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On August 26, the U.S. Supreme Court issued a 6-3 decision in Alabama Association of Realtors et al. v. U.S. Department of Health and Human Services et al. to lift the federal government’s eviction moratorium, stating the CDC lacked authority to impose the ban. This decision follows the Court’s June decision, which previously denied the group’s request to lift the eviction moratorium in order to let the ban expire at the end of July as intended to allow for a “more orderly distribution of the congressionally appropriated rental assistance funds.” (Covered by InfoBytes here.) In agreeing with the group’s argument that the law on which the CDC relied upon did not allow it to implement the current ban, the majority held that “[i]t strains credulity to believe that this statute grants the CDC the sweeping authority that it asserts,” pointing out that, as the Court noted in its June decision, “[i]f a federally imposed eviction moratorium is to continue, Congress must specifically authorize it.” This decision vacates a stay on the U.S. District Court for the District of Columbia’s judgment placed by the same court and renders the district court’s judgment enforceable. As previously covered by InfoBytes, the district court ruled that the CDC exceeded its authority when it imposed the temporary ban and stated that because the Public Health Service Act (PHSA) does not “grant the CDC the legal authority to impose a nationwide eviction moratorium” the moratorium must be set aside.
The dissenting judges faulted the Court for deciding the issue without full briefing and argument, arguing that a stay entered by a lower court cannot be vacated “unless that court clearly and ‘demonstrably’ erred in its application of ‘accepted standards.’” Among other things, they pointed out that “it is far from ‘demonstrably’ clear that the CDC lacks the power to issue its modified moratorium order” as the CDC’s current, modified order targets only regions experiencing a spike in transmission rates. They further argued that the PHSA’s language authorizes the CDC “to design measures that, in the agency’s judgment, are essential to contain disease outbreaks,” and that “the balance of equities strongly favors leaving the stay in place.” According to the minority, “public interest strongly favors respecting the CDC’s judgment at this moment, when over 90% of counties are experiencing high transmission rates.”
Notably, the decision impact’s the CFPB’s interim final rule (Rule) amending Regulation F to require all landlords to disclose to tenants certain federal protections put in place as a result of the ongoing Covid-19 pandemic (covered by InfoBytes here). As previously covered by InfoBytes, the U.S. District Court for the Middle District of Tennessee denied a request in May for a temporary restraining order to block the Rule, but noted however, that “by its own terms the Rule applies only during the effective period of the CDC Order, only to tenants to whom the CDC Order reasonably might apply, and only in jurisdictions in which the CDC Order applies. Defendant CFPB has opined, in its response to the Motion, that ‘the Rule’s provisions—by the Rule’s own operation—have no application where the CDC Order, on account of a court order or otherwise, does not apply.’ . . . The Court concurs with this view, and it intends to hold CFPB to this view (and believes that other courts perhaps should do likewise).”
On July 30, USDA, HUD, the VA, and FHFA extended their foreclosure-related eviction moratoria until September 30. The extensions follow President Biden’s July 29 announcement, which asked federal agencies to extend their respective eviction moratoria through the end of September following the expiration of the CDC’s moratorium on residential evictions on July 31. While Biden called on Congress to pass legislation to extend the eviction moratorium following a recent U.S. Supreme Court ruling, which stated that “clear and specific congressional authorization (via new legislation) would be necessary for the CDC to extend the moratorium past July 31”, emergency legislation to extend the federal eviction moratorium through the end of the year did not pass the U.S. House.
USDA extended its eviction moratorium for homeowners of properties financed or guaranteed by USDA through September 30 and reminded servicers that the single family foreclosure moratorium will expire on July 31. After this date, no new foreclosure filings should occur until homeowners are reviewed for new options to reduce their payments and stay in their homes, USDA noted.
FHA also announced the extension of its eviction moratorium for foreclosed borrowers and their occupants through September 30. The moratorium applies to homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (reverse) mortgages, excluding legally vacant or abandoned properties (see Mortgagee Letter 2021-19). The extension is intended to ensure borrowers with FHA-insured mortgages are not immediately displaced from their homes. FHA also noted the expiration of the foreclosure moratorium on July 31.
Additionally, VA Circular 26-21-14 extends eviction relief for properties previously secured by VA-guaranteed loans (including properties in VA’s Real Estate Owned (REO) portfolio through September 30, excluding vacant or abandoned properties.
Further, FHFA announced that Fannie Mae and Freddie Mac (GSEs) will extend their moratorium on single-family REO evictions until September 30. The current moratorium was set to expire July 31. The REO eviction moratorium applies only to properties that have been acquired by the GSEs through foreclosure or deed-in-lieu of foreclosure transactions. FHFA also encouraged landlords of Fannie Mae or Freddie Mac-backed properties to apply for Emergency Rental Assistance (ERA) before beginning the process of evicting a tenant for non-payment of rent, and directed tenants and landlords to the CFPB’s online Rental Assistance Finder.
