CA Foreclosure & Eviction Moratorium

When the beginning of the year started it was like the typical years before it, foreclosure and evictions were steadily happening across the county, State of California, the County of Los Angeles, and the city of Los Angeles. Then in March of this year everything changed, COVID19 spread, shutdowns came, business showdown overnight, unemployment skyrocketed, the labor market crashed, the stock market crashed, then it rebounded, then it crashed again. The same cycle has now played out once or twice and seems to have no end in sight. Along with all the above problems renters overnight could not afford their rent, homeowner’s couldn’t afford their mortgages and now four months later and renters still can’t afford their rent and homeowners can not afford their mortgages.

The federal, state, and local governments have tried to step in and do what they can to stabilize the market but there is only so much they can legally do. Their authority does not extend to private companies, lenders, etc. The government can only order government entities to take certain action; if the government directs a private entity to do something that results in them losing property then it may be considered a “taking” and require compensation from the government to the private individual having property “taken” from them.

For this reason the Federal government issued an order mandating that all government backed loans such as those owned by Freddie and Fannie Mae be placed in forbearance and that no foreclosures proceed until August 31, 2020. Evictions related to these government owned properties were also put on moratorium until Aug. 31. Another federal effort was The Cares Act which provides for forbearance payments on all government backed mortgages for up to a year from the inception of the act.

In California in an effort to curb a tsunami of evictions the Governor issued several orders regarding evictions and foreclosures. The protections from eviction afford by the executive order were at first that no evictions could happen through May 31, 2020 then another executive order extended that moratorium to July 28, 2020. Per the county of Los Angeles, "The temporary moratorium is effective from March 4, 2020 through July 31, 2020, and may be extended by the Board of Supervisors on a month-to-month basis.” Most recently that order was extended to September 30, 2020.

Local governments were allowed initially to stop evictions for tenants affected by COVID19 but then even after 120 plus California jurisdictions did so the state government put out a mandatory order for the halt of all evictions until September 30, 2020. Additionally, the Judicial Branch of California also implemented a nine-one-one rule stopping court’s from being able to conform any summons, entry of default judgment, and mandating continuance of trials in unlawful detainers generally speaking. These continuances of trial are supposed to be for ninety days subsequent to the state of emergency being ordered over or until the nine-one-one rule is withdrawn.

There are also additional protections under Governor Newsom’s order specifically afforded by the commission on the public utilities of California regarding protections from the shutoff of utilities. The commission rightfully so has put a mandatory halt on any utility including water from being disconnected by any utility company for failure to pay due to COVID19.

In addition, to these moratoriums on evictions the governor worked out an informal agreement with major banks to stop foreclosures for sixty days while trying to work out forbearance agreements with borrowers. Some borrowers accessed up to ninety days of forbearance with zero negative consequences to their credit. Others obtained sixty days of stoppage on their foreclosure. For many, however, this simply has been a bandaid over a huge gaping bleeding wound. There is also some relief for homeowners with late charges and fees.

Again since the court’s and federal, state, and local government can control government loans and court’s the California judiciary issued another nine-one-one rule stopping all judicial foreclosure for up to 90 days subsequent to the emergency in the state declared over or until the nine-one-one rule is withdrawn.

The COVID19 California Orders by Governor Newsom are Executive Order N-28-20, March 16, 2020, Executive Order N-37-20, March 27, 2020, Executive Order N-37-20, April 2, 2020, Executive Order N-66-20, May 29, 2020

There are also releases by the press: Office of Governor Gavin Newsom, March 25, 2020, California Public Utilities Commission, March 17, 2020 and California Judicial Branch Emergency Actions: Criminal, Civil and Juvenile Court, April 22, 2020.

https://www.bankrate.com/mortgages/mortgage-rates/#housing-hardship-index Our experts at Bankrate created a metric that sums mortgage delinquencies and unemployment from all fifty states to identify the states with economies hardest hit by the pandemic. We also discuss what Americans can do if they are facing financial hardship due to the recession, including: