Several HUD programs receive funding boosts under the latest coronavirus relief package. USDA tenants and homeowners – along with those assisted by other federal programs – are protected from eviction, although no additional funds are provided for USDA’s rural housing programs.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, H.R. 748, passed the Senate on March 25 and the House on March 27. President Trump is expected to sign it. A fourth relief/stimulus measure is likely in the future, and could include additional housing provisions, but it is not clear when such a bill might be considered. The House and Senate will both go out of session after voting on the CARES Act.
The CARES Act establishes a 120-day moratorium on beginning proceedings to evict tenants for nonpayment of rent or other charges. (Tenants could still be evicted for other reasons.) Landlords also may not charge fees or penalties for nonpayment of rent during this time period. The 120-day period will start when President Trump signs the bill.
Protected tenants are those living in rental properties that receive any type of federal assistance, including USDA’s Section 515, Section 514/516 and Section 538 programs. (The bill uses different language for provisions referring to rental properties of one to four units and those with five or more units, but the protections are the same for tenants in properties of any size.)
The bill’s moratorium applies only to new evictions. It does not stop evictions that are already in process when the bill takes effect.
Many states and localities have imposed more stringent eviction moratoria. It is not clear whether those measures would supersede the CARES Act’s provisions. If a state or locality has a less stringent moratorium, the CARES Act would apply.
Rental Property Owner Protections
Owners of rental properties with five or more units and federally backed mortgages can request forbearance if they were current on mortgage payments as of February 1. An owner must contact the company or agency to which they make mortgage payments and say they are experiencing financial hardship. The mortgage company or agency must provide forbearance for 30 days. The property owner can request two additional 30-day forbearance periods.
The CARES Act imposes a moratorium on foreclosures for homeowners with mortgages backed by any federal programs. This seems to apply to foreclosures that have already begun as well as new ones. It takes effect on March 18 and lasts for 60 days.
The bill does not provide automatic protection for homeowners who have difficulty meeting their mortgage payments, but it gives them the right to request forbearance from their mortgage lender, with an explanation that they are experiencing financial hardship because of the coronavirus crisis. The lender is required to grant forbearance for up to 180 days, with an extension of another 180 days if needed. The homeowner will still need to make the payments eventually.
These provisions apply to homeowners with mortgages made or guaranteed by USDA under Section 502, as well as to those with mortgages insured or guaranteed by HUD’s Section 184 program for Native Americans and Alaska Natives and 184A program for Native Hawaiians, FHA (including home equity conversion mortgages, often called “reverse” mortgages), or VA. And it applies to mortgages purchased by Fannie Mae or Freddie Mac. Most home mortgages in the U.S. are backed by Fannie Mae or Freddie Mac, but a mortgage issued by a community-based bank in a rural area may not be. Information about how to determine whether your mortgage is backed by a federal agency is provided here by the National Consumer Law Center.
Any homebuyer with coronavirus-related mortgage concerns should immediately contact the bank or agency where they send mortgage payments to discuss a forbearance agreement.