In keeping with the March 23, 2020, announcement from the Federal Housing
Finance Agency that multifamily property owners would be eligible for
mortgage forbearance on the condition that they suspend evictions for
renters unable to pay rent due to the impact of coronavirus, Freddie Mac
has provided its lenders with additional details on implementation of the
forbearance plans, and the required form documentation.
Freddie Mac’s program will apply to its portfolio loans and to loans
included in Freddie Mac securitization trusts. It will offer a three-month
forbearance on all payments of principal and interest, and all required
deposits impounds and reserves, without any late charges or default
interest; the deferred amounts are to be repaid in 12 equal, monthly
instalments, beginning after the three-month forbearance period.
Freddie Mac will prohibit property owners who enter into a forbearance
agreement from evicting any tenant during the three-month forbearance
period, based solely on non-payment of rent as a consequence of the impact
of the coronavirus; this includes illness, caring for a family member, job
loss, reduced hours, temporary unpaid leave or any combination of those
factors. Also, borrowers will be required to provide written updates to
their loan servicer about any material change or impact to the related
property and its financial condition, tenants and occupancy.
Additionally, Freddie Mac will be reimbursing up to $750 per loan in
servicer’s counsel fees, for forbearance agreements on its approved form
As is typically the case, Freddie Mac’s forbearance would terminate if
there were to be another, unrelated event of default on the loan, either
during the three-month forbearance period or the 12-month repayment period.
Documentation allowing lenders to process forbearances is now available.
Freddie Mac’s forbearance program has fewer restrictions than a comparable
program announced on March 24 by Fannie Mae. The Fannie Mae program
accelerates repayment of the forborne amounts to the extent of the
borrower’s receipt of business income interruption insurance payments or
payments under other assistance or relief programs. Fannie Mae prohibits
tenant evictions until the mortgage loan is brought current, and requires
that its borrowers extend rent forbearance to tenants, also over a 12-month
period. Also, Fannie Mae is requiring either the borrower or servicer to
pay the counsel fees for the forbearance.
McGuireWoods’ real estate group has an extensive practice representing
“Optigo Lenders” in Freddie Mac’s “Optigo” program in the origination and
servicing of multifamily mortgage loans; lenders under Fannie Mae’s
“Delegated Underwriting and Servicing” program; and commercial and
multifamily mortgage lenders generally, including banks, CMBS lenders and
servicers, insurance companies, debt funds and other portfolio lenders. For
questions or additional guidance on how commercial and multifamily mortgage
lenders are responding to COVID-19, please contact one of the McGuireWoods
real estate finance team members listed, or any of the
McGuireWoods COVID-19 Response Team members
McGuireWoods is ready to help and process forbearance requests, as well as
help with all of your servicing and origination needs.