CARES Act Changes for Property Owners

CARES Act has New Requirements for Property Owners

As you probably know, on March 27, 2020 the federal government passed the CARES Act. The CARES Act is a large COVID-19 relief package. While over 800 pages, we will specifically look at the parts that affect many property owners. This is just a summary – if you need to know more details, please read the Act here or give us a call.

 Forbearance of Mortgage Payments

 The Act grants Fannie and Freddie the ability to provide forbearance from mortgage payments of any Fannie/Freddie loans. Specifically, the Act states that upon a request from a multifamily borrower, a servicer will provide the borrower forbearance for 30 days. And that forbearance can be extended an additional two 30 day periods. See Cares Act §4023.

 But the federal government has set some conditions on the forbearance. For the duration of the forbearance, the borrower may not: 

1. Evict or initiate an eviction solely for nonpayment of rent;

2. Charge any late fees, penalties, or other charges for late payment of rent; or

3. issue a notice to vacate.

 Eviction and Fees Rules Apply to Anyone with Fannie/Freddie Loan

The government did not apply the rules above just to borrowers who ask for a forbearance on their Fannie/Freddie loan. They apply to anyone with a F/F loan. See Cares Act §4024.

 Under the Act, for the 120 day period starting on March 27, the lessor of a covered dwelling* may not – 

1. Evict or initiate an eviction solely for nonpayment of rent;

2. Charge any late fees, penalties, or other charges for late payment of rent; or

3. issue a notice to vacate.

 A covered dwelling is a dwelling that is occupied by a tenant, pursuant to a lease, in a covered property. A covered property is any property that, among other things, has a Fannie/Freddie loan or participates in a federal low income housing program (i.e., Section 8 housing).

 As a result, if your property has a F/F loan or participates in something like Section 8, you have to follow the rules listed above.

 Act also Regulates Credit Reporting

​In addition to regulating evictions and fees, the Act also states what property owners can report to credit reporting agencies.

 During this 120 day period, if you make an accommodation on someone’s rent, you have to report them as current to the credit reporting agencies. There is an exception to this if they were delinquent prior to the accommodation, you can keep the status they were at until they bring it current. At which point, you have to report them as current. See Cares Act §4021.

 Again, this is just a summary of some of the relevant parts of the CARES Act. You can read the entire text here.