A Summary of Housing Related Provisions in the CARES Act

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) is designed to help address the nation’s efforts to mitigate the economic effects of COVID-19.  The CARES Act was signed into law on Friday, March 27, 2020.

The CARES Act appropriated approximately $2.2 trillion toward the effort to mitigate the economic impact upon the nation brought on by COVID-19 and provides significant relief to owners and renters of multi-family housing that take advantage of certain federally-assisted, federally-insured programs and “federally backed” mortgage loans (note this is quite broad, but is anticipated to include properties receiving HUD/FHA financing, as well as properties that have received mortgage loans from Fannie Mae, Freddie Mac and USDA Rural Development) (“Federally Impacted Property”).   The CARES Act expires on December 30, 2020; however, many of the appropriation provisions survive the sunsetting of the CARES Act.

This alert provides a brief summary of certain housing related (non-tax) provisions in the CARES Act.

Loan Forbearance (Multi-Family)

With respect to housing-related policy, the CARES Act provides, during the “covered period” (the period from enactment through