HUD Issues Guidance on Multifamily Mortgage Forbearance Under the CARES Act
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.
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.
For more information, contact Michelle Kitchen at 800-368-5242 x8352.
Latest from NAHBNow
Economics
Jul 03, 2025
Consumer Confidence Retreats in JuneAfter a strong rebound in May, consumer confidence resumed its downward trend in June. Consumers remain concerned about the economy and labor market amid ongoing uncertainty, especially around tariffs.
Sponsored Content
Jul 02, 2025
5 Proven Strategies Smart Builders Use to Grow in Any MarketSound Capital has worked with builders across market cycles for over 20 years. They have seen who thrived when others pulled back, and they've studied the strategies they used to scale while competitors were sidelined. Here are five things they all had in common.
Latest Economic News
Economics
Jul 03, 2025
Solid Job Growth in JuneThe U.S. labor market continued to show resilience in June, with steady job gains led by state/local government and health care sectors.
Economics
Jul 02, 2025
Two or More Story Home Starts Rebound in 2024Over half of new single-family homes built in 2024 were two or more stories, according the recent release of the Census Bureau’s Survey of Construction (SOC). After declining in 2023, the share of homes started with two or more stories increased again in 2024, continuing the upward trend in place since 2020.
Economics
Jul 01, 2025
May Private Residential Construction Spending DipsPrivate residential construction spending fell by 0.5% in May, marking the fifth straight month of decreases. This drop was primarily driven by reduced spending on single-family construction. Compared to a year ago, total spending was down 6.7%, as the housing sector continues to navigate the economic uncertainty stemming from ongoing tariff concerns and elevated mortgage rates.