawyer or housing counselor when faced with a potential foreclosure.

“It can be quite a tricky process to navigate on your own,” Hennen said. “There’s a lot of documentation.”

Webber said he isn’t entirely sure why the foreclosure auction for his house was canceled, although potential buyers showed up to the scheduled auction outside of the Montgomery County Circuit Court in Rockville on Tuesday morning. Attempts to foreclose on Webber’s home predate the coronavirus pandemic, and he says he was the victim of a predatory loan.

Webber said Hogan’s order, particularly the nearly year-long forbearance option, will likely help Maryland homeowners weather the pandemic – but urged the governor to ensure courts and servicers alike are complying.

He said borrowers should contact their lenders and loan services as soon as possible to ask for a forbearance if they’ve taken a financial hit due to the coronavirus pandemic. 

“It can’t wait,” Webber said. “This housing crisis is not only forthcoming, it’s here now.”

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Advocates: Homeowners Still in Danger of Foreclosure Despite State, Federal Orders