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HUD implements new CARES Act multifamily mortgage payment relief to maintain & preserve affordable rental housing

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Wed, Apr 15th 2020 04:50 pm

Multifamily borrowers can request up to 90 days of mortgage payment forbearance from their servicer

Today, the U.S. Department of Housing and Urban Development (HUD) announced it is issuing new mortgage payment relief guidance under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) for borrowers with multifamily mortgages insured by the Federal Housing Administration (FHA) or borrowers participating in other HUD Multifamily housing programs. Servicers must grant multifamily borrowers experiencing financial hardships, as a result of COVID-19, up to 90 days of forbearance when the borrower requests assistance. Servicers can grant this forbearance without direct HUD approval if they follow the protocol in HUD’s guidance.

Read the guidance for multifamily lenders, servicers, and other stakeholders.

Additionally, FHA announced that, as required by the CARES Act, all owners/agents of FHA-insured multifamily properties and properties participating in HUD multifamily-assisted housing programs must cease evictions of tenants for non-payment of rent for 120 days.

“The president’s decisive action to provide unprecedented CARES ACT relief options for America’s multifamily housing providers will not only stabilize rental housing now, but preserve affordable rental options for our nation’s low-income individuals and families in the future,” HUD Secretary Ben Carson said. “While this relief is reserved to help alleviate Americans experiencing hardship due to the pandemic, it is important to note that if an individual’s situation affords them the ability to pay their rent, then they should continue to do so to the extent practical.”

HUD Regional Administrator for New York and New Jersey Lynne Patton said, “Today’s announcement provides HUD’s multifamily housing providers and renters in the joint-epicenter of the COVID-19 crisis, much-needed security and stability. No renter in an FHA-insured property should fear eviction for non-payment of rent, and no owner or agent should fear not being able to pay their mortgage during this difficult time. HUD’s 90 days of mortgage forbearance and cease of evictions will deliver relief to suffering Americans in New York and New Jersey.”

To facilitate implementation, HUD is providing a standard multifamily forbearance protocol to reduce paperwork and streamline processing for borrowers, servicers and lenders. The protocol includes:

•Allowing servicers to grant, without HUD approval, up to 30 days of forbearance for borrowers experiencing a financial hardship due to COVID-19 if the borrower was current on their mortgage payments as of Feb. 1, 2020;

•Allowing automatic forbearance extensions from servicers to borrowers for up to two additional 30-day periods, without HUD approval; and

•Encouraging borrowers to enter into repayment plans with renters (residential and commercial) that experience an income reduction or temporary loss of household income but are able to make up the difference over time, without HUD approval.

“The key provisions of the CARES Act, and our implementation guidance, are meant to provide relief to those multifamily borrowers who are in immediate financial danger due to a reduction of rental receipts from their tenants – tenants who may also be struggling financially due to COVID-19,” said Assistant Secretary of Housing and Federal Housing Commissioner Brian Montgomery.

The guidance also includes important information for multifamily borrowers, lenders and servicers about addressing cash flow shortages, repayment plans, and other options to bring a mortgage current following a forbearance period.

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