Governor Larry Hogan has issued Executive Order Number 21-06-15-01 (“New Executive Order”) which effective August 15, 2021 will rescind the restrictions imposed under Emergency Order 20-12-17-02 (“Initial Executive Order”). As a reminder, the Initial Executive Order established certain limitations on initiating and proceeding with foreclosure and eviction actions in Maryland. More specifically, the Initial Executive Order restricted the ability to send a Notice of Intent and required lenders to offer special forbearance programs. The recission of the Initial Executive Order will remove the Notice of Intent restriction and, beginning on August 16, 2021, Notices of Intent may again be set on all loans without requiring the loan holder to offer a special forbearance. A review of the restrictions lifted under the new rule is provided for your review and a copy of the New Executive Order is attached to this correspondence.
Unfortunately this otherwise good news has been complicated by the recent issuance of the “2021 Mortgage Servicing COVID-19 Rule” by the CFPB. This rule will impose a stay on the commencement of new foreclosures throughout the country beginning August 31, 2021 and expiring at the end of the calendar year. While the original proposal included a blanket stay on all new foreclosures, the final rule included some important carve-outs. Specifically, loans which have a delinquency date of November 1, 2019, or earlier are excluded from the stay, as are any loans which may be subject to a statute of limitations defense at any time prior to January 1, 2022. This eliminates any aged loans which have otherwise been impacted by state or federal COVID stays and permits us to proceed upon them. Therefore the new executive order means that we will be able to proceed on issuing NOIs and commencing foreclosure activity in Maryland on all loans with a default date of November 1, 2019 or earlier with no additional restrictions at the state level or under the new CFPB rule.
For loans with a more recent delinquency date, new actions may still be commenced if a lender can show that one of three “procedural safeguards” have been met: 1) the borrower, during their delinquency, submitted a complete loan modification application and the servicer made a determination on that modification; 2) the property is “abandoned” as defined under applicable law; OR 3) the borrower is unresponsive and the servicer is able to demonstrate that they made good faith efforts to communicate with the borrower.
On all such “recent delinquencies” in Maryland the CFPB stay will have to be complied with, absent evidence of the existence of one of the above procedural safeguards. We are advising our clients to retain evidence of complete loan modification packets that resulted in denial as well as any evidence of good faith efforts to establish live contact with borrowers in order to qualify for one of the above “procedural safeguards” and avoid any further delays under the new CFPB rule. Where one of the above procedural safeguards have been met we will be able to proceed with the issuance of the Notice of Intent upon the expiration of the Emergency Order on August 16, 2021.
Finally, an additional aspect of the CFPB rule is triggered by Maryland’s forbearance requirements. While servicers will no longer be required to offer forbearance prior to the service of an NOI beginning on August 16, 2021, to the extent any previously issued forbearance is ongoing after 8/31, servicers are required to attempt live contact more than 10 days but less than 45 days prior to the expiration of the forbearance to 1) establish the end date of the forbearance; 2) describe available loss mitigation programs; and 3) provide information on how to obtain homeownership counseling services. Servicers must retain evidence of this contact for the purposes of future litigation. For any questions regarding this update, please contact Deborah Gallo, Esq. at email@example.com.