To continue to mitigate against the devastating economic effects of COVID-19, Freddie Mac provided further relief for multifamily landlords and tenants by revising its existing Multifamily COVID-19 Forbearance Program (Forbearance Program) in response to the enactment of the CARES Act. Under the existing Forbearance Program, property owners with a fully-performing Freddie Mac Multifamily loan can defer their loan payments for 90 days by showing hardship as a result of COVID-19 and by obtaining lender approval. In exchange, Freddie Mac originally required no evictions for nonpayment of rent during the forbearance period, which was conditioned on a tenant demonstrating that their non-payment was a result of COVID-19-related hardship.
Freddie Mac revised the Forbearance Program as follows:
- Extension of Forbearance Program: The Forbearance Program originally expiring in August 2020, is now available until the earlier of (a) the end of the federally declared emergency period, or (b) December 31, 2020.
- Updated Evictions Prohibition: Property owners that enter the new Forbearance Program are restricted from evicting, giving notice of, or starting an eviction of any tenant for nonpayment during the forbearance period, thereby removing a requirement that tenants have to demonstrate their non-payment is due to COVID-19 related hardship and clarifying that property owners cannot start the eviction process during the forbearance period.
- Prohibition on Late Fees and Penalties: Property owners that enter the new Forbearance Program are prohibited from charging late fees, penalties, or other charges under a tenant lease related to a tenant nonpayment of rent during the forbearance period, as required by the CARES Act.
Something to keep an eye out for in the coming days and weeks is whether Fannie Mae will follow in Freddie Mac’s footsteps. Fannie Mae’s Multifamily Forbearance Program is currently set to expire on August 31, 2020.
