Updates from Bendett & McHugh (RI, MA, ME)
In response to the Rhode Island Governor's Executive Orders declaring a state of emergency in Rhode Island due to the Covid-19 virus, the Rhode Island Department of Business Regulations, Banking Division has issued Banking Bulletin Number 2020-5: Mediation Compliance during the Covid-19 Emergency. Pursuant to the CARES Act, which expands the availability of forbearance options, Banking Bulletin 2020-5 allows for mediation notices, pursuant to RIGL 34-27-3.2, to be sent 120 days after the date on which a forbearance agreement terminates.
RHODE ISLAND: In response to the Rhode Island Governor's Executive Orders declaring a state of emergency in Rhode Island due to the Covid-19 virus, the Rhode Island Department of Business Regulations, Banking Division has issued Banking Bulletin Number 2020-5: Mediation Compliance during the Covid-19 Emergency. Pursuant to the CARES Act, which expands the availability of forbearance options, Banking Bulletin 2020-5 allows for mediation notices, pursuant to RIGL 34-27-3.2, to be sent 120 days after the date on which a forbearance agreement terminates.
This interpretation applies to (1) all mortgages not in default at the time the forbearance agreement was reached and (2) all mortgages where a forbearance agreement was reached on or before the 120th day of default.
This means that no penalty will accrue if the notice is mailed to the mortgagor within 120 days after the date the forbearance agreement terminates. Please note that the mediation coordinator may request documentation to evidence the terms of the forbearance agreement.
MASSACHUSETTS: On April 17, 2020, Massachusetts House Bill 4647 was enacted and is expected to be signed by the Governor today April 20, 2020. This new law will have a very significant impact not only on the scheduling of sales in Massachusetts but also on the relief which must be offered to borrowers within the state as well. A summary of the requirements of the new law is set forth below. A full copy is also attached for your review.
Foreclosure Impacts: Unless a property is vacant or abandoned, no foreclosure notice can be published, no foreclosure by sale or entry may occur, no foreclosure via non-judicial means (notice of sale mailing) or judicial means (superior court action) may be commenced and no Servicemember's action may be filed with the Land Court until the sooner of 120 days from enactment of this section or 45 days following the lifting of the current Emergency Order in Massachusetts. Practically, this means that absolutely no foreclosure action may occur during this time period. The expiration date is currently uncertain, however if signed today as expected, the latest date by which action can recommence is August 18, 2020. It is possible that these limitations may be lifted sooner if the Emergency Order is lifted prior to July 4, 2020. The provisions of this section may also be extended by the Governor beyond 120 days in 90 day increments.
Required Loan Forbearance: Under this section, a mortgagee must grant a forbearance to a borrower of an owner occupied 1-4 family house when requested due to a COVID-19 financial impact- regardless of whether the investor is a government sponsored entity. Such forbearance should not be more than 180 days. During this forbearance, no additional fees, charges or interest other than what was already scheduled to be due may accrue. The payments due during the forbearance must be added to the end of the term of the loan unless alternative agreement is reached between the lender and the borrower.
Eviction Impacts: Property owners are prohibited from terminating a tenancy, sending a Notice to Quit or requesting that the occupant vacate the premises for a non-essential eviction. Additionally, courts hearing eviction matters are prohibited from accepting the filing of a summons, writ or complaint for eviction, entering judgment or default judgment for the plaintiff for possession or scheduling any court event including a trial. The courts may not also deny any request for continuance or stay of execution. Deadlines are likewise tolled.
MAINE: On Thursday 4/16/20 the State of Maine took the following actions in response to the COVID-19 situation:
- Limits on Evictions
On 4/16/20, Maine Governor Janet Mills issued the attached Executive Order (“An Order Regarding Unlawful Evictions, Writs of Possession and Initiation of Eviction Proceedings”) suspending the issuance and service of writs of possession in various circumstances, including those issued pursuant to 14 MRSA § 6321 which governs the residential foreclosure process. Landlords and their agents can apply for judicial relief in limited circumstances.
Servicers Urged to Halt All Foreclosure Activity, Including Notices of Default
On Thursday 4/16/20, Maine Governor Janet Mills wrote open letters urging (but not requiring) mortgage servicers in Maine to refrain from initiating or prosecuting residential foreclosures, and specifically to refrain from sending Notices of Default.
Also on 4/16/20, the Maine Bureau of Consumer Credit Protection, a division of the Maine Department of Professional and Financial Regulation, issued the attached guidance that “Strongly urges that servicers of non-federally-backed mortgages adhere to a foreclosure moratorium, and refrain from mailing “right to cure” notices to Maine residents, so long as the current federal moratorium or successive moratoria remain in effect.“
These communications from the State highlight that while Maine has not legally barred moving forward with all aspects of the foreclosure process on mortgages that are not subject to the federal moratoria, including sending Notices of Default to borrowers, the State has made its preferences known. In this regard, it is important to note that the Maine Bureau of Consumer Credit Protection, which issued the attached memorandum urging servicers not to send Notices of Default, directly regulates mortgage servicers and collection activities in Maine, and will receive notification of each Notice of Default sent as it oversees the State's mandatory Notice of Default registration process.
ME Executive Order
ME Servicers Guidance