On July 1, 2020, HUD issued Notice H-20-07, Coronavirus Aid, Relief, and Economic Security (CARES) Act Eviction Moratorium. This Notice provides background and up-to-date guidance on HUD’s policies and procedures regarding the eviction relief provided to tenants of certain multifamily properties under the CARES Act (signed into law on March 27, 2020). Specifically, the Notice extends the moratorium on evictions for all HUD-insured or HUD-held mortgages while under forbearance and also provides guidance on tenant protections for multifamily properties not subject to forbearance and those with HUD-assisted units. Unless rescinded or amended, this Notice will be HUD Multifamily Housing’s procedures for the duration of the COVID-19 emergency.
Background
HUD is particularly concerned about the impact of the expiration of the tenant protections provided by the CARES Act, and encourages owners, agents, and contract administrators to work with those residents who have been impacted by the COVID-19 emergency to the extent practicable.
During the period March 27, 2020 to July 24, 2020, the CARES Act prohibits owners of certain multifamily properties from certain acts; such owners may not:
- Make, or cause to be made, any filing to initiate a legal action to recover possession of a covered dwelling unit from a tenant for nonpayment of rent or other fees or charges; or
- Charge fees, penalties, or other charges to the tenant related to the nonpayment of rent.
In addition, covered tenants may not be given a notice to vacate until after July 24, 2020 for nonpayment of rent and then must be given at least 30 days to vacate after the notice is given. While the CARES Act is silent on what an owner or agent can charge after the eviction moratorium ends, HUD interprets the law to mean that unpaid rents will accrue during the moratorium and may be collected from tenants after it concludes, along with any fees or charges that were assessed and left unpaid prior to March 27, 2020. However, fees and charges for rent due during the moratorium may not be accrued.
Some owners of certain HUD projects requested mortgage forbearance that took effect shortly after March 27, 2020. This 90-day forbearance period will be ending shortly, but these owners are still subject to the eviction moratorium until July 24, 2020. Owners who received mortgage forbearance for a 90-day period after the March 27 date, remain subject to the eviction moratorium and renter protections until both the moratorium and forbearance period have expired. If an owner negotiates an extension to the forbearance period, the eviction moratorium must be extended for the full term of any negotiated extension of forbearance.
The Notice provides the following additional requirements for owners who receive extended forbearance protection:
- Tenants who missed rent payments during the forbearance period must be allowed to make up the missed payments over a reasonable time as determined in the sole discretion of the borrower. The owner may not require that missed rent payments be repaid in one lump sum at the end of the forbearance period.
- During the time an owner is repaying missed mortgage payments due to forbearance, the owner may not charge tenants late fees or penalties due to late or missed rent payments.
Tenant Protections for Mortgaged Properties Not Subject to Forbearance
Many HUD-insured properties and those with HUD-held mortgages, as well as Section 202 and Section 811 financing did not receive mortgage forbearance, and tenants in those properties are not protected under the CARES Act. HUD is “encouraging” all owners of properties with FHA insured, HUD-held mortgages, and Section 202/811 financing to work with tenants to avoid evictions. Such measures could include rent payment plans, delayed evictions, and/or other measures to avoid evictions.
Owners of these properties may pursue available financial relief measures when necessary, including reserve for replacement and residual receipt account releases; suspension of reserve for replacement account deposits; owner advances; and/or loans or other resources from outside sources to lessen the impact of lost rental income during the pandemic.
Owners of HUD properties should obtain a copy of HUD Notice H-20-07 and familiarize themselves with the requirements of the Notice.