Freddie Mac Unveils 3 New Multifamily Forbearance Options
The options also extend tenant protections. They include delaying the start of repayment following forbearance, an extension of the repayment period itself, or an extension of the forbearance period with the added option of extended repayment as well.
As many as 27,000 properties with a population of about 4.2 million renters could apply for the extensions, according to the GSE. The agency also reports that as of the end of May, more than 1,000 loans totaling $6.4B were in deferral.
“Many borrowers are still facing hardship, even though they may soon exhaust the 90-day forbearance granted in the initial iteration of our COVID-19 relief program,” Freddie Mac Multifamily Executive Vice President Debby Jenkins said in a statement. “These additional relief options will provide more flexibility to borrowers."
The new options also stipulate that any extension of forbearance for owners will extend the ban on evicting tenants for nonpayment of rent. Landlords taking advantage of additional forbearance also aren't allowed to charge late fees or other penalties or demand a lump-sum payment of back rent when tenant forbearance is finished.
Evictions are allowed for reasons other than nonpayment of rent, though Freddie Mac's rules state that landlords have to give such tenants at least a month's notice.
Freddie Mac Multifamily is the arm of the GSE that acquires and securitizes apartment building mortgages, with about 90% of the mortgages purchased involving rental units for households earning 120% or less of area median income.
There is currently some pressure on multifamily loans, though not as much as the retail or hospitality sectors have been experiencing. Trepp reports that in April, the delinquency rate for CMBS multifamily loans was 1.92%. In May, the rate rose to 3.25%.
As the U.S. unemployment rate remains elevated at 13.3% in May, there is corresponding pressure on renters' ability to pay rent.
The National Multifamily Housing Council's most recent Rent Payment Tracker, published on Saturday, found 94.2% of apartment households had made a full or partial rent payment, down 0.5 percentage points from a year earlier. The survey covers 11.1 million professionally managed apartment units.
The NMHC attributes the relatively high payment rate among its survey group to expanded unemployment benefits, federal stimulus funds and the efforts of apartment owners and operators to mitigate renters' woes.
Leaselock's June 1 report on rental payments is less sanguine about the overall picture for renters, particularly those who dwell in Class-C properties, which are often not managed by professional management companies.
The pandemic has caused a major drop in rent payments among Class-C asset renters, Leaselock reports, with 31% of such renters paying their rents in full during the first 15 days of May. That compares with an average of 54% who did so during the three months between January and March this year.