Odessa, TX — Individuals and businesses in the Permian Basin that are finding they can’t make rent or mortgage payments as coronavirus lockdown continues to cut into the economy, must rely, for now, on a patchwork of federal and local legal protections that may help them hold onto their properties.
Multiple forms of relief are already mandated by law. Under the CARES Act, federal legislation that went into effect on March 27, owners of single family and multi-family dwellings financed through Fannie Mae, Freddie Mac, or the Federal Housing Administration (FHA), are entitled to forbearance options if their ability to make mortgage payments is impacted by the novel coronavirus. Renters who lease within a multi-unit property financed through the government-backed entities also get relief.
For renters in qualifying buildings, landlords are prohibited from filing payment-based eviction proceedings through July 25. In addition, landlords may not charge fees, penalties or other charges related to unpaid rent. Borrowers who financed multifamily properties (those with more than 5 units) through the agencies are eligible for forbearance up to 90 days. And while tenants of such properties are already protected from eviction until July 25, borrowers who elect to use the forbearance may not to evict any tenant based on failure to pay rent.
Unfortunately, none of the CARES Act relieves property owners or tenants from their legal obligation to make payments on residential or commercial properties that are not baked by the government entities. Absent workarounds with their lenders, or an order from a local government, they remain on the hook.
In efforts to urge lenders to offer more alternatives to mortgage borrowers, additional guidance was issued Tuesday by five federal agencies including the Board of Governors of the Federal Reserve, the Consumer Financial Protection Bureau, and the Federal Deposit Insurance Corporation. The guidance clarified loan modification rules for lenders operating under the CARES Act. According to the guidance, loans modified due to impacts of coronavirus are exempt from classification as troubled debt restructurings.
Currently, 27,000 U.S. apartment buildings are financed through Fannie Mae and Freddie Mac. In total, the properties house 4.2 million renters. Some renters are finding relief through local governments that have adopted measures to prohibit payment-based evictions. States and municipalities are stepping in to ensure that those who do not qualify under federal anti-eviction protections are not put out on the street.
Renters impacted by COVID-19 should check with their local authorities to inquire whether a local order is in place that allows them to defer payments and remain protected from eviction. According to a report published by the National Multifamily Housing Council, 13% fewer tenants who reside in multi-unit dwellings paid rent during the first five days of April 2020, compared to the same time frame last year.