FHFA Extends Multifamily Mortgage Forbearance and Eviction Prevention

The Federal Housing Finance Agency (FHFA) announced on March 4 that Fannie Mae and Freddie Mac (the Enterprises) will extend to June 30 mortgage forbearance for multifamily property owners experiencing financial hardship due to the coronavirus pandemic if they agree not to evict tenants for nonpayment of rent, among other requirements. Property owners with multifamily mortgages backed by Fannie or Freddie can enter into new or modified forbearance agreements.

Forbearance is contingent upon the property owner’s compliance with specific tenant protections. Property owners must:

  • Inform tenants in writing about tenant protections available during the forbearance period as well as the owner’s repayment period.
  • 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, once the forbearance period concludes a borrower may qualify for up to 24 months to repay the missed payments. It is not clear that the March 4 extension includes a 24-month repayment period. Note that July 6 announcement does not urge owners to establish repayment plans for tenants for up to 24 months while the owner has a reprieve from paying their mortgage. Note also that in order to obtain forbearance, a mortgage servicer must agree to provide it to the borrower.

The March 4 FHFA median release is at: https://bit.ly/3v59Zbc