HUD Announces New CARES Act Mortgage Payment Relief Guidance

HUD announced new mortgage payment relief guidance under the CARES Act for borrowers with multifamily mortgages insured by FHA or borrowers participating in other HUD multifamily housing programs.

The new guidance (https://www.hud.gov/sites/dfiles/OCHCO/documents/2020-09hsngml.pdf) says servicers must grant multifamily borrowers experiencing financial hardships due to COVID-19 up to 90 days of forbearance when the borrower requests assistance. Servicers can grant this forbearance without direct HUD approval if they follow the protocol in HUD’s guidance.

Additionally, FHA announced all owners/agents of FHA-insured multifamily properties and properties participating in HUD multifamily assisted housing programs must cease evictions of tenants for non-payment of rent for 120 days.

HUD Secretary Ben Carson said these CARES Act relief options should stabilize rental housing now and preserve affordable rental options in the future. “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,” he said.

HUD provided 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 February 1, 2020;

–Allowing automatic forbearance extensions from servicers to borrowers for up to two additional 30-day periods without HUD approval; and

–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 guidance also included 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.

“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,” said Assistant Secretary of Housing and Federal Housing Commissioner Brian Montgomery.