By: Kevin Hildebeidel

Two years have passed since the initial Covid-19 emergency declaration in the District on March 10, 2020. Coronavirus appears to be retreating and certainly it would be excellent news for everyone if that retreat continued. The District of Columbia, however, recently extended its foreclosure moratorium until June 30, 2022 with a possible extension to September for homeowners who apply for assistance through the DC Homeowner Assistance Fund (“HAF”). That fund was only in the pilot stage at the time this was written. The prohibition affects both mortgage foreclosures and condominium foreclosures, but no direct mention is made regarding cooperative entities. There are also exceptions made to allow action against vacant or non-owner occupied property. However, the question of how one can provide the required proof of non-occupancy for at least 275 days in a given period of time remains an issue.
The extension to June 30, 2022 will raise the total to more than twenty-seven (27) months during which lenders and servicers have been denied recourse to owner-occupied collateral. DC Code §12-304 exempts statutory stays from the computations for statute of limitations purposes. Since the moratorium is statutory, the statute of limitations is not in play. Nevertheless, this may be scant consolation as interest, taxes, insurance, and general carry costs continue to mount.
The combination of moratoriums and extensive revisions to debt collection laws has caused at least one author to question whether the District is becoming a repossession and collections sanctuary city. The DC Office of the Attorney General, on the other hand, provided impactful testimony that while a third of DC residents contend with debt collection issues generally, forty-five percent of residents of color face the same activities, and, thus, the recent reforms are vital. The HAF, in particular, would appear to be mutually beneficial to both borrowers and lenders as federal Covid funds are channeled to noteholders to bring accounts current, or at least more current, which works to everyone’s advantage. Every reasonable effort should be made to facilitate the HAF process, and servicers should remain alert to both the advantages and requirements of such programs.