*Co-Authored by Robyn B. Eisen and Christopher J. Azzara
The new CARES Act, H.R. 748, enacted into law on March 27, 2020, imposes restrictions on foreclosures and evictions and provides for loan forbearance relief if the building is financed in part with US government assistance (HUD or FHA) or through mortgages purchased by Fannie Mae or Freddie Mac (most home loans).
CARES Act Section 4022 – Foreclosure Relief
Foreclosures on all federally-backed mortgage loans are stayed for a 60-day period beginning on March 18, 2020. Borrowers are eligible for up to 180 days of forbearance on payments for federally-backed mortgage loans provided they have experienced a financial hardship related to the COVID-19 emergency. Applicable mortgages include those: (1) purchased by Fannie Mae and Freddie Mac, (2) insured by HUD, VA, or USDA, or (3) directly made by USDA. The authority provided under this section terminates on the earlier of the termination date of the national emergency concerning the coronavirus or December 31, 2020.
CARES Act Section 4023 – Forbearance of Residential Mortgage Loan Payments for Multifamily Properties with Federally Backed Loans.
Borrowers are eligible for up to 90 days of forbearance on payments for multifamily borrowers with a federally backed multifamily mortgage loan who have experienced a financial hardship. Borrowers who receive a forbearance may not evict or charge late fees to tenants for the duration of the forbearance period. Applicable mortgages include loans to real property designed for 5 or more families that are purchased, insured, or assisted by Fannie Mae, Freddie Mac, or HUD. The authority provided under this section terminates on the earlier of the termination date of the national emergency concerning the coronavirus or December 31, 2020.
CARES Act Section 4024 – Temporary Moratorium on Eviction Filings.
For 120 days following March 27, 2020, landlords are prohibited from initiating legal action to recover possession of a rental unit or to charge fees, penalties, or other charges to the tenant related to such nonpayment of rent where the landlord’s mortgage on that property is insured, guaranteed, supplemented, protected, or assisted in any way by HUD, Fannie Mae, Freddie Mac, the rural housing voucher program, or the Violence Against Women Act of 1994. Notably, this section contains no requirement that a tenant’s nonpayment is due to a COVID-19 hardship.