• In the News ,
• Tags: CARES Act, covid-19 real estate laws, real estate loan forbearance, Section 4022
• 29 Mar

Foreclosure Moratorium and Consumer Right to Request Forbearance

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

The CARES Act

President Trump signed the CARES Act into law on Friday, March 27. The media is not paying attention to several pieces of this act which pieces have a lot of significance for rental property real estate owners.

This post summarizes the parts of Section 4022 that apply most to rental property landlords, property managers, and owners. 

CARES Act, Section 4022

Section 4022 applies to rental properties with up to 4 units, which are also financed by federally-backed loans. Federally backed loans are mortgages secured by the FHA, VA, Fannie Mae, or Freddie Mac. So this part of the CARES Act applies to single-unit homes (a single-family home used as a rental), duplexes, triplexes, and quadplexes. Even if you are living in one of the units in a duplex or quadplex that you own, Section 4022 of the CARES Act still applies to your property. 

You can request forbearance for 180 days (½ year). You can also apply for an extension of another 180 days (half a year). This gives you the possibility of paying nothing on the loan for your rental property for the next 12 months. Your mortgagor may not charge you late fees or additional interest on your loan. In other words, Section 4022 waives the typical penalties that apply to late loan payments.

Read full text of the law here.

What this means…

Essentially Congress is pushing “PAUSE” on the mortgage amortization schedule. Your mortgagor will push “PLAY” in 180 days (½ a year) or, if you apply for the extension, in 360 days (1 year). 

The final piece of Section 4022 in the CARES Act prohibits foreclosures or foreclosure evictions until around May 16, 2020. 

How to get forbearance

Submit a request to your loan servicer to claim this forbearance. The CARES Act does not require the forbearance request to be in writing. It is enough to simply call your loan servicer and verbally tell them you want to claim the forbearance provided for in the CARE Act, Section 4022. You do not need to provide proof to qualify. 

What is not not covered by Section 4022?

Any properties backed by non-federal commercial loans, like the mortgages issued by your local bank. If you are uncertain, call your loan servicer to inquire.

In summary:

The CARES Act, Section 4022 provides the owners of rental properties that are between 1 and 4 units in size and that have a federally backed loan with:

• Up to 1 full year of deferred loan payments, with
• No fees, no penalties, and no interest.

To learn more, contact us:

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

Watch Video Explaining Main Points of CARES Act, Section 4022: