Coronavirus Economic Stabilization Act of 2020
Title IV of the CARES Act is intended to aid the severely distressed sectors of the U.S. Economy. For example, there is language written to support aviation workers and community banks. Also included in this section of the bill is language to protects tenants. Let’s explore the details of these new rules that landlords with certain mortgages must follow.
Temporary moratorium on eviction filings
During the 120-day period beginning on the date this Act was enacted, it prohibits landlords from requiring a tenant to vacate, or from initiating legal action to recover possession of a rental unit or to charge fees, penalties, or other charges to a 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.
Foreclosure moratorium and consumer right to request forbearance
It provides up to 180 days (extended for another period of up to 180 days upon request by the borrower) of forbearance for borrowers of a federally backed mortgage loan who have experienced a financial hardship due, directly or indirectly, to the COVID-19 emergency. Covered mortgages include those purchased by Fannie Mae and Freddie Mac, insured by HUD, VA, or USDA, or directly made by USDA.The Act also prohibits judicial or non-judicial foreclosures on all federally backed mortgage loans for not less than a 60-day period beginning on March 18, 2020.
Forbearance of residential mortgage loan payments for multifamily properties
It provides up to 90 days of forbearance (initial period of 30 days, extended for up to 2 periods of 30 days) for multifamily borrowers with a federally-backed multifamily mortgage loan who are experiencing a financial hardship due, directly or indirectly, to the COVID–19 emergency. A borrower requesting forbearance must have been current on payments as of February 1, 2020. Applicable mortgages include loans for real property designed for 5 or more families that are purchased, insured, or assisted by Fannie Mae, Freddie Mac, or HUD. Multifamily borrowers receiving forbearance may not evict or charge late fees to tenants for the duration of the forbearance period.
As your trusted advisors, we are committed to keeping you well-informed with any new legislation passed by Congress as well as any new pronouncements by the Department of Treasury that may affect you. Please do not hesitate to reach out to KHA with any additional questions you may have.
These sources are simply included for informational purposes. KHA Accountants, PLLC, its partners and others do not provide any assurance as to the accuracy of these items or the information included therein. As such, KHA Accountants, PLLC cannot be held liable for any information derived from referenced sources. Consult your legal and business advisors prior to making financing decisions. This is intended for illustrative and discussion purposes only.