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Breaking Down the Law: COVID-19 & Foreclosures/Evictions

COVID-19 & Foreclosures/Evictions

Shutdowns made in response to COVID-19 have left many in the valley out of work, raising concerns over people losing their homes if they cannot pay their mortgages or being evicted if they cannot pay rent.

The Federal government has responded by enacting rules that freeze evictions for mortgages backed by the Federal government, such as FHA loans, while the Las Vegas Justice Court has suspended eviction proceedings.

But the question remains, how do these changes affect homeowners and renters here in Las Vegas? Here to discuss the issue is attorney Matt Hoffmann with Battle Born Injury Lawyers.

Thanks, etc.

1.

Let’s start with the Federal government. What have they done to stop foreclosures for affected homeowners and how does it apply locally?

The U.S. Department of Housing and Urban Development (HUD) along with the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, have directed all mortgage servicers to stop any new foreclosures and to suspend any foreclosures already in process.

These are Administrative orders by the agencies.

The orders apply to single-family homeowners who are unable to pay their mortgage on FHA loans.

The orders also apply to loans backed by Fannie Mae and Freddie Mac.

Combined, these orders affect about 65% of the mortgages in the country, and that’s true locally as well.

Then just the other day, a new order came down from the Finance Agency for landlords who own homes backed by these same programs.

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If a landlord does not evict their tenants, they can obtain a forbearance and avoid foreclosure If they cannot make their mortgage payments, which can easily happen when tenants are not able to pay rent.

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Obviously this is good news for renters, since it is an incentive for landlords not to evict tenants who cannot pay rent.

**But these Federal orders only apply to mortgages backed by Federal programs**

2.

What about locally - are the state or local governments doing anything to protect homeowners and renters in light of the lockdown?

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Locally, The Las Vegas Justice Court suspended all eviction proceedings about a week ago, and that suspension will last for 30 days.

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That’s a big deal, since the Justice Court handles all eviction proceedings in the city of Las Vegas, and to give you an idea of the numbers we are talking about, in December - before this lockdown - there were 2,631 eviction cases.

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After 30 days, the courts will revisit whether to continue suspending evictions, and I suspect they will.

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Landlords can still file for eviction, but nothing will be done and they cannot obtain a Default against renters who do not respond to the eviction filing.

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The normal process for eviction in requires that when you receive an eviction notice, you can either go down to the courthouse and file a response, which results in a hearing, or move out and be evicted.

3.

So for those without Federally backed mortgages, or renting from someone without a Federally backed mortgage, there’s really no protection in place?

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As far as anything “new,” no, other than the fact the court will not process any evictions.

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But for homeowners who are looking for help and do not have a Federally backed mortgage, the same things that were done during the last housing crisis apply.

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Contact your lender and explain your situation.

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Request a temporary forbearance.

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Some lenders, including Ally Bank and Bank of America, are offering to suspend mortgage payments for eligible borrowers, and I suspect more lenders will offer similar programs.

- As far as the State of Nevada goes, they could follow other states, like New York and California.

- New York has announced that mortgage payments in the state may be delayed by 90 days for homeowners sho have lost their job due to the s lockdown, and California has stopped all evictions and foreclosures through May 31st.

**But a huge issue with Nevada’s shutdown of “Non-Essential” businesses is Commercial Real Estate.

**Prices for commercial property has surged in the last couple years, and now we have investor-owned commercial properties with tenants who cannot pay rent.

**We could see a major increase in commercial properties going into foreclosure if businesses are not allowed to operate soon.

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