Fannie Mae announced today that it would extend its forbearance program on multifamily properties until Sept. 30, 2021. This means that Fannie borrowers who own multifamily properties that they rent out can ask their lender to push out their monthly payments due to financial hardship from the Covid-19 pandemic. In doing so, the borrower also cannot evict any renters during that same time period.
Fannie acknowledges that both property owners and renters are still struggling financially as a result of the Covid-induced recession, which prompted the government-sponsored enterprise (GSE) to extend the forbearance deadline three more months from its previous June 30 deadline.
“Fannie Mae remains committed to supporting renters and multifamily property owners as Covid-19 continues to financially impact many people in the United States,” said Michele Evans, Executive Vice President and Head of Multifamily in a statement. “By extending the forbearance program for Fannie Mae multifamily borrowers, we are also extending essential protections and flexibilities for renters, which will help keep people in their apartments as the economy continues to improve.”
This news comes as the Centers for Disease Control and Prevention (CDC) ends its nationwide eviction moratorium on June 30. The moratorium, which prohibits landlords from evicting tenants—who earn below a certain income level, are facing financial hardship due to Covid-19 and can’t pay rent—was put in place last fall to minimize the impact and spread of economic hardship leading to homelessness.
Emergency rental assistance is available to renters across the country. In December, Congress passed the Consolidated Appropriations Act which earmarked $25 billion in rental assistance. Then in March, President Joe Biden signed the American Rescue Plan to apportion another $21.55 billion.
How Property Owners Can Get Forbearance
If you own a multifamily property backed by Fannie and are unable to make mortgage payments because of Covid-related financial difficulties, immediately call your lender and ask for the forbearance program. There’s no proof required, so the process should be straightforward and easy.
A forbearance program allows borrowers to reduce or stop their mortgage payments for a specified period of time. However, borrowers are still required to repay those missed payments, including interest. There are several ways borrowers can repay what they owe:
- Repayment plan: A repayment plan tacks on a portion of the total amount owed to your mortgage payment.
- Lump sum: You can pay for everything at once.
- Deferral or partial claim: This moves the amount you owe to the end of your mortgage, so you don’t have to repay until you pay off your mortgage, refinance or sell your property.
- Loan modification: Borrowers who can no longer afford to pay their mortgage after the forbearance ends can request a modification from their lender. Upon approval, a lender might reduce your balance, monthly payments or interest (or a combination of these) in order to make your mortgage payments affordable.
With the new extension, borrowers have until Sept. 30, 2021 to request an initial forbearance. This forbearance plan lasts between three to six months. Borrowers who need more time after the forbearance period ended can request an extension, which can go up to 12 months. If your initial forbearance began on or before Feb. 28, 2021, you’re eligible for up to 18 months of forbearance.
Property Owners Must Inform Renters of Their Rights
Property owners who enrolled in forbearance are required to notify tenants of their rights. Remember, the multifamily forbearance program is a two-pronged solution to Covid-induced financial hardship: it helps property owners and renters keep their homes as the economy recovers. Therefore it’s important for landlords to work with their tenants in order to mitigate the hardship felt by Covid-19.
Property owners must inform tenants, in writing, about the protections available to them. This includes the following:
- Tenants are obligated to repay the amount owed but not in a lump sum, they can pay over time
- Tenants are not to be charged any late fees or penalties for not paying rent during this period
- The tenant must then get a minimum of 30-days notice to vacate the property
What Tenants Should Know
The first step renters should take is to sign the CDC declaration stating you can’t make rent because of Covid-19 and send it to your landlord. The declaration is all you need to prove that you can’t afford rent. There’s no requirement to submit pay stubs or employer statements. This makes it easy and efficient for renters to quickly access protection when they need it.
If possible, send the document electronically, so there’s evidence that you did, in fact, send it to your landlord. It’s important to have documentation in the event that you have to go to court for eviction proceedings.
If your landlord is in forbearance, then you are also protected. You can find out if the property where you live is backed by Fannie using its resource tool.
Finally, be sure to apply for emergency rental assistance. Billions of dollars of emergency rental assistance funds have been distributed to all 50 states, so renters should have access to help for both rent and utilities. You can find assistance in your area by using the National Low Income Housing Coalition guide.