Multifamily mortgage holders backed by the FHA can now request up to 90 days of forbearance without direct HUD approval – and most evictions are on hold for 120 days.

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) announced 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.

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Servicers must grant multifamily borrowers experiencing financial hardships as a result of COVID-19 up to 90 days of forbearance if the borrower requests assistance. Servicers can then grant this forbearance without direct HUD approval if they follow the protocol in HUD’s guidance.

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

“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,” says HUD Secretary Ben Carson.

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.
  • Automatic forbearance extensions from servicers to borrowers for up to two additional 30-day periods, without HUD approval.
  • 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, again 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,” says Assistant Secretary of Housing and Federal Housing Commissioner Brian Montgomery.

The guidance also includes 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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By Lela