On April 10, HUD released a mortgagee letter outlining the terms of the loan forbearance and rent moratorium program that applies to all FHA multifamily loans. The guidelines conform with the CARES Act regarding all aspects of the loan forbearance and eviction moratorium requirements. It also conforms with the broad-based national eviction moratorium that runs 120 days beginning on March 27, the date the CARES Act was signed into law.
Borrowers may request loan forbearance in writing or orally to their lender, not HUD, for an initial period of 30 days with two additional 30-day extensions available. During the forbearance period the borrower cannot take any action against a resident for nonpayment of rent due to COVID-19 nor charge any fees or penalties. The national eviction moratorium is broader and does not allow evictions for nonpayment of rent even if the resident is not impacted by COVID-19.
Repayment of the loan forbearance, both over what time as well fees, is to be negotiated between the borrower and the lender and will not involve HUD. The lender may charge interest on the outstanding amount of forbearance during the repayment term in an amount that is to be negotiated but not to exceed the interest rate on the outstanding loan.
HUD also released a mortgagee letter outlining modifications to the underwriting requirements for the FHA 223-f loan program. The 223f loan program finances or refinances existing market rate or affordable properties. Due to the uncertainty of property performance during the COVID-19 crisis, HUD will now require a debt service reserve for market rate, affordable and cash out refinances. The calculation and duration of the debt service reserve is described in the letter.
For more coronavirus updates, resources and advocacy news, please visit NMHC’s COVID-19 Hub
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