Multifamily property owners who are struggling to make mortgage payments due to the coronavirus pandemic now have a reprieve through the end of June for mortgages backed by Fannie Mae and Freddie Mac, the Federal Housing Finance Agency announced on Friday.
Forbearance options for multifamily mortgages backed by the GSEs were set to expire on Mar. 31, but the FHFA has extended that till June 30, 2021, provided landlords are also extending benefits to their renters. Landlords must:
- Inform tenants in writing about tenant protections available during the property owner’s forbearance and repayment periods; and
- Agree not to evict tenants solely for the nonpayment of rent while the property is in forbearance.
Eligible landlords must also:
- Allow the tenant flexibility to repay back rent over time and not in a lump sum;
- Not charge the tenant late fees or penalties for non-payment of rent; and
- Give the tenant at least a 30-day notice to vacate
“COVID-19 continues to financially impact Americans across the country, thereby hindering many tenants’ ability to pay their rent,” said FHFA Director Mark Calabria. “To help tenants in financial distress and property owners, FHFA is extending the multifamily COVID-19 forbearance and tenant protections through the end of June 2021.”
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The FHFA’s multifamily extension now aligns its expiration with its single-family housing forbearance request date also set to end June 30, 2021. However, single-family borrowers have the option to potentially forgo mortgage payments for up to 18 months.
As of Feb. 22, the Mortgage Bankers Association estimates 2.6 million homeowners are still in some form of forbearance. The MBA reported on Monday that the portfolios of Fannie Mae and Freddie Mac held at 2.97% forbearance volume and the GSEs have consistently seen lower forbearance rates than other owners of mortgages during the pandemic.
Based on the rate of improvement to date, Black Knight estimates there could be more than 2.5 million active forbearance plans remaining at the end of March 2021, when the first wave of plans reaches their 12-month expirations.
However, the limitations of survey data are particularly apparent in the rental market space, which lacks real-time data and has fewer data in general, the Urban Institute noted. According to the Washington D.C. based think-tank, the data sets available tend to show a higher share of renters missing rental payments than the administrative data show, suggesting that the survey results need to be interpreted with caution.
“It is unclear whether the Biden administration’s $25 billion of additional rental assistance is significant for renters, who have been hit harder by the pandemic than homeowners,” the institute said.
As for single-family borrowers, safety measures such as the loss mitigation waterfall and home equity buffer are expected to protect even the riskier homeowners in forbearance from foreclosure.