Freddie Mac, Fannie Mae move to protect renters from eviction during coronavirus crisis
Fannie Mae and Freddie Mac last week suspended foreclosures and evictions on single-family homes as the coronavirus continues to spread, but that policy will only help those living in a house, leaving many renters vulnerable to being evicted.
The Federal Housing Finance Agency announced Monday that Fannie and Freddie are moving to protect renters from being evicted if they’re unable to pay their rent due to the impact of the coronavirus.
Specifically, Fannie and Freddie will begin offering mortgage forbearance to multifamily property owners on the condition that they suspend all evictions for renters who can’t pay their rent because of the coronavirus.
Because Fannie and Freddie back the mortgages on multifamily properties, but have no contact with individual renters, the only way for the GSEs to provide relief to renters is by providing relief to the property owners themselves. Missed rent payments mean that multifamily property owners wouldn’t be able to make their mortgage payments and the entire property would go into foreclosure.
As a result of the GSEs’ action, property owners now have the ability to delay their mortgage payments if their property is negatively affected by the coronavirus national emergency.
The condition the GSEs included — that property owners can’t use the forbearance option unless they agree to suspend evictions — should have a sizable impact on the market, considering how much of the multifamily market Fannie and Freddie support.
According to the most recent data from the Mortgage Bankers Association, Fannie and Freddie hold or back approximately 48.6% of the entire outstanding multifamily mortgage debt.
“Renters should not have to worry about being evicted from their home, and property owners should not have to worry about losing their building, due to the coronavirus,” FHFA Director Mark Calabria said in a statement.
“The multifamily forbearance and eviction suspension offered by the Enterprises should bring peace of mind to millions of families during this uncertain and difficult time,” Calabria added. “The Enterprises are working with mortgage servicers to ensure that these programs are implemented immediately so that property owners and renters experiencing hardship because of the coronavirus can get the assistance they need.”
According to the FHFA, the eviction suspensions are in place for the entire duration of time that a property owner remains in forbearance.
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