Freddie Mac is extending the forbearance period for multifamily borrowers and beefing up the eviction ban requirement for landlords who receive the relief.
The program, which offers landlords forbearance on multifamily loans if they can show coronavirus-related hardship, will be extended to the end of the year or the end of the federal emergency period, whichever is sooner. Borrowers may apply for forbearance up to the end of the program, which had been scheduled to expire Aug. 1.
In the program’s first week, 105 borrowers requested relief on $810.2 million in multifamily mortgages, according to Fitch Ratings. None of those loans was transferred to special servicing.
Freddie Mac is also broadening the no-eviction requirement. Now, landlords cannot evict a tenant for nonpayment during the forbearance period, even if the tenant is unable to demonstrate financial hardship due to the coronavirus.
The agency also made clear that while mortgage payments are postponed, borrowers may not charge tenants late fees, penalties or other charges related to nonpayment.
The program, which was announced just before the $2 trillion federal stimulus was passed, allows multifamily landlords whose properties are financed with a Freddie Mac loan to defer loan payments for three months. The program could potentially apply to as many as 27,000 properties that currently have performing Freddie Mac loans, where approximately 4.2 million renters reside, according to the agency. The latest census data shows that there are more than 40 million renters in the US.
Since 2008, Freddie Mac has become more active in multifamily lending, especially in New York City. Its small-balance loan program generated some controversy, when it was used by borrowers whose business model depended on deregulating rent-stabilized apartments. Freddie Mac multifamily loans made up more than 20% of total multifamily debt originations in 2019, according to the agency.