• In the News ,
• Tags: real estate, rental property owners
• 29 Mar

Multi Family Loan Forbearance

Please note: this blog post is for educational purposes only. This is not legal advice. Always seek legal counsel before making legal and investment decisions. 

CARES Act, Section 4023

The CARES Act, Section 4023 covers multi-family rental real estate properties with 5 or more units, and are backed by a federal loan (HUD, Fannie Mae, or Freddie Mac). This section covers an apartment building with 6 units and an apartment complex with 150 units, but not a quadplex with 4 units.

Forbearance

Section 4023 allows mortgagees approximately 90 days of forbearance, requested in 30-day increments. These are the requirements to qualify: 

1. Be current on your loan as of Feb 1, 2020.
2. Submit a request to your loan servicer in writing or verbally.
3. Affirm that you have financial hardship because of COVID-19 emergency. 

Restrictions

There are some rules to abide by if you implement Section 4023 with your multi-unit real estate property. While in forbearance, you may not evict your tenants for nonpayment of rent or fees. You may not charge fees or penalties for late rent payments. You must wait until the forbearance period is over before giving any tenant a 30-day notice to vacate.  

The time period you can request forbearance, under Section 4023, is from March 13, 2020, until December 31, 2020. It is also possible for the President to end this program at any time. 

Additional thoughts

Here are some additional thoughts on the tenant eviction moratorium in Section 4023: 

• If you plan to ask for forbearance, do it now – do not wait.
• Your mortgagor may charge you late fees, penalties, and interest during the forbearance period.
• Your tenant is protected from non-payment evictions for 120 days.
• You get only 90 days forbearance on your loan. This means there may be a 30-day period during which you are required to pay on your loan, but you are not allowed to evict non-paying tenants. The NAA is appealing to Congress to fix this problem. 

Summary of CARES Act, Section 4023

Owners of multifamily properties with 5 or more units with federally backed loans can receive up to 90 days forbearance (no payment on loan) for that property. Tenants in the same properties are protected from non-payment evictions and late payment fees for 120 days, even if the owner does not apply for loan forbearance. If the owner does apply for loan forbearance, the owner cannot give a 30-day eviction notice until after the forbearance period is over. So it may be advisable for multifamily rental property owners to ask for forbearance during the initial 120 days of tenant eviction protection. 

To learn more, contact us

Email: support@expressrpm.com
Phone: 605-274-7373
Website: https://expressrpm.com/

Read full text of the law here.