Some interesting news for multifamily property owners and managers with Fannie Mae and Freddie Mac-backed mortgages.

The Federal Housing Finance Authority (“FHFA”) announced temporary, coronavirus-related relief for multifamily property owners with Fannie Mae and Freddie Mac-backed mortgages and, in connection therewith, the tenants of such properties. This announcement, which was made on March 23, 2020, represents FHFA’s attempt to simultaneously keep multifamily renters in their homes and provide assistance to multifamily landlords who may struggle to collect the rental payments they rely upon to pay their Fannie Mae and Freddie Mac-backed mortgages. For multifamily property owners, the temporary relief is a mortgage payment forbearance for up to three (3) months, provided certain conditions are met. For tenants, the relief is a suspension of evictions for the full duration of the property owner’s forbearance period. Due to the national impact of COVID-19, Fannie Mae has expressed the opinion that this mortgage and eviction forbearance could apply to renters living in more than 27,000 separate multifamily properties and apartment complexes.

This relief is immediately available, and pursuant to guidance issued by Fannie Mae on March 24, 2020, a multifamily property owner impacted by COVID-19 and desirous of temporary mortgage forbearance must request the forbearance from its lender in writing pursuant to the notice section of its loan agreement. After such request, the lender and property owner would then enter into a forbearance agreement that requires the owner-borrower to (i) bring the loan current by the earlier of the borrower’s receipt of Business Income insurance proceeds or 12 months after the end of the forbearance period, (ii) suspend all evictions of COVID-19-impacted tenants until the later of the date when the borrower’s loan is brought current or 90 days after the effective date of the forbearance agreement, and (iii) permit the impacted tenants to repay, without late charges, any missed rent payments in equal monthly installments not to exceed 12 installments. A tenant’s repayment of missed payments would be made concurrent with that tenant’s post-forbearance regular rent.

Because of the domino effect of COVID-19 on individuals and businesses across the nation, the possible need for delayed loan and rental payments is merely one of several legal and business issues relevant for multifamily owners and investors. Additional helpful resources can be found here on the National Multifamily Housing Council’s Coronavirus Resources for Apartment Firms page.

Sirote & Permutt, P.C. stands ready to advise multifamily property owners, their investors and multifamily property managers as well as FHFA lenders in this market sector with respect to FHFA’s forbearance announcement or other issues arising out of the COVID-19 pandemic. If you have any questions concerning the topics discussed, Sirote attorneys Adam Sigman, and Brad Sklar are available to help.