Justices rebuff Fannie Mae, Freddie Mac petition on COVID interest tolling

The Indiana Supreme Court has denied a petition by federal mortgage giants Fannie Mae and Freddie Mac asking the court to clarify its emergency orders tolling mortgage interest in certain cases in Indiana trial courts.

In a Friday order, the court denied the petition supported by several mortgage and banking associations that asked to clarify COVID-related court orders from March 23-May 29, 2020. Among other things, the orders instructed trial courts that “no interest shall be due or charged during [a] tolled period from March 23-Aug. 14, 2020.”

The petition asked the court to clarify its orders, asserting, the Supreme Court wrote, “that to avoid several constitutional concerns, our orders should be understood to apply only ‘where Court action . . . establishes the right to interest and the amount thereof’ — and not ‘to curtail the accrual of interest provided by Petitioners’ private mortgage contracts.’ The petition further alleges that trial courts in four mortgage-foreclosure cases have, contrary to Petitioners’ interpretation, prohibited recovery of interest due under mortgage contracts during the tolled period.

“At bottom, Petitioners are impermissibly seeking to bypass the regular appellate process by invoking our non-adjudicative authority ‘to supervise the administration of all courts of this state’ on which our emergency orders were based,” the court wrote. “… Any of the four complained-of cases are (or were) opportunities to adjudicate this issue on appeal; we see no reason that remedy is inadequate here.”

The order is In the Matter of Administrative Rule 17 Emergency Relief for Indiana Trial Courts Relating to the 2019 Novel Coronavirus (COVID-19), 20S-CB-123. The court’s coronavirus-related orders under Administrative Rule 17 are available here.

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