Earlier today, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). We wanted to alert you to a few provisions of this legislation that may have an immediate impact on multifamily property owners, developers and investors. A summary of the Senate version is attached.
- Section 4023 provides that multifamily borrowers with a federally backed mortgage loan (Fannie, Freddie, or HUD) who have experienced a financial hardship may request up to 90 days of forbearance. Borrowers receiving forbearance may not evict or charge late fees to tenants for the duration of the forbearance.
- Separately, under Section 4024, even if forbearance is not sought, landlords with federally backed mortgage loans are prohibited from initiating eviction proceedings or charging late fees for 120 days after the enactment of this legislation. This will not only preclude new eviction proceedings, but also may impact ongoing proceedings.
- There are several provisions designed to provide financial relief, including the Paycheck Protection Program (Sections 1102 and 1106) that would make loans available to small businesses for payroll support, mortgage, rent, and utility payments. The maximum amount of each loan is $10 million, with the loan amount calculated pursuant to a formula based on payroll costs. Portions of the loans are eligible for forgiveness if used for qualified purposes, though the forgivable amount may be reduced in connection with reductions in employment or employee compensation. In addition, the Act would expand eligibility for and access to Economic Injury Disaster Loans through December 31, 2020, including waiver of the credit elsewhere requirement and waiver of the requirement that the applicant must have been in business for one year.
