HUD Implements CARES Multifamily Mortgage Payment Relief

HUD recently announced it’s 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. This guidance is being issued to help maintain and preserve affordable rental housing.

Multifamily borrowers experiencing financial hardships, as a result of COVID-19, can request up to 90 days of forbearance from their mortgage servicer. Servicers can grant this forbearance without direct HUD approval if they follow the protocol in HUD’s guidance.

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 nonpayment of rent for 120 days. HUD Regional Administrator for New York and New Jersey Lynne Patton said the 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 its 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 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.

The guidance can be found here.