October 02, 2020

Solicitor's Corner: New Federal Regulations Effecting Landlords and Borrowers with Federally Backed Mortgages

While most landlords were still required to make their monthly mortgage payments, tenants have been the beneficiary of multiple executive orders and regulations issued by Governor Wolf to curb the fallout from stay at home orders which prevented a landlord from taking any action against a tenant for not paying rent. It did not matter if the current tenant was months behind on rent before the moratoriums or missed their first payment after the pandemic began, if a tenant could not, or did not want to pay rent, a landlord was unable to evict.
 
When Governor Wolf’s eviction and foreclosure moratorium was finally set to expire on August 31, 2020, thousands of people within the Commonwealth were behind on their rent and at risk for eviction. However, within a few days of the moratorium expiring, the Centers for Disease Control and Prevention issued an order under Section 361 of the Public Health Services Act to again temporarily halt residential evictions to prevent the further spread of COVID-19. Under this order, a landlord, owner of a residential property, or other person with a legal right to pursue eviction or possession of their property, is prevented from doing so until December 31. Further, any attempt by a landlord to evict a tenant and collect unpaid rent could lead to criminal charges and fines being assessed to the landlord.
 
Importantly, this new federal order does not forgive any rent owed by the tenant pursuant to the lease and the landlord is still permitted to charge and collect fees, penalties, or interest as a result of the failure to pay rent on a timely basis. It just prevents the landlord from filing an eviction action for the non-payment of rent. Because this order allows the tenant to continue to fall further and further behind, it merely kicks the eviction can down the road until December 31.
 
Unlike previous moratoriums issued by the Governor’s office, a landlord has multiple other avenues to regain possession of its properties prior to December 31. The order does not prevent a landlord from evicting a tenant for either (1) the lease ending and the tenancy expiring, or (2) breaching any other terms of the lease, excepting the non-payment of any rent obligation. Previously, a landlord could only evict if a tenant caused damage to the leased property. This means that any holdover tenants or tenants on month-to-month leases still remain susceptible to eviction if a landlord is willing to forego any rents owed and merely regain possession as soon as possible. In addition, it appears that this order does not affect post sheriff sale ejectment actions.
 
In addition to the eviction moratorium order, the federal government also extended a lifeline to borrowers who risked going into default on their mortgages. The Federal Housing Finance Agency announced an extension to the moratoriums on real estate foreclosures for single-family properties through December 31. This is a relief to many borrowers with a federally backed mortgage, however for homeowners without a federally backed mortgage it still leaves many homeowners still at risk for foreclosure.
 
For further information regarding the above subject matter or general real estate advice, please contact David Berger, Esquire (dberger@norris-law.com) or contact his office at (610) 391-1800.