Yesterday, the D.C. Council passed emergency legislation to protect District residents in the wake of the coronavirus pandemic. While the emergency legislation provides important protections against eviction, more must be done—and quickly—to prevent District residents from losing their homes to foreclosure. Prohibiting foreclosure auctions from occurring during the District’s public health emergency is critical for protecting the health and stability of District homeowners, many of whom are elderly, low-income, or otherwise vulnerable. We urge the Council to pass standalone emergency legislation to protect vulnerable District homeowners.
The emergency legislation passed yesterday contains a broad moratorium on evictions, which will temporarily prevent individuals and families whose homes have already been auctioned from being evicted from the properties following a sale. However, stopping the underlying foreclosure auctions themselves during the public health emergency remains important. Allowing foreclosure auctions to move forward during the District’s health emergency will cause homeowners to suffer irreversible loss of ownership rights at a time when office closures, financial losses, and other barriers caused by the public health emergency make it unrealistic for many homeowners to resolve their arrearages in time to save their homes. Allowing auctions to continue also:
- Increases the risk of vulnerable homeowners falling victim to foreclosure rescue scams in a desperate effort to preserve ownership of their homes;
- Increases the number of District residents who will be in the pipeline for eviction once the state of emergency comes to an end; and
- Will likely result in substantially depressed auction prices and home values in light of the impact of social distancing on current bidding conditions.
Some measures have been instituted by D.C. Superior Court to address this problem. Specifically, in a recent order addressing COVID-19 concerns, the Court announced that hearings in mortgage and tax foreclosure cases scheduled before May 1st will be automatically continued to a later date. These laudable measures provide broad protection to distressed homeowners but still leave some significant gaps requiring a legislative solution in order to prevent District residents from losing their homes during this unprecedented emergency. For example, many foreclosures take place entirely outside the judicial system, including foreclosures by condominium associations for unpaid fees and by mortgage lenders that elect to participate in the District’s extra-judicial foreclosure process overseen by the D.C. Department of Insurance, Securities, and Banking. In addition, in cases where the court has already issued an order authorizing a foreclosure auction, no further court action is needed and the auction can take place before the next court hearing. Thus, even with the court automatically continuing hearings, homeowners with pending foreclosure auctions scheduled to occur in March or April 2020 remain in imminent danger of losing their homes. According to the website for just one auction house, fifteen foreclosure auctions are scheduled to occur in the next two weeks.
We urge the Council to introduce additional emergency legislation to fill this gap and will continue to advocate for these necessary protections.