Freddie Mac Augments Multifamily Forbearance Program
- Jul 01, 2020
Freddie Mac Multifamily has expanded its COVID-19 forbearance program, creating supplemental forbearance relief options for landlords who are still facing economic hardship. The new changes also extend several protections for renters including a ban on evictions solely for nonpayment of rent, which was a feature of the original program when it was rolled out in March.
The mortgage relief options are geared towards borrowers who need further assistance as they may be approaching the end of the 90-day forbearance period granted in the first iteration of the program. The new rules allow landlords to delay the start of the repayment period following forbearance and further extends the repayment period. In addition, the program now extends the forbearance period with an optional extended repayment period.
Aside from the extended eviction ban, the new rules provide other protections for renters. Multifamily property owners that that are in forbearance may not charge tenants late fees or penalties because of nonpayment of rent during the forbearance period or the borrowers’ repayment period.
Landlords must also provide flexibility to tenants by allowing the repayment of back rent over time rather than in a lump sum. Borrowers who take advantage of the new protections must also provide 30 days’ notice to renters before evicting anyone during the repayment period, subject to local laws.
Jobless rate soars
Modeled on Freddie Mac’s disaster-relief forbearance plan launched after Hurricane Harvey in 2017, the COVID-19 assistance program was first updated in mid-April to align it with the provisions of the more than $2 trillion economic relief package known as the CARES Act. The program potentially applies to borrowers across the more than 27,000 properties that have performing Freddie Mac loans, in which roughly 4.2 million people reside.
The updates to the program come amid continued economic turmoil, with 47.2 percent of Americans jobless as a percentage of the adult population in May, according to Bureau of Labor data—plunging from a recent high of 61.2 percent in January.
The National Multifamily Housing Council reports that U.S. rental payments reached 89 percent as of June 13, up year-on-year, but this does not capture payment data for smaller landlords and affordable and subsidized housing properties across the country.