HUD Issues Guidance on Multifamily Mortgage Forbearance Under the CARES Act

Codes and Standards
Published

HUD has released two letters to provide guidance to borrowers and lenders during the COVID-19 pandemic. The first letter provides guidance for implementing the CARES Act multifamily mortgage forbearance provisions for FHA-insured multifamily loans.

The guidance closely follows the CARES Act in setting a maximum 90-day forbearance period and eviction moratoria for non-payment of rent. In a win for NAHB’s advocacy, HUD clarified: "In addition, mortgage modification tools are available to HUD-held loans, including adding the missed payments at the end of the mortgage as extended payments or a balloon payment; recasting the mortgage to cover the delinquency; or other reasonable measures."

Similarly, HUD addressed other NAHB requests by committing to review and quickly approve requests for suspension of Reserve for Replacement deposits, releases from the Reserve for Replacement or Residual Receipts account, or other measures to make debt service and tax and insurance payments. Finally, the guidance discusses outside funding sources for COVID-19 relief, loans and owner advances.

View the full letter.

The second letter is separate guidance to mitigate risks for FHA-insured Section 223(f) refinancing loans. HUD will require steps to offset additional risks of higher vacancy, lost rent and income disruptions as a result of COVID-19.

These actions include, but are not limited to, the requirement of a Debt Service Reserve (DSR) for Section 223(f) transactions to offset anticipated operating losses after closing. The letter provides instructions to HUD staff describing the new DSR requirements for market rate, affordable and cash out refinance transactions in the pipeline prior to and after receiving a firm commitment. This letter takes effect immediately and will remain in effect until HUD determines that the real estate markets that were negatively affected by the COVID-19 emergency have stabilized and additional actions for Section 223(f) transactions are no longer required.

View the FHA 223(f) letter.

For more information, contact Michelle Kitchen at 800-368-5242 x8352.

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Member Benefits

Aug 22, 2025

NAHB Members See Big Savings in 2025 with New Discounts on Business Tools, Automobiles

Whether you're looking to cut business costs or make smart personal purchases, the NAHB Member Savings Program offers significant savings for members. And in 2025, NAHB has unveiled several new savings opportunities from leading companies including Best Buy, Ford, Mercedes-Benz, QuickBooks and RAM Trucks.

Workforce Development | HBA | Codes and Standards | Sustainability and Green Building

Aug 21, 2025

Santa Fe Students Build ‘Tiny’ Homes to Test Energy Efficiency Codes

To benefit the community and provide students hands-on construction experience, the Santa Fe Area Home Builders Association recently completed the Northern New Mexico Ice Box Challenge.

View all

Latest Economic News

Economics

Aug 22, 2025

Slight Gains for Townhouse Construction

Townhouse construction expanded more than 9 percent on a year-over-year basis per data from the second quarter of 2025.

Economics

Aug 21, 2025

Existing Home Sales Rise in July

Existing home sales rebounded in July as mortgage rates retreated from the recent peak and home price growth slowed, according to the National Association of Realtors (NAR).

Economics

Aug 21, 2025

New and Existing Homes Remain Largely Unaffordable in Second Quarter

While new homes remain largely unaffordable, builder efforts to improve housing affordability paid dividends in the second quarter of 2025, according to the latest data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI).