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CARES Act Section 4022 Forbearance and Foreclosure Moratorium

Borrower-initiated forbearance and a foreclosure moratorium for any federally-backed mortgage loan are parts of the major financial relief available to borrowers under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) signed by President Donald Trump on March 27, 2020. Under Section 4022 of the CARES Act, a federally-backed mortgage loan is defined to include: 

any loan which is secured by a first or subordinate lien on residential real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from one to four families that is —

(A) insured by the Federal Housing Administration under title II of the National Housing Act (12 U.S.C. 1707 et seq.);
(B) insured under section 255 of the National Housing Act (12 U.S.C. 1715z–20);
(C) guaranteed under section 184 or 184A of the Housing and Community Development Act of 1992 (12 U.S.C. 1715z–13a1715z–13b);
(D) guaranteed or insured by the Department of Veterans Affairs;
(E) guaranteed or insured by the Department of Agriculture;
(F) made by the Department of Agriculture; or
(G) purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.

Under the provisions of Section 4022(b)(2), a borrower with a federally-backed mortgage loan "experiencing a hardship due, directly or indirectly, to the COVID-19 emergency" may request forbearance to the borrower's servicer and affirm that the borrower is experiencing such hardship. The statute provides that upon request such forbearance "shall be granted for up to 180 days, and shall be extended for an additional period of up to 180 days at the request of the borrower." At the request of a borrower, either the initial or extended period of forbearance may be shortened.

During the period of forbearance, Section 4022(b)(3) provides that no additional fees, penalties, or interest can accrue on the borrower’s account beyond those scheduled or calculated as if the borrower made all payments on time and in full. Mortgage servicers are not permitted to require any additional documentation beyond the basic information required under Section 4022(b), and are not permitted to assess any additional fees, penalties, or interest.

Additionally, under the law, no mortgage servicer of any federally-backed mortgage loan is permitted to do the following for a 60-day period, which began on March 18, 2020 and ends on May 17, 2020: 

  • Initiate any foreclosure process, whether judicial or non-judicial

  • Move for a foreclosure judgement or order of sale

  • Execute a foreclosure-related eviction or foreclosure sale

The foreclosure moratorium does not apply to vacant or abandoned property.

© 2023 Jones Walker LLPNational Law Review, Volume X, Number 100

About this Author

J. Andrew Gipson, Banking and financial services lawyer, Jones Walker law firm
Special Counsel

Andy Gipson is special counsel in the firm's Banking & Financial Services Practice Group and practices from the firm's Jackson office. He focuses his practice in securities, banking, communications, and insurance regulatory law. In 2007, he was elected to the Mississippi Legislature representing District 77 in the Mississippi House of Representatives.

Mr. Gipson is a member of The Mississippi Bar and was selected as a member of Leadership Simpson County, Class of 2006–2007 and of Leadership Jackson, Class of 2003–2004. He also was elected to...