COVID-19 Mortgage Forbearance and Foreclosure in NH Under the CARES Act

The CARES Act, Pub. L. 116-136, H.R. 748, 116th Cong. (2d Sess.2020), in an effort to support those experiencing financial hardship as a result of the COVID-19 national emergency, provides for mortgage loan forbearance for certain Federally backed mortgages. During the covered period, lasting until December 31, 2020 or the end of the national emergency, whichever comes earlier, eligible homeowners and multifamily property owners can seek mortgage loan forbearance if they have been financially impacted by the COVID-19 national emergency. If forbearance is granted, the lender may charge only the interest or fees that were scheduled or calculated as if the borrower made all contractual payments on time—no additional interests, fees, or penalties can get applied to the mortgages.

Which borrowers qualify for mortgage loan forbearance under the CARES Act?

Any borrower with a “Federally backed mortgage loan” that is experiencing financial hardship as a result of the COVID-19 national emergency may request forbearance—regardless of delinquency status. See below for multifamily property owner qualification requirements.

What is a “Federally backed mortgage loan”?

The CARES Act defines a “Federally backed mortgage loan” as any loan secured by a lien on residential property (including individual condominiums and cooperatives) designed for the occupancy of one to four families that is:

  • Issued by the Federal Housing Administration under Title II or Section 255 of the National Housing Act;
  • Guaranteed under Sections 184 and 184A of the Housing and Community Development Act;
  • Guaranteed or insured by the Department of Veterans Affairs;
  • Guaranteed, insured, or issued by the Department of Agriculture; or
  • Purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.

What do borrowers need to provide in order to receive forbearance?

Eligible borrowers must submit a forbearance request directly to their loan servicer and affirm that the cause of their financial hardship is the COVID-19 emergency.

How long can the forbearance last?

The forbearance period is up to 180 days from the date of the request, and can be extended at the borrower’s request for up to another 180 days (this request must be made within the first forbearance period).

Can multifamily property owners qualify for mortgage loan forbearance? 

Any multifamily borrower with a “Federally backed multifamily mortgage loan” that is experiencing financial hardship as a result of the COVID-19 national emergency—if the mortgage was current as of February 1, 2020—is eligible for forbearance.

What is a “Federally backed multifamily mortgage loan”?

A “Federally backed multifamily mortgage loan” is defined as a loan that:

  1. Is secured by a lien on residential multifamily real property designed for five or more families, the proceeds of which are used to prepay or pay off an existing loan secured by the same property (e.g., a second mortgage); and
  2. Is (A) made, insured, guaranteed, supplemented, or assisted in any way: (1) by any officer or Agency of the Federal Government; (2) under or in connection with a housing or urban development program administered by the Secretary of Housing and Urban Development; or (3) by a housing or related program administered by any other such office or agency; or is (B) purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.

What do multifamily borrowers need to provide in order to request forbearance?

Eligible multifamily borrowers may submit an oral or written request for forbearance to their servicer along with an affirmation of financial hardship caused by the COVID-19 national emergency.

Does requesting forbearance impact landlord responsibilities?

Yes, the CARES Act has built in renter protections during the forbearance period. Any multifamily landlord that receives forbearance may not: (1) evict or initiate the eviction of a tenant located in or on the associated property for nonpayment of rent or other fees and charges; or (2) charge any late fees, penalties, or other charges to such a tenant for late payment of rent.

Additionally, multifamily landlords may not issue any new notice to vacate or require a tenant to vacate earlier than 30 days from the date of a previously sent notice to vacate. Such restrictions end upon the termination of forbearance.  

How long can the multifamily forbearance last?

The multifamily forbearance period is up to 30 days from the date of the request, and can be twice extended at the borrower’s request, with each request up to another 30 days. However, the request to extend must be submitted at least 15 days prior to the end of the forbearance period (i.e., within the first two weeks of forbearance).

How long do eligible borrowers have to request forbearance?

For all eligible borrowers, the covered period is currently open and lasts until either the end of the COVID-19 national emergency or December 31, 2020, whichever comes first.

Regardless of whether a borrower requests forbearance, can foreclosure proceedings begin or continue during the COVID-19 national emergency?

Under the CARES Act, a servicer of a federally backed mortgage loan could not initiate a foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction between March 18, 2020 and May 17, 2020. Notably, on May 14, 2020, both the Federal Housing Administration and the Department of Housing and Urban Development announced they would be extending the CARES Act foreclosure suspension period. As a result, all servicers of Federal Housing Administration and Fannie Mae and Freddie Mac-backed mortgages may not initiate foreclosure-related evictions until after June 30, 2020.

Furthermore, while the foreclosure protections under the CARES Act expired on May 17th, under the State emergency orders, a moratorium on all foreclosures continues for as long as there is a governor-declared State of Emergency.  Pursuant to Executive Order 2020-04, Governor Sununu ordered, as of March 17, 2020, that all judicial and non-judicial foreclosures are prohibited in New Hampshire during the State of Emergency. Under Governor Sununu’s Executive Order 2020-09 issued on May 15, 2020, the COVID-19 State of Emergency has been extended through June 5, 2020.  It seems likely there will be a further extension.

The state foreclosure moratorium applies to both residential and commercial properties, but does not relieve borrowers from their obligation to make payments. As a result, once the moratorium is lifted, borrowers who have fallen behind likely will be scrambling to avoid foreclosure.  While the forbearance provisions of the CARES Act may provide relief for some of those borrowers, residential borrowers with private mortgages and commercial borrowers may have few options.

For information or if you have further questions, please contact attorneys Kelly Ovitt Puc (603-223-2832) or Allyson Moore (603-223-2817).