The Federal Housing Finance Agency (FHFA) announced on June 3 that Fannie Mae and Freddie Mac (the Enterprises) will continue to offer coronavirus forbearance to multifamily property owners with mortgages backed by Fannie Mae or Freddie Mac through September 30, subject to the continued tenant protections FHFA has imposed during the pandemic. This is the third extension (see Memo, 3/8, 7/6/2020).
Property owners who enter into a new or modified forbearance agreement because they experience hardship due to the coronavirus pandemic must:
- Inform tenants in writing about tenant protections available during the owner’s forbearance period as well as the owner’s repayment period, a policy added on August 6, 2020 (see Memo, 8/10/20)
- Agree not to evict tenants solely for nonpayment of rent while the property is in forbearance
During the owner’s repayment period, owners must:
- Give tenants at least a 30-day notice to vacate
- Not charge tenants late fees or penalties for nonpayment of rent
- Allow tenant flexibility to repay back rent over time, and not necessarily in one lump sum
An initial forbearance extension (see Memo, 7/6/20) specifically echoed Section 4023 of the CARES Act, which provided that if forbearance is extended by a mortgage servicer, a borrower may qualify for up to 24 months to repay the missed payments once the forbearance period concludes. It is not clear that the March 4 or June 3 extensions include a 24-month repayment period. Note that the July 6 announcement did not urge owners to establish repayment plans for tenants for up to 24 months while the owner has a reprieve from paying their mortgage. Also note that to obtain forbearance, a mortgage servicer must agree to provide it to the borrower.
In the past, NLIHC and NHLP have asked FHFA to ensure that tenants using the Fannie Mae and Freddie Mac lookup tools could determine whether the owner of their property had received mortgage forbearance, but FHFA has not added that information. Fannie and Freddie continue to rely on owners to provide notice to tenants.
The FHFA announcement is at: https://bit.ly/3vRrRWO