On July 23, the U.S. Court of Appeals for the Sixth Circuit held that statutory language did not authorize the CDC to implement a moratorium on evictions in response to the Covid-19 pandemic. The plaintiffs, a group of rental property owners and managers, filed a lawsuit seeking declaratory judgment and a preliminary injunction, claiming the CDC’s order exceeded the government’s statutory grant of power and violated the Constitution and the Administrative Procedures Act. The district court found that the moratorium exceeded the government’s statutory authority under 42 U.S.C. § 264(a) and ruled in favor of the plaintiffs on the declaratory judgment claim. The 6th Circuit denied the government’s motion for an emergency stay pending appeal, citing that the government was unlikely to succeed on the merits.
In affirming the district court’s ruling and addressing the merits in the current order, the 6th Circuit reviewed whether Section 264(a) of the Public Health Act of 1944 allowed the CDC to issue its moratorium. The appellate court held that while the statute allows the Surgeon General, with the approval of the Secretary, to make and enforce such regulations as are “necessary to prevent the introduction, transmission, or spread of communicable diseases from foreign countries into the States or possessions, or from one State or possession into any other State or possession,” it “does not grant the CDC the power it claims.” Additionally, the appellate court concluded that an eviction moratorium did not fit the mold of actions permitted under the statute’s language. The 6th Circuit emphasized that even if the language of the statute could be construed more expansively, it could not “grant the CDC the power to insert itself into landlord-tenant relationships without clear textual evidence of Congress’s intent to do so.” Writing that “[a]gencies cannot discover in a broadly worded statute authority to supersede state landlord-tenant law,” the appellate court explained that the government’s interpretation of the statute presented a nondelegation problem, which “would grant the CDC director near-dictatorial power for the duration of the pandemic, with authority to shut down entire industries as freely as she could ban evictions.” Furthermore, the appellate court concluded that any potential ratification taken by Congress last December when former President Trump signed the Consolidated Appropriations Act, which, among other things, extended the expiration date of the eviction moratorium, “did not purport to alter the meaning of § 264(a), so it did not grant the CDC the power to extend the order further than Congress had authorized.”
On June 29, the U.S. Supreme Court issued a 5-4 decision in Alabama Association of Realtors et al. v. U.S. Department of Health and Human Services et al. denying a request from a coalition of landlords and realtor groups to lift the federal government’s eviction moratorium. In his concurring opinion, Justice Brett Kavanaugh agreed that the CDC “exceeded its existing statutory authority by issuing a nationwide eviction moratorium.” However, he explained his vote to deny the request by pointing out that the moratorium is set to expire on July 31 and keeping it in place until then will allow for a “more orderly distribution of the congressionally appropriated rental assistance funds.” As previously covered by InfoBytes, on June 2, the U.S. Court of Appeals for the District of Columbia denied the group’s motion to lift an administrative stay placed by a district court on its own order, in which it had ruled that the CDC’s nationwide eviction moratorium issued in response to the Covid-19 pandemic exceeded the agency’s statutory authority.
On June 29, FHFA announced that Fannie Mae and Freddie Mac (GSEs) will not be permitted to make a first notice or filing for foreclosure that would be prohibited by the CFPB’s “Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act (RESPA), Regulation X” final rule prior to the rule’s effective date. As previously covered by a Buckley Special Alert, the Bureau’s final rule, which takes effect August 31, obligates a servicer to continue specifying, with substantial detail, any loss mitigation options that may help borrowers resolve their delinquencies. GSEs are required to follow the CFPB’s new protections a month before the CFPB rule takes effect, which will protect borrowers from foreclosure and provide certainty for servicers regarding GSE expectations. According to FHFA, “[s]ervicers will still be able to make a notice or filing for foreclosure on abandoned properties and those that had a foreclosure referral prior to March 2020, along with certain other exceptions.” FHFA’s action eliminates the gap between the expiration of its current moratoriums for single family foreclosures and real estate owned (REO) evictions that will expire on July 31 (covered by InfoBytes here) and the effective date of the CFPB’s rule, which is a month later.
On June 24, FHFA announced that Fannie Mae and Freddie Mac (GSEs) will extend their moratorium on single-family foreclosures and real estate owned (REO) evictions until July 31. The current moratoriums were set to expire June 30. The foreclosure moratorium applies only to homeowners with a GSE-backed, single-family mortgage, and the REO eviction moratorium applies only to properties that have been acquired by the GSEs through foreclosure or deed-in-lieu of foreclosure transactions. Additional details on Covid-19 forbearance plan terms and payment deferrals are covered by InfoBytes here and here. The extensions are implemented in Fannie Mae Lender Letter LL-2021-02 and Freddie Mac Guide Bulletin 2021-23. The same day, the CDC also announced an extension of its current moratorium on residential evictions for non-payment of rent through July 31, also stating in the announcement that “this is intended to be the final extension of the moratorium.”
