Many counties in Western North Carolina continue to struggle with the devastating effects of Hurricane Helene.  As of today, seven county courthouses are reporting closures of some type.  An updated list of counties along with the types of closures in each county is available through the North Carolina Administrative Office of the Courts website.  Officials in federal, state, and local government are taking action to provide relief in many forms.  This includes actions at both the federal and state level that impact foreclosures.

Federal Foreclosure Moratorium

On September 28, 2024, President Biden issued a major disaster declaration (amended October 2, 2024), effective September 25, 2024.  As a result of this declaration, the U.S. Department of Housing and Urban Development (HUD) announced the implementation of federal disaster assistance for North Carolina and ordered federal aid to supplement state, tribal, and local recovery efforts in the areas affected by Helene.

The aid includes a 90-day moratorium on foreclosures of certain mortgage loans.  It is not a moratorium on all foreclosures and does not apply to, for example, privately insured mortgage loans or other federally backed loans such as loans guaranteed or insured by the U.S. Department of Agriculture or the U.S. Department of Veterans Affairs (VA)* or loans purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.  It may be the case that the federal government takes action to implement a moratorium on these types of loans in the future, but for now the moratorium is limited and applies only to:

• mortgages insured by the Federal Housing Administration (FHA), and
• mortgages to Native American borrowers guaranteed under the Section 184 Indian Home Loan Guarantee program.

There is also a 90-day extension granted automatically for Home Equity Conversion Mortgages, which are federally insured reverse mortgages.  This moratorium is in effect as of the date of the President’s disaster declaration date, which is September 25, 2024, and thus runs through December 24, 2024.

The moratorium applies to foreclosures of covered mortgage loans in the following 25 counties: Alexander, Alleghany, Ashe, Avery, Buncombe, Burke, Caldwell, Catawba, Clay, Cleveland, Gaston, Haywood, Henderson, Jackson, Lincoln, Macon, Madison, McDowell, Mitchell, Polk, Rutherford, Transylvania, Watauga, Wilkes, and Yancey.  It also applies to the Eastern Band of Cherokee Indians.

You can read more about the moratorium and other relief available to homeowners in impacted areas on HUD’s website.

Order from the Chief Justice of the North Carolina Supreme Court

The Chief Justice of the North Carolina Supreme Court entered an emergency order applicable to certain counties impacted by Helene on September 29, 2024, as amended September 30 (the “Original Order”).  You can read more about that order in a blog post available from my colleague, Sara DePasquale.  The Original Order extends “the time and periods of limitation for filing and for acts due to be done” in 28 North Carolina counties in civil actions, criminal actions, estates, and special proceedings between the dates of September 26, 2024 and October 14, 2024.  Under the Original Order, such documents and acts are “deemed to be timely” if they are filed or done before the close of business on October 14, 2024. The Original Order applies to the same 25 counties as the federal foreclosure moratorium and adds to that list an additional three counties, Swain, Cherokee, and Graham. Unlike the federal moratorium, the Chief Justice’s Order does not apply to the Eastern Band of Cherokee Indians.

On October 11, 2024, the Chief Justice entered an order extending the Original Order for 13 of the 28 counties (the “Extension Order,” and together with the “Original Order,” the “Order”).  The 13 counties covered by the Extension Order are: Avery, Buncombe, Haywood, Henderson, Jackson, Madison, McDowell, Mitchell, Polk, Rutherford, Transylvania, Watauga, and Yancey. The Extension Order extends the time and periods of limitation for filing and for acts due to be done in those counties to the close of business on October 28, 2024.  The chart at the end of this post reflects a summary of the covered counties both with respect to the federal moratorium and the Chief Justice’s Order.

For foreclosures in covered counties, this means that, if an order authorizing or not authorizing a foreclosure sale is entered, the deadline to appeal the order, which is 10 days from the entry of the order (G.S. 45-21.16(d1)), will be extended to the close of business on the date specified in the Order.  If, for example, a foreclosure hearing took place on September 24, and it resulted in the entering of an order allowing a foreclosure sale to proceed, the homeowner would normally have until October 4 to file an appeal.  However, the Order now extends the time to file an appeal to either (1) October 14, 2024, for 15 of the 28 counties covered in the Original Order or (2) October 28, 2024, for the 13 counties covered by the Extension Order.

