GSEs allow servicers to extend forbearance agreements for owners impacted by COVID-19.
Fannie Mae and Freddie Mac are providing additional protections to support renters and multifamily property owners experiencing financial difficulties as a result of the COVID-19 pandemic, announced the Federal Housing Finance Agency (FHFA).
The government-sponsored enterprises (GSEs) are allowing servicers to extend forbearance agreements for multifamily owners for up to three months and for a total forbearance up to six months, according to the FHFA. In addition, while the properties are in forbearance, the landlords must suspend all evictions for tenants who are unable to pay rent. This extension is for qualified properties with a GSE-backed multifamily mortgage experiencing a financial hardship due to the COVID-19 pandemic.
If a forbearance is extended, once that period concludes the borrower may qualify for up to 24 months to repay the missed payments. In addition, if the forbearance is extended, the repayment schedule is modified, or a new forbearance issue is executed, the borrower must provide several protections for the tenant during the repayment period:
- Give the tenant at least a 30-day notice to vacate;
- Not charge the tenant late fees or penalties for nonpayment of rent; and
- Provide flexibility for the tenant to repay rent over time and not in a lump sum.
“Many borrowers are still facing hardship even though they may soon exhaust the 90-day forbearance granted in the initial iteration of our COVID-19 relief program,” said Debby Jenkins, executive vice president and head of Freddie Mac Multifamily. “These additional relief options will provide more flexibility to borrowers and extend tenant protections for renters who also continue to struggle with the economic effects of the pandemic.”
Jeff Hayward, executive vice president of multifamily at Fannie Mae, added: “By offering our multifamily borrowers a forbearance extension up to six months, as well as updated repayment schedules that allow repayment to take place over 24 months, we believe we’re continuing to offer common-sense solutions that work for everyone during these unprecedented times.”