On June 2, the U.S. Court of Appeals for the District of Columbia denied a group of realtors’ motion to lift an administrative stay placed by a district court on its own order, in which it had previously ruled that the CDC’s nationwide eviction moratorium issued in response to the Covid-19 pandemic exceeded the agency’s statutory authority with the temporary ban. As previously covered by InfoBytes, the district court vacated the CDC’s eviction moratorium and rejected the federal government’s request that the decision be narrowed, ruling that “when ‘regulations are unlawful, the ordinary result is that the rules are vacated—not that their application to the individual petitioner is proscribed.’” However, shortly after the federal government filed a notice of appeal, the district court stayed its own summary judgment order pending appeal.
In denying the plaintiffs’ motion to vacate the stay pending appeal, the appellate court held that the district court did not abuse its discretion in staying its own ruling, and noted that the federal government has a good chance of winning its appeal. “[W]hile of course not resolving the ultimate merits of the legal question, we conclude that [the federal government] has made a strong showing that it is likely to succeed on the merits,” the appellate court wrote, adding, among other things, that “Congress has expressly recognized that the agency had the authority to issue its narrowly crafted moratorium.” Moreover, the D.C. Circuit determined that the plaintiffs failed to show the likelihood of irreparable injury should the stay remain in place.
On May 5, the U.S. District Court for the District of Columbia vacated the CDC’s eviction moratorium issued in response to the Covid-19 pandemic, ruling that the agency exceeded its authority with the temporary ban. The nationwide eviction ban was recently extended until June 30. Other courts have ruled on the lawfulness of the eviction moratorium but have limited the scope of their decisions to apply only to the particular parties involved in those lawsuits (see, e.g. InfoBytes coverage here). However, in vacating the eviction moratorium, the court rejected the federal government’s request that the decision be narrowed. “The Department urges the Court to limit any vacatur order to the plaintiffs with standing before this Court,” the court wrote. However the court found that “[t]his position is ‘at odds with settled precedent’” and that “when ‘regulations are unlawful, the ordinary result is that the rules are vacated—not that their application to the individual petitioner is proscribed.’” The court further emphasized that “[i]t is the role of the political branches, and not the courts, to assess the merits of policy measures designed to combat the spread of disease, even during a global pandemic.” Specifically, the court noted that the “question for the Court is a narrow one: Does the Public Health Service Act grant the CDC the legal authority to impose a nationwide eviction moratorium? It does not. Because the plain language of the Public Health Service Act . . . unambiguously forecloses the nationwide eviction moratorium, the Court must set aside the CDC order.”
Following the ruling, the DOJ issued a statement announcing its intention to appeal the court’s decision, citing that the court’s order “conflicts with the text of the statute, Congress’s ratification of the moratorium, and the rulings of other courts.”
On May 3, the CFPB acting Director Dave Uejio and FTC acting Chairwoman Rebecca Kelly Slaughter released a joint notification letter to the nation’s largest apartment landlords that together own over 2 million units. The letter serves as a reminder of federal protections put in place to keep tenants in their homes throughout the Covid-19 pandemic, including an eviction moratorium recently extended by the CDC to June 30, and an interim final rule issued by CFPB last month (covered by InfoBytes here), effective May 3, that established new notice requirements under the FDCPA. The letter also encourages the landlords to “notify debt collectors working on your behalf, which may include attorneys, of the CDC Moratorium, applicable state or local moratoria, and those parties’ obligations under the FTC Act and the FDCPA, including under the CFPB’s interim final rule.” Furthermore, the letter asks landlords to examine their practices in light of the CDC moratorium to ensure that they “comply with the FTC Act and the [FDCPA]” and “remediate any harm to consumers stemming from any law violations.” As previously covered in InfoBytes, in March, the CFPB and FTC issued a joint statement indicating staff at both agencies will be monitoring and investigating eviction practices to ensure that they comply with the law.
On April 19, the CFPB issued an interim final rule (IFR) to amend Regulation F, which implements the FDCPA, that will require debt collectors to provide tenants written notice alerting them of their rights under the CDC’s moratorium on evictions in response to the Covid-19 pandemic. Failure to provide notice will be considered a violation of the FDCPA, which may result in a private right of action as well as actual damages, statutory damages, and attorney’s fees. The Bureau noted in its press release that the IFR does not preempt more protective state laws. Additionally, debt collectors are prohibited from misrepresenting renters’ eligibility for temporary protection under the CDC’s moratorium. Sample disclosure language and a summary of the IFR have been provided by the Bureau as well.
The IFR will take effect May 3. Comments are due 15 days after publication in the Federal Register.
- Buckley Webcast: State supervision, enforcement, and multistate coordination
- Benjamin W. Hutten to discuss “Latest on AML regulations and impact of economic sanctions” at a Mortgage Bankers Association webinar
- Hank Asbill to discuss “Ethical issues at sentencing” at the 31st Annual National Seminar on Federal Sentencing
- Benjamin W. Hutten to discuss “Fundamentals of financial crime compliance” at the Practicing Law Institute
- Benjamin W. Hutten to discuss “Ongoing CDD: Operational considerations” at NAFCU’s Regulatory Compliance & BSA Seminar