At this point, the Coronavirus Aid, Relief, and Economic Security Act is old news. Passed on March 27, 2020, the legislation was intended to provide some measure of relief to Americans as the COVID-19 pandemic began to take hold in the United States. Of course, there are divergent opinions on how well it met this goal, but it is important to note that even as most major media outlets are reporting surging infection numbers many of its provisions are expiring imminently.
Among those are the protections set out for homeowners in Section 4022. Owners of dwellings for one to four families have the right to seek loan forbearance for up to 180 days, with a possible extension of an additional 180 days, upon a showing that he or she is “experiencing a hardship due, directly or indirectly, to the COVID-19 emergency.” During the forbearance period, no additional fees, penalties or interest can be assessed.
If the mortgage is current at the time forbearance is granted, the loan would be reported to all credit reporting agencies as current. However, a delinquent account would be reported as such, despite forbearance. Obviously, forbearance is quite different than forgiveness, and the loan must still be repaid. However, the Federal Housing Administration,the Department of Veterans Affairs and the U.S. Department of Agriculture have repayment options to ease the burden of managing the missed payments, so that owners will not be stuck with large lump sums due at the end of the forbearance period.
Section 4023 offers protection to owners of multifamily dwelling owners with five or more dwelling units). Owners with federally-backed loans who are experiencing pandemic related financial hardship can request loan forbearance for between 30 days and 90 days. However, the right to request forbearance under this section expires at the end of the pandemic or Dec. 31, 2020, whichever occurs first, so timing under this provision is particularly important.
Section 4024 of the CARES Act addresses residential tenants. Specifically, it provides for a moratorium on eviction filings if the property is subject to a federally-backed mortgage, or if the property is part of certain federal housing programs. This provision was originally set to expire 120 days after March 27. Evictions for reasons other than nonpayment, such as violations of other lease provisions, are still permitted. Some states have extended further protections, but in Ohio it has been left to the separate localities to determine if and how to handle evictions.
No doubt we are living in strange and unusual times. Renters are concerned with making next month’s rent. Property owners are concerned about making that next month’s mortgage payment. Meanwhile, landlords are very concerned about their own rental collections and subsequent ability to pay their own bills. Some federal agencies have indicated an extension of some programs, but it’s not clear if and for how long these protections will ultimately continue, or if any protections will be extended here in Ohio for tenants and property owners who don’t qualify. If you find that you need help getting tenants out or paying your bills, be sure to contact your attorney and/or lender.
This article originally appeared as a column for the Cleveland Jewish News.