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HUD issues mortgagee letter on implementation of CARES Act forbearance
On April 10, HUD issued Mortgagee Letter 2020-09 to FHA Approved Multifamily Mortgagees regarding implementation of CARES Act forbearance. The letter includes guidelines on CARES Act forbearance for FHA insured mortgages, 542(b) and (c) risk share mortgages, and HUD-held loans. Among other things, the guidance notes that HUD will not participate in the negotiation of forbearance repayment between multifamily borrowers and lenders. However, if the forbearance agreement contains actions requiring HUD approval, a copy of the forbearance agreement must be provided to HUD.
The letter also provides guidance on continuing program obligations and the post-forbearance period. Mortgagees are reminded that during the forbearance period, all other material terms and conditions of the HUD Loan Documents and the FHA Regulatory Agreement remain in effect. The letter notes that Lenders should use Multifamily Delinquency and Default Reporting System to record post-forbearance delinquencies and defaults. Finally, the letter notes that HUD has reviewed the MBA’s sample forbearance agreement drafted in April 2020, and stated that forbearance agreements that follow this format would not be submitted to HUD prior to execution and implementation by the lender and borrower. HUD is also developing its own form for lenders and borrowers to use.