The CARES Act and the Real Estate Industry – A Four Part Series
By: Dean Dorton | May 13, 2020
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Part 3: Forbearance on Payments of Federally Backed Mortgages. This particular series is focused on the impact of the CARES Act on the real estate industry.
COVID-19 | COVID-19 Industries | Real Estate
The Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law by the President on March 27, 2020. This was not the first, and is likely not to be the last, economic stimulus package that will arise from the pandemic.
This particular series is focused on the impact on the real estate industry. In addition to the stimulus portions of the package as noted above, there were also technical corrections to the law that we feel will have a significant impact to the real estate community.
Part Three: Forearance on Payments of Federally Backed Mortgages
Forbearance of Residential Mortgage Loan Payments for Multifamily Properties with Federally Backed Loans
Who is Eligible?
- Forbearance is available for multifamily borrowers with federally backed multifamily mortgage loans who have either directly or indirectly experienced a financial hardship due to COVID-19. This does not include construction loans or temporary financing.
- Applicable mortgages include loans to real property designed principally for the occupancy of five or more families that are purchased, insured or assisted by Fannie Mae, Freddie Mac or HUD.
- The borrower must be current on its payments as of February 1, 2020.
How do I receive forbearance?
- Written or oral request should be made by submission to the borrower’s service company affirming borrower experienced financial hardship during COVID-19 emergency.
- No additional documentation is required by the borrower.
- No fees, penalties or interest beyond the amounts scheduled will be accrued during this time. It’s as if the borrower was making the payments regularly.
How long does it last?
- Forbearance can be granted for up to 30 days and can be extended for two additional 30-day periods upon request.
- Borrower may request length to be shortened.
Are there other restrictions if receiving forbearance?
- Borrowers receiving forbearance may not:
- Evict or charge late fees to tenants for the duration of the forbearance period solely for nonpayment of rent or other charges.
- Require a tenant to vacate a dwelling with less than 30 days notice.
- Issue a notice to vacate until the expiration of the forbearance.
The last part of this series will address general topics like lease and loan modifications, related to the ongoing changes to real estate during the pandemic. To read Parts One and Two of this series, follow the links below.
For more information on how the Coronavirus is impacting businesses across multiple industries, visit our COVID-19 resource page:
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