FHFA Extends Multifamily Forbearance Through June 30: What It Means for Property Owners and Renters
by Maurie Backman | Updated July 19, 2021 - First published on March 5, 2021
Forbearance protection will now last till mid-2021 for more properties. That's good news for landlords and renters.
Many individual homeowners have struggled tremendously during the coronavirus pandemic. But landlords have also faced their own woes. Evictions for non-payment of rent were banned early in the pandemic. As a result, a lot of landlords haven't been collecting the money they need to cover their mortgage payments.
Let's remember a lot of these landlords aren't major property management companies. They're mom-and-pop landlords who own one or two properties and rely on their rental income to not only pay their mortgages, but make a living.
Thankfully, there's been relief available for multifamily property owners in the form of forbearance. Just as regular homeowners have been able to hit pause on their mortgage payments, so too have owners of properties with more than one unit. And now, the Federal Housing Finance Agency (FHFA) has extended multifamily property forbearance until June 30. It had been set to expire at the end of March, but now, multifamily property owners will get to keep their mortgage payments paused even longer.
Good news for both landlords and tenants
While multifamily forbearance ultimately benefits landlords who own properties with more than one unit, it helps renters too. That's because as part of their forbearance agreements, landlords must:
- Agree to not evict tenants due to the non-payment of rent while their loans are in forbearance. Landlords can still evict tenants if they violate other lease terms, for example, smoking inside the building when that's prohibited or making excess noise late at night.
- Inform tenants about the available protections in writing
- Give tenants flexibility to catch up on overdue rent. This includes not forcing tenants to repay back rent in a single lump sum.
- Not charge tenants late fees for overdue rent.
- Give tenants a minimum of 30 days of notice in situations where they have the right to remove a tenant.
Of course, multifamily forbearance gives tenants protection in other ways, too. If a landlord falls behind on mortgage payments and the lender initiates foreclosure proceedings, anyone living in that property could be forced to move. Tenants are less likely to lose their homes if landlords have more leeway.
Rental assistance is on the way
A large number of tenants haven't been able to pay rent during the pandemic and most people agree they need help. But some landlords aren't in a strong enough financial position to let them off the hook. After all, they have their own bills to pay. Multifamily forbearance helps. And the fact that it's been extended gives landlords and tenants more breathing room to ride out the pandemic.
Incidentally, the new $1.9 trillion coronavirus relief package that's in the works also includes money for rental assistance, as well as mortgage assistance. If enough tenants are able to use those funds to catch up on their rent, it could, in turn, help landlords better manage their expenses. Forbearance can pause mortgage payments, but it doesn't address property taxes, maintenance, and the many other expenses that go into operating a building. Giving tenants money to catch up on their rent will also landlords.
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