By G.K. Sanchez, Esq.

Rosenberg & Associates, LLC *

USFN Member (DC, MD, VA)

On February 3, 2022, the mayor of the District of Columbia signed the Foreclosure Moratorium Extension Emergency Amendment Act of 2022. This new law lengthens the prohibition period against residential foreclosure actions, making it effective from March 11, 2020 to June 30, 2022. New judicial foreclosure actions may not be filed, and foreclosure sales may not be conducted as part of existing foreclosure cases. However, foreclosure actions may proceed in normal course if the parties in the action consent. There is also an exemption from the moratorium for residential properties at which neither a record owner nor a person with an interest in the property as heir or beneficiary of a record owner, if deceased, has resided for at least 275 total days during the previous 12 months, as of October 1, 2021.

This extension of the local moratorium is tied to federal efforts to provide relief to homeowners affected by the ongoing COVID-19 pandemic. The District of Columbia. is awaiting full federal assistance from the Homeowner Assistance Fund (“HAF”). HAF was established as part of the American Rescue Plan Act of 2021 to provide funds to homeowners who experienced financial hardship caused by the pandemic after January 21, 2020. HAF is meant to avoid mortgage delinquencies, defaults, foreclosures, loss of utility services, and displacement. The U.S. Department of the Treasury is responsible for allocating HAF monies to the states, D.C., and Puerto Rico. In turn, state and local governments are responsible for distribution of HAF assistance to qualified homeowners.

According to an accompanying resolution from the Council of the District of Columbia, this law was passed so that D.C. may have time to receive HAF money and disburse it to. homeowners before foreclosure actions completely resume. Along with needing time to receive HAF assistance, D.C. is still working to establish an application and disbursal mechanism for these funds. The district has already received 10% of its HAF funds and has used that money to launch a pilot HAF program administered by the D.C. Department of Housing and Community Development. Homeowners who apply for financial assistance no later than 60 days after July 1, 2022, will be eligible to further delay foreclosure and housing debt collection actions until September 30, 2022, while their financial assistance application is pending approval, payment, or reconsideration upon appeal.

While the moratorium hampers the ability of creditors to act against delinquent accounts in D.C., the passing of this latest law shows the beginnings of a phased approach to the end of the long moratorium. The D.C. moratorium had been extended before, with previous extensions tied to public emergency orders from the mayor. Now, the end of the moratorium is predicated on pending financial assistance and the upcoming timelines and procedures associated with its disbursement. This provides a modicum of predictability that was not previously present during the moratorium. It appears that the Council finally sees an end to the moratorium, and, barring any further negative developments, this will be the last extension.

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USFN e-Update - February 2022