The information provided on this resource page is for informational purposes only and not intended to be legal advice. It is designed to assist our members and other housing providers in understanding COVID-19 and the issues it raises, but it is not intended to address specific circumstances or business situations. For specific legal questions, please consult your legal counsel.

 

Rent is Still Due

Author: MHA/Friday, April 3, 2020/Categories: COVID-19

Federal Rental Housing Eviction Moratorium
The CARES Act includes a 120-day moratorium on evictions and late fees for “covered properties.” Beginning on March 27 (the effective date of the legislation) property owners and managers of covered properties are prohibited from providing eviction notices or initiating eviction actions against residents for nonpayment of rent and may not charge fees or penalties related to that nonpayment of rent.

“Covered properties” are those with a “federally backed mortgage loan,” such as those that are insured, guaranteed, supplemented, protected, or assisted in any way by HUD, the Federal Housing Administration (FHA), Fannie Mae, or Freddie Mac. Also included in this requirement are those properties covered by the Violence Against Women Act of 1994, which would include most affordable housing. The scope of properties subject to the national eviction moratorium is substantial.

Under the Act, notices to vacate are prohibited from being issued until after the expiration of the moratorium and residents may not be required to vacate within 30 days of the notice to vacate, which effectively extends the eviction moratorium to 150 days.

This moratorium does not apply just to those affected by the COVID-19 crisis but to all residents at a “covered property.” Unlike the mortgage forbearance program (discussed below) which limits forbearance for multifamily properties to 90 days, the eviction moratorium extends for 120 days. National Multifamily Housing Council (NMHC) is seeking to address both of these concerns with Congress. Furthermore, MHA is raising these matters with the Minnesota Congressional delegation and appealing for relief.

It is important to note that this moratorium is in addition to Governor Walz’s Executive Order halting evictions. The federal moratorium supersedes state or local eviction bans that are less stringent or shorter in duration, but the federal eviction moratorium does not prevent the enforcement of more restrictive state or local moratoria. For example, the Minnesota eviction moratorium suspends evictions not only for nonpayment cases but also for breaches of lease.

Consistent with the message that MHA has been giving, residents still owe rent under both the federal law and the Governor’s Executive Order, they just cannot be evicted for failing to pay it.

Click here for the text of the CARES Act. Section 4024 is the section on “Temporary Moratorium on Eviction Filings.”

Mortgage Forbearance
Under the CARES Act, borrowers with federally backed multifamily mortgage loans, such as those with FHA, HUD, USDA, Fannie Mae, or Freddie Mac, are eligible for up to 90 days of forbearance on loans due to a financial hardship during the COVID-19 emergency. In exchange for the forbearance, the borrower may not issue a notice to vacate, initiate an eviction filing, or assess fees, penalties, or other charges on residents for nonpayment or late payment of rent during the forbearance period. A notice to vacate may not be issued until after the expiration of the forbearance period and the renter may not be required to vacate until 30 days after the notice to vacate has been issued. In order to avail themselves of forbearance protection, the borrower must have been current as of February 1, 2020.

Broader forbearance protections apply to those with federally backed mortgage loans for properties with 1-4 units, such as those with FHA, VA, or USDA. Forbearance may be requested by affirming financial hardship directly or indirectly due to the COVID-19 emergency and the servicer may not request any other documentation. The forbearance period is up to 180 days and shall be extended for an additional period of up to 180 days at the request of the borrower. During the forbearance period, no fees, penalties, or interest may accrue beyond the amounts scheduled or calculated as if the borrower made all payments in accordance with the terms of the mortgage contract.

For the text on mortgage forbearance, use the CARES Act link above and see Section 4023 on “Forbearance of Residential Mortgage Loan Payments for Multifamily Properties with Federally Backed Loans” and Section 4022 on “Foreclosure Moratorium and Consumer Right to Request Forbearance.”


“Rent is Still Due” Media Coverage
There has been extensive media coverage on the fact that April rent is due and the accompanying need for rental assistance. Here is a sample of some of the recent media coverage.

"As a property manager, we are counting on the rents to pay for the mortgages, property taxes, insurance, the upkeep of the buildings, the upkeep of the units, as well as our employees to keep them employed," said Jennifer Spadine with Guardian Property Management.

“We need those that can pay rent to pay it so we can operate,” (Real Estate Equities Vice President of Marketing and Leasing Stefanie) Sokup said. “We have expenses like every other business.”


The Governor’s Executive Order, (MHA President and CEO Cecil) Smith said, created “a moral hazard where some people might use it as an opportunity to say ‘I’m taking a pause on paying my rent’ when they can afford to pay their rent,” he said. If there is no penalty for that, then there needs to be rental assistance, because owners and operators still need to pay their mortgage, property taxes and utilities, he said.

Other media coverage:

 

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