Force Mejeure And The COVID-19 Pandemic: Impact On Indiana Notes and Mortgages
The Federal CARES Act - Consumer/Residential Mortgage Loans

Governor Holcomb's Executive Order 20-06: How Does It Affect Indiana Foreclosures?

On March 19, 2020, Indiana's Governor handed down his Order for Temporary Prohibition on Evictions and Foreclosures.  With regard to mortgage foreclosures, here's what it says in pertinent part (italics added):

WHEREAS, the adverse economic impacts of COVID-19 … on Hoosiers … include … hindering their ability to pay … mortgages, which could potentially result in creditors … initiating foreclosure … proceedings to remove them from their homes;

WHEREAS, to avoid the serious health, welfare, and safety consequences that may result if Hoosiers are … removed from their homes during this emergency, it is reasonable and necessary to suspend laws relating to real property (including breach of … mortgages, etc.), to control the occupancy of premises in … Indiana, and to impose a moratorium on … foreclosures;

WHEREAS, … HUD, in an effort to provide immediate relief to … homeowners … will temporarily suspend all foreclosures …;

NOW, THEREFORE … [the Governor orders] that:

  1. No … foreclosure actions or proceedings involving residential real estate real estate … may be initiated … until the state of emergency has been terminated….
  2. No provision contained in this … Order shall be construed as relieving any individual of their obligations … to make mortgage payments, or to comply with any other obligation(s) that an individual may have under a … mortgage.

Takeaways

  1. Order 20-06 applies only to consumer/residential mortgage foreclosures - not commercial foreclosures.
  2. Lenders cannot file a mortgage foreclosure complaint (start a lawsuit) against a homeowner until the Governor terminates this order.
  3. Despite the Order, Borrowers must continue to make mortgage loan payments. 

Gray Area

    A question I have relates to the Order's use of the term "proceedings."  For example, paraphrasing Paragraph 1:  "no foreclosure proceedings may be initiated."  This part of the Order is subject to interpretation, and the courts ultimately will decide what it means.  It seems to me that the Order effectively suspends all residential foreclosure (sheriff's) sales.  On the other hand, in a pending residential foreclosure case, the Order arguably does not prohibit a party from filing a motion.  But, the Order may prevent the court from holding a hearing on the motion or from ruling on the motion.  To that end, in connection with a pending case it would be wise to investigate whether any county-specific orders exist or to simply call the court's office to determine how the judge has decided to apply the Order.          

    

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