State Officials Extend Moratorium on New Foreclosures

Maryland Department of Labor officials have extended the state’s emergency stay on new foreclosures through the end of March, according to a Tuesday press release.

That means the state’s reporting system for certain foreclosures will remain closed through March 31, according to the release. While that system is closed, mortgage lenders, loan servicers, and collection agencies won’t be able to send a “notice of intent to foreclose” – the first step in most foreclosures – to homeowners.

“After an analysis of multiple factors related to the COVID-19 health crisis, we made the decision to continue the prohibition on new foreclosures by keeping the statewide reporting system closed,” Maryland Commissioner of Financial Regulation Antonio P. Salazar said in a statement.

Salazar said his office is monitoring “the economic conditions within the State, trends within the residential mortgage market, and the status of the virus and associated governmental and public health responses,” to determine if the stay on new foreclosures should continue.

The state’s moratorium on new foreclosures was set to expire at the end of February. Gov. Lawrence J. Hogan Jr. (R) originally put that moratorium in place last April, and has since issued several executive orders to extend the stay. A nationwide moratorium on foreclosures on homes with federally-backed mortgages has also been extended through March.

“Homeowners who have fallen behind on their mortgage payments due to economic hardships caused by the COVID-19 pandemic will have additional time to connect with their mortgage lender to find solutions and take advantage of the many financial relief programs available,” Labor Secretary Tiffany P. Robinson said in the release.

But despite the state’s stay on new foreclosures, and federal and state orders allowing nearly a year of forbearance for homeowners, advocates have warned that some foreclosures are still moving forward. 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, told Maryland Matters in December.

“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.”

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

The General Assembly is considering legislation that would give homeowners additional protections. House Bill 1009, sponsored by Del. Vaughn Stewart (D-Montgomery) and cross-filed as Senate Bill 724 by Sen. Jill P. Carter (D-Baltimore City) would codify current orders on foreclosures and give homeowners more options to catch up on mortgage payments. The House bill is set for a hearing in the House Economic Matters Committee this week.

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