If you own a multifamily property that's backed by a Fannie Mae- or Freddie Mac-owned mortgage, then you're in luck. Both government-sponsored entities have moved to extend their mortgage forbearance options -- but only for multifamily borrowers.
The move will give millions of landlords, property owners, and investors a much-needed safety net while nonpaying tenants play catch up or apply for rent assistance through their state or local programs.
Is your multifamily property financed with a Fannie or Freddie loan? Here's what you need to know about the extension:
Multifamily forbearance extension
Both Fannie Mae and Freddie Mac are extending mortgage forbearance options through at least September 30 of this year. Forbearance allows borrowers to essentially hit pause on their monthly payments due to economic hardship, and the measure was previously set to expire at the end of this month.
Still, the pause doesn't come for free. Multifamily borrowers who take advantage of the GSEs' forbearance plans need to comply with a few rules first. These include:
- They must suspend all evictions for renters unable to pay rent through September 30.
- They must notify all renters of their protections, including eviction moratoriums and rent assistance.
- They must give borrowers the ability to repay their back-rent over time (not as one, large lump sum).
- They cannot charge any late fees or penalties for nonpayment.
- They cannot require renters to show a COVID-19-related hardship to be eligible for protections.
- They must give tenants at least 30 days' notice before eviction (at the end of the forbearance term).
According to the GSEs, if borrowers are still experiencing hardship at the end of their forbearance period, they can request additional relief through their servicer.
"The extension of our forbearance program reflects Freddie Mac's commitment to providing support to the multifamily market and renters who have been financially impacted by the pandemic," said Debby Jenkins, head of multifamily at Freddie Mac. "Allowing borrowers additional time to request forbearance and ensuring tenant protections are in place in those properties is just one of the ways that Freddie Mac has continued to stabilize the multifamily market since first implementing this COVID-19 forbearance program in March of last year."
The bottom line
Multifamily property owners who are struggling due to nonpaying tenants, eviction bans, and other renter protections now have a bit more time to sort out their options. If you're not sure your property's loan is a Fannie- or Freddie-owned one, use the companies' lookup tools (Fannie / Freddie).
Need other resources to help? Take these four steps when your tenants aren't making rent, or try one of these three options.