It also means that, after a foreclosure sale, a report of sale may be filed and any person may file an upset bid, but the upset bid period does not expire until the close of business on the date specified in the Order. For example, a foreclosure sale was held on September 24.  The trustee filed the report of sale the same day.  The filing of the report of sale starts the running of the 10-day upset bid period.  Absent the Chief Justice’s Order, the upset bid period would have run on October 4.  However, the Order now extends the time to file an upset bid on the property to the close of business on (i) October 14, 2024 for 15 of the 28 North Carolina counties covered in the Original Order and (ii) October 28, 2024 for the 13 counties covered by the Extension Order.  If no one files an upset bid, the upset bid period would run to the close of business on either October 14 or October 28, depending on whether the Extension Order applies to that county.  This is because the Chief Justice’s Order does not prevent someone from filing an upset bid. The Order authorizes someone to file an upset bid by the close of business on October 14 or October 28, as applicable, and the bid would be deemed timely despite being outside of the statutory 10-day upset bid period.

If a person, Jane, appeared on September 27 in Graham County (a county covered by the Original Order, but not the Extension Order) to file an upset bid related to the sale held on September 24, Jane could file the upset bid provided it otherwise meets the requirements of an upset bid (bid amount equal to the greater of $750 or 5% more than the previous bid and other requirements in G.S. 45-21.27).  If Tom appeared on September 30, he could upset Jane’s bid if his bid also meets the statutory requirements.  However, if Jane then files another upset bid on October 9, the 10-day upset bid period would fall on October 21, a date outside the period protected by the Original Order.  As a result, the final time to file an upset bid on the property would be at the close of business on October 21.

If another person, let’s say Jake, appeared on October 4 in Polk County (a county covered by the Extension Order) to file an upset bid related to a foreclosure sale held on September 24, Jake could file the upset bid provided it otherwise meets the requirements of an upset bid (bid amount equal to the greater of $750 or 5% more than the previous bid and other requirements in G.S. 45-21.27).  If Tonya appeared on October 14, she could upset Jake’s bid if her bid also meets the statutory requirements.  However, if Jake then files another upset bid on October 22, the 10-day upset bid period would fall on November 1, a date currently outside the period protected by the Extension Order.  As a result, the final time to file an upset bid on the property would be at the close of business on November 1.

Summary: Foreclosure Relief as of October 11, 2024

Some key takeaways of this combined federal and state relief are:

• Foreclosure hearings are not prohibited by the Chief Justice’s Order, however, mortgage lenders and servicers are prohibited from pursuing foreclosure of covered loans in covered counties.  Before proceeding to enter an order in any of the covered counties, judicial officials should inquire as to whether the mortgage loan is a loan that is the subject of the moratorium.  The court should not enter an order authorizing the foreclosure sale if the loan is a covered loan.
• Foreclosure sales are not expressly restricted by the Chief Justice’s Order, but certain sales may be prohibited by the federal moratorium depending on the type of mortgage loan.
• Reports of sale and upset bids may be filed but an upset bid period ending on or after September 26, 2024 may not expire until (i) the close of business on October 14 for 15 counties covered by the Original Order and (ii) the close of business on October 28 for 13 counties covered by the Extension Order, in accordance with the Chief Justice’s Order. Likewise, if a deadline for a party to appeal a foreclosure order occurred on or after September 26, 2024, the deadline is extended for the same period of time.

Additional relief may be forthcoming, we’ll update this blog post as appropriate to provide any additional information available related to impacted foreclosures. As always feel free to reach out with any questions, I’m available at meredith.smith@sog.unc.edu.

Counties Covered by the Foreclosure Moratorium and the Chief Justice’s Order

*On May 29, 2024, in an action unrelated to Hurricane Helene relief, the VA announced loan repayment relief for borrowers under VA-guaranteed loans by issuing a notice encouraging loan servicers to implement a targeted foreclosure moratorium through December 31, 2024.