What the $2T Federal Package Means for Multifamily
- Mar 26, 2020
The $2 trillion federal stimulus package is inching toward finalization. Here are the key provisions for multifamily owners and their residents.
The bill allows 90 days of forbearance for multifamily borrowers of federally-backed loans who experience coronavirus-related financial hardship, according to the the Center for Economic Policy and Research, an economic and policy thinktank. Owners who benefit from the program may not evict or charge late fees to tenants during the 90 days. Owners whose mortgages are insured by HUD may not evict tenants or charge late fees or penalties for 120 days from the day the relief program commences. These allowances echo those announced by the GSE’s earlier this week.
U.S. renters and landlords hoping to see their rents paid will get an additional boost from direct cash payments to citizens and the $260 billion of additional unemployment benefits that are part of the bill. Unemployment claims for the week ending March 21 rose by 3 million from the previous week to 3.28 million, according to DOL figures issued today, and the job losses are now being generated by a wide swath of industries: lodging and food service, health care and social assistance, arts, entertainment and recreation, transportation, warehousing and manufacturing.
“That will be a huge protection for people who are struggling right now,” said CEPR Senior Fellow Sean Fremstad of the jobless benefits.
CEPR, however, noted that the stimulus bill does not include emergency rental or mortgage assistance for non-homeless citizens and or protections against eviction or foreclosure when the landlord’s mortgage is not federally backed. But, Fremstad said the bill’s housing provisions and the huge increase in unemployment insurance benefits will bring some needed relief in light of what he called a “woefully inadequate system of housing assistance” in the U.S.
The bill also includes $4 billion for homeless assistance grants, $3 billion for HUD public housing and rental assistance $3 billion, and $300 million for tribal housing programs.
Focus on Forbearance
Other benefits related to mortgage forbearance, according to the Mortgage Bankers Association, include:
- A $454 liquidity facility to support lending institutions
- $349 billion for SBA loans up to $10 million to small businesses to make payroll, pay rent, mortgage interest and utilities
- Inclusion of nonbank financial companies in Office of the Comptroller of the Currency’s lending limit waiver
- Temporary reduction of the Community Bank Lending Ratio from 9 to 8 percent for qualifying community banks
- Temporary authority for the FDIC to establish a debt guarantee program to guarantee debt of solvent insured depositories and depository institution holding companies
- The ability of financial institutions to elect to suspend Troubled Debt Restructures determination under GAAP for COVID-19-related loan modification
- The option insured depositories (including credit unions) to temporarily delay Current Expected Credit Losses applications