California Coronavirus Foreclosure Relief
On March 16, 2020, Governor Gavin Newsom issued Executive Order N-28-20. On May 29, 2020, Govern Newsom issued Executive Order N-66-20, which extends the protections of Executive Order N-28-20 to 60 days to a date of July 28, 2020. Executive Order N-28-20 authorizes local governments to stop any foreclosures. This means that judicial foreclosures brought pursuant Code of Civil Procedure Section 725(a) et seq, Code of Civil Procedure Section 1161 et. seq., and any other actions that may otherwise eject a residential or commercial tenant or occupant of residential real property after a foreclosure is suspended. This order remains effective until July 28, 2020, unless extended.
Banks and Foreclosure Relief
On March 25, 2020, California Governor Gavin Newsom entered into an agreement with, four of the five major banks in the United States—JP Morgan Chase, Citi, US Bank, and Wells Fargo—along with around 200 credit unions and state banks, who have consented to give homeowners mortgage payment relief during the coronavirus outbreak. Specifically, California Homeowners financially affected by the COVID-19 pandemic may receive a 90-day forbearance on mortgage payments. As part of the agreement with the Governor, the banks also agreed not to report late payments to the credit reporting bureaus. As such, late payments or lack of payments may not affect the credit scores of California Homeowners.
It is important to note homeowners should contact their loan servicers to request a forbearance or to see if they may qualify for payment suspensions. During this process, to get details on how to apply for relief, go to the official California Coronavirus (COVID-19) Response website. Homeowners may be able to work with lenders to enter or extend forbearance agreements if still experiencing continued financial hardship due to coronavirus.
Also, under the deal, financial institutions won’t initiate foreclosure sales or evictions, consistent with applicable guidelines, for at least 60 days, and, for at least 90 days, banks will waive or refund mortgage-related late fees to customers who request assistance.
California Courts Emergency Rules
The Judicial Council of California governs the rules and regulations for the courts in California. As such, any emergency rules that effect court closures and judicial hearings will be issued through the Judicial Council of California. On April 6, 2020, the Judicial Council of California issued emergency rules to account for the coronavirus (COVD-19) emergency.
The Judicial Council of California issued emergency rules about unlawful detainer matters and judicial foreclosure actions. Specifically, the Judicial Council of California issued Emergency Rule #2 to protect borrowers in judicial foreclosure actions.
A court may not issue any decision or judgment in a judicial foreclosure action until 90 days after the Governor declares that the state of emergency related to the COVID-19 pandemic has been lifted unless the court finds that the action is required to further public health and safety. Note that these rules do not apply to non-judicial foreclosures, which is the most common way a lender pursues its collateral in California.
Any statute of limitations governing a judicial foreclosure action is tolled until 90 days after the Governor declares that the statement of emergency related to the COVID-19 pandemic has been lifted.
All periods for electing and exercising any rights in a judicial foreclosure action is extended until 90 days after the Governor declares that the statement of emergency related to the COVID-19 pandemic has been lifted. This may include the rights of redemption on foreclosure sales.
The emergency rules ensure that judicial foreclosures will remain on hold in California while the legislature aims to come up with a long-term plan to handle the multitude of evictions.