Monday, September 24, 2018

Senator proposes moratorium on Puerto Rico foreclosures

By on February 1, 2018

SAN JUAN – In light of the high number of foreclosures expected in Puerto Rico in the aftermath of Hurricane Maria, Sen. Carmelo Ríos presented Thursday Joint Senate Resolution 199 to implement a moratorium.

The legislation establishes that for any foreclosure process begun on a residence or business after Sept. 20, the property owner may request the procedure be stopped, through a motion in court, until Sept. 30, 2018.

The measure would apply to property used as a principal residence or main commercial property used by the debtor to generate income.

Sen. Carmelo Ríos (María Soledad Dávila/CB)

The court, at its discretion, may evaluate the merits and circumstances of each case to extend that period until Dec. 31.

However, Ríos said at a press conference that moratorium applicants must justify their employment situation and the extraordinary expenses incurred due to not having electric power service, among other hardships, so the court can grant the extension.

He also stressed that people who were behind on their mortgage before the hurricane or were already in the foreclosure process, do not qualify and would have to resort to other legal mechanisms, such as loss-mitigation services.

Up to Sept. 30, the courts would not be permitted to take any action and no claim or judicial proceeding would begin or continue, including conducting auctions or collections pursuant to the resolution.

Payments that were suspended during the moratorium period would be transferred to the end of the original term of the mortgage and paid at the same frequency.

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Meanwhile, loan interest would continue to accrue at the same rate as the original agreement until the loan expires. That is, a monthly payment will be made after the original date of the loan’s expiration date for each month it had been suspended.

The senator also argued that “although it is true the three-month moratorium offered by local banks was a small relief, the island’s situation is still far from having returned to normal.

Owners of mortgaged properties saw relief when the federal government imposed a temporary moratorium on foreclosures. [This action] stopped the banks and investors, who bought mortgages in the market at considerably low prices, from evicting people with mortgages in arrears or beginning new foreclosures. Unfortunately, because the three-month moratorium period has expired, Puerto Rico is facing a wave of foreclosures,” he added.

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