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HUD Extends Mortgage Forbearance and Tenant Eviction Protections at Properties with HUD-Insured or HUD-Held Mortgages

HUD’s Office of Housing issued Notice H 20-07 “Coronavirus Aid, Relief, and Economic Security (CARES) Act Eviction Moratorium” on July 1. The notice announces the ability of owners of HUD-insured or HUD-held mortgages to seek or extend mortgage forbearance, provided they also extend the moratorium on evictions. The notice also provides guidance on tenant protections for multifamily properties not subject to forbearance and those that only have HUD-assisted units. HUD writes that it is particularly concerned about the impact of the expiration of the tenant protections provided by the CARES Act, encouraging owners, agents, and contract administrators to work with residents who have been impacted by the coronavirus pandemic.

Section 4024 of the CARES Act states that during the 120-day period running until July 24, borrowers that own certain multifamily properties under Section 4024 of the CARES Act must:

  • Not evict renters unable to pay rent;
  • Not charge tenants late fees or penalties for nonpayment of rent; and
  • Give tenants at least a 30-day notice to vacate and not give such a notice until the moratorium ends.

Another part of the CARES Act, Section 4023, provides mortgage forbearance for owners with a federally backed multifamily mortgage who are experiencing financial hardship due to the pandemic. Forbearance could be for up to 90 days. If the servicer of the mortgage grants forbearance, the owner must provide tenants with the same eviction protections as Section 4024, but for the length of the forbearance.

Instead of directly stating that HUD will continue to consider borrowers’ requests for mortgage forbearance, Notice 20-07 has a long, dense paragraph on page 3 that indirectly extends mortgage forbearance. Some of the key provisions that indicate HUD will extend forbearance include (emphasis added):

  • Borrowers that received or will receive forbearance under the CARES Act at a later date, remain subject to the eviction moratorium and renter protection provisions under either Section 4023 or Section 4024, as applicable, until both the moratorium and the borrower’s forbearance periods have expired.
  • Many borrowers and lenders will negotiate additional forbearance relief beyond the 90-day period provided in the CARES Act.
  • HUD prior approval is required for such additional forbearance.
  • HUD is concerned that the tenant eviction protections afforded by the CARES Act may not carry beyond the 120-day period and terminate with the forbearance agreement extensions.
  • Therefore, HUD will condition approval of a forbearance extension on the borrower’s agreement to similarly extend the Section 4023 renter protections.
  • Borrowers with forbearance must comply with the guidance provided by Mortgagee Letter 2020-09, issued on April 10 (see Memo, 4/20), which is in effect until the termination of the national emergency declared by the President on March 13 or until December 31, whichever is earlier.

Two other important points are:

  • Borrowers who received forbearance when the CARES Act was first implemented are approaching the end of the 90-day forbearance term but are still required to continue to comply with the 120-day eviction moratorium and other renter protections required under Section 4024.
  • During the borrower’s forbearance period, the borrower must inform all residents of the prohibition against eviction solely for nonpayment of rent.

A following paragraph in the notice lists conditions that a borrower must agree to in order for HUD to approve a new, extended, or amended forbearance agreement. A borrower:

  • Must allow a tenant who missed rent payments during the borrower’s forbearance period to make up missed rent payments over a reasonable time to be determined by the borrower.
  • May not require missed rent payments be repaid in one lump sum at the end of the forbearance period.
  • Must not charge tenants late fees or penalties due to late or missed rent payments during:
    • the forbearance period,
    • the borrower’s repayment period following forbearance, and
    • until the borrower has repaid all forborne amounts.
  • Must, during the above periods, provide at least 30 days’ notice to vacate to any tenant being evicted solely for nonpayment of rent
  • Must inform all residents of the prohibition against eviction solely for nonpayment of rent during the borrower’s forbearance period.

With the impending expiration of the 120-day eviction moratorium, HUD is concerned about tenants in properties without forbearance that are insured by the Federal Housing Agency (FHA), have a HUD-held mortgage, or that only have assistance with Section 202 Supportive Housing for the Elderly or Section 811 Supportive Housing for Persons with Disabilities. HUD encourages owners of such properties to work with tenants to avoid evictions by providing repayment plans or by delaying evictions.

The notice reminds tenants and owners that the CARES Act provided supplemental funds for the Project-Based Section 8, Section 202, and Section 811 programs, and that a portion of this extra funding is designated for providing increased rental subsidies to owners to cover diminished tenant rent payments due to tenants’ reduced or lost wages. HUD reminds tenants to inform their landlord of reduced or lost wages and to request an interim income recertification. The Notice also encourages owners to inform tenants of their ability to request an interim income recertification.

Notice H 20-07 “Coronavirus Aid, Relief, and Economic Security (CARES) Act Eviction Moratorium” is at: https://bit.ly/2C0U0nn

More information about Project-Based Rental Assistance is on page 4-61 of NLIHC’s 2020 Advocates’ Guide.

More information about Section 202 Supportive Housing for the Elderly is on page 4-67 of NLIHC’s 2020 Advocates’ Guide.

More information about Section 811 Supportive Housing for Persons with Disabilities is on page 4-71 of NLIHC’s 2020 Advocates’ Guide.