188.8.131.52 State-Ordered Foreclosure Moratoria
States act well within their constitutional authority when they order a stay of foreclosures in response to an economic or health crisis.112 Beginning in March 2020, many governors offices and state administrative agencies ordered stays of foreclosure activity.113 These orders can prove extremely helpful for borrowers. However, advocates need to examine their own state’s orders carefully. The orders are typically time-limited, often limited to the duration of a governor’s broad declaration of emergency. Some of these orders are now expired. The scope of the orders also varies a great deal from state to state, often dependent on the intricacies of the state’s foreclosure procedures. For example, an order may stay only the conduct of a foreclosure sale and not apply to steps the servicer takes leading up to a sale. Other orders limit the initiation of new foreclosures, but have no effect on proceedings already underway when the order was published. Advocates should pay particular attention to the effect of a stay order on time limits for borrowers to act, such as the running of pre- or post-foreclosure sale redemption periods. Finally, many states implemented general stays on evictions. In some instances, the stay orders specifically reference post-foreclosure sale evictions. Other orders are expressly limited to evictions arising from landlord and tenant cases. Some orders are simply not clear on the scope of eviction protections.
Many state governments have provided extra relief for borrowers facing COVID-19 hardship, especially for loans not covered by the CARES Act.
112 East N.Y. Sav. Bank v. Hahn, 326 U.S. 230, 66 S. Ct. 69, 90 L. Ed. 34 (1945) (reasonable exercise of state police power to limit mortgage foreclosures does not violate Contracts Clause of U.S. Constitution); Home Building & Loan Ass’n v. Blaisdell, 290 U.S. 398, 54 S. Ct. 231, 78 L. Ed. 413 (1934) (state foreclosure moratorium valid response to economic crisis).
113 NCLC has listed many of these along with links to the texts of the orders here: https://www.nclc.org/issues/foreclosures-and-mortgages/covid-19-state-foreclosure-moratoriums-and-stays.html.