March 20, 2020
In the midst of the continually evolving health crisis caused by COVID-19 (novel coronavirus), and daily press conferences from state and federal officials with the latest recommendations and plans to reduce the domino-like impact of the virus, HUD issued “Mortgagee Letter 2020-04” on March 18, 2020, announcing a 60-day moratorium on foreclosures and evictions, effective immediately.
HUD’s Mortgagee Letter was lean. While understandable, given the emergency issuance, it certainly creates a number of questions for mortgage lenders and mortgage loan servicers. Some considerations are as follows:
The moratorium applies to all FHA-insured Title II Single Family forward and Home Equity Conversion (reverse) mortgages.
According to HUD’s press release, servicers are directed to halt all new foreclosure actions and suspend all foreclosure actions currently in process; as well as to cease all evictions of persons from FHA-insured single-family properties.
The moratorium applies to the initiation of foreclosures and to the completion of foreclosures in
process. In addition, deadlines of the first legal action and reasonable diligence timelines are extended by 60 days.
While the FHA did not speak directly to this issue, loan servicers would be well-served by placing foreclosure holds on all applicable loans. Additionally, servicers should place eviction holds on all accounts with completed foreclosures.
The FHA continues to encourage loss mitigation options to help prevent delinquent borrowers from going into foreclosure. Specifically, hardship forbearance is an option for borrowers unable to make their mortgage payments due to coronavirus.
The FHA’s guidance does not speak to these issues. However, at a minimum, it seems likely that no relief can be granted that calls for immediate eviction.
Further, the FHA’s guidance would indicate that borrowers who have sought an injunction to stop foreclosure will be successful during this period. It is likely in lenders’ best interest not to contest temporary injunctions during the pendency of the moratorium.
Moreover, as courts in West Virginia, as well as across the country, are placing increasing restrictions on trials, hearings, and other deadlines, activity in these actions is likely to be continued at least briefly.
The West Virginia plaintiff’s bar has been known to allege violations of the West Virginia Consumer Credit and Protection Act where a loan servicer has allegedly threatened to foreclose on a property but did not have the legal right to do so.
It is certainly within reason to expect suits in West Virginia based on letters, phone calls, etc. placed between March 18, 2020 and the ultimate end of the FHA moratorium, in which a mortgage lender or servicer threatens to foreclose on the borrower’s property or to evict a borrower from the property. A successful plaintiff is entitled to recover $1,000 per violation, as well as actual damages and attorney’s fees.
To avoid potential suits such as this, best practices should include instructing all servicing personnel to make no representations to borrowers regarding foreclosure or eviction until the moratorium is lifted.
This article in no way serves as a comprehensive or definitive guidance with respect to the FHA moratorium, nor does it address numerous other potential nuances of the long-term impact of the FHA’s moratorium. However, it provides considerations for steps lenders and loan servicers can take to avoid future backlash from this developing situation.
 Thus, the moratorium will be in effect until at least May 17, 2020.
 This is in line with the Federal Housing Finance Agency’s (“FHFA”) announcement that it is directing Fannie Mae and Freddie Mac to suspend foreclosures and evictions for at least 60 days.
 Often, plaintiffs allege violations of W. Va. Code 46A-2-124(f) or W. Va. Code 46A-2-127(d).
W. Va. Code 46A-2-124 prohibits threats or coercion in debt collection. Specifically, subsection (f) provides:
No debt collector shall collect or attempt to collect any money alleged to be due and owing by means of any threat, coercion or attempt to coerce. Without limiting the general application of the foregoing, the following conduct is deemed to violate this section:
(f) The threat to take any action prohibited by this chapter or other law regulating the debt collector's conduct.
W. Va. Code 46A-2-127 prohibits fraudulent, deceptive or misleading representations in debt collection. Specifically, subsection (d) provides:
No debt collector shall use any fraudulent, deceptive or misleading representation or means to collect or attempt to collect claims or to obtain information concerning consumers. Without limiting the general application of the foregoing, the following conduct is deemed to violate this section:
. . .
Any false representation or implication of the character, extent or amount of a claim against a consumer, or of its status in any legal proceeding;
 W. Va. Code 46A-5-101(1); W. Va. Code 46A-5-104.
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