What Real Estate Professionals Need to Know: Housing Help for Homeowners, Renters, Multi-Family Owners and More in the $2T Stimulus Bill
While media coverage of the $2 Trillion Stimulus Package has mostly focused on the direct $1,200 payments for many Americans, expanded unemployment insurance, and small business loans, the CARES Act within that bill includes a number of housing protections for single-family homeowners, renters, multi-family owners, and prospective homeowners. In this article, we’ll break down the necessary details and how they relate to real estate, your clients, and your sphere of influence.
Many of the specifics of the CARES Act are already in motion on state and local levels, and the CARES Act will codify these housing protections into federal law.
Mortgage Forbearance and Foreclosure Protections
Mortgage forbearance is a temporary postponement of mortgage payments. During the COVID-19 designated disaster period (which started on March 13th), a borrower with a federally-backed loan (guaranteed or insured by FHA, VA, USDA or securitized or purchased by Fannie Mae or Freddie Mac) can request forbearance through their loan servicer.
Once the borrower’s request has been submitted, forbearance is granted for up to 180 days. No interest, fees, or penalties beyond the amount scheduled can be accrued on the account. Additionally, the servicer can’t request any proof beyond the borrower’s assertion of financial hardship caused by COVID-19.
Lastly, no servicer may initiate the foreclosure process for not less than a 60-day period from March 18th.
Help for Multi-Family Property Owners
During the official disaster period, protections that are extended to homeowners are also extended to owners of multi-family properties with federally-back loans. Unlike single-family homeowners, multi-family owners must document the financial hardship they face, and they can request forbearance for up to 30 days. The forbearance can be extended for two additional 30-day periods.
Additionally, renter protections are built into this part of the bill through the agreement that the multi-family owner may not evict or initiate evictions based on nonpayment of rent. They are also forbidden from charging any late fees due to late payment of rent by tenants.
Help for Tenants
For the next 120 days, the owners of any property that participates in any housing program (including low-income housing tax credits, National Housing Act, Homeless Assistance Act, National Affordable Housing Act, rural housing voucher program, and more) may not initiate any eviction action to re-take the property for nonpayment of rent. They are also not allowed to charge any fees or penalties related to nonpayment of rent.
Protections for Credit
The CARES Act also amends the Fair Credit and Reporting Act to allow more flexibility for consumers who come to agreements with lenders on deferring, modifying, making partial payments, forbearing loan delinquencies, or using any other relief. If the consumer and lender make an agreement on any of the items just mentioned with respect to one or more payments, and the consumer follows through with the agreed-upon payment terms or is not required to make the payment, the lender must report the account as current to the credit bureaus. The reasoning behind this part of the bill is to prevent falling credit scores of millions of Americans who find themselves out of work due to COVID-19.
It’s true–we’re living in a rapidly-evolving time, and it’s important to understand how the CARES Act protects your clients and sphere of influence.