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After several days of debates and deliberations, the U.S. Senate unanimously passed a stimulus bill to prop the economy amid the coronavirus outbreak on Wednesday evening. The $2 trillion aid package is now headed for the House before it reaches President Donald Trump’s desk.
Beginning on page 567, out of a total of 880, the Coronavirus Aid, Relief and Economic Security Act – CARES Act – lays out the terms of assistance for the real estate industry. In that regard, the bill focuses on mortgage payment forbearance and evictions and foreclosures stops on properties with federally backed loans.
This comes days after a string of cities and states instituted their own mandates on housing relief along with novel regulations by the Department of Housing and Urban Development and the Federal Housing Finance Agency.
Here is what the CARES Act does for homeowners, renters and landlords.
A halt on foreclosures
Except for vacant or abandoned properties, lenders of mortgages backed by federal agencies (such as the Department of Agriculture or the Federal Housing Administration), Freddie Mac or Fannie Mae may not execute foreclosures – or foreclosure-related evictions – for 60 days starting March 18.
Although it encompasses a longer period, the postulate is largely in line with an earlier declaration by the president instructing HUD, Freddie Mac and Fannie Mae to suspend foreclosures and evictions.
Loan payment forbearance
Irrespective of their delinquency status, owners of residencies, ranging from single-family homes to fourplexes, may request payment forbearance from their loan providers, given that they prove COVID-19-induced financial hardship.
Forbearance may be granted for up to 180 days, a period that could be subsequently doubled. During the time of forbearance, mortgage servicers are not to levy fees, penalties or interest that would not normally accrue if borrowers paid their monthly obligations.
Forbearance for borrowers of multifamily mortgages
Owners of multifamily properties, who were current on their loan payments as of Feb. 1 but are now facing financial difficulties due to the health crisis, may seek forbearance by submitting oral or written requests to their lenders.
The initial forbearance period is to span 30 days, with the possibility of two additional 30-day extensions. As long as the forbearance lasts, landlords cannot evict tenants for nonpayment of rent or charge late fees.
Moreover, during the forbearance period, multifamily mortgage borrowers should suspend the issuance of new eviction notices and provide a month to residents already with such notifications to vacate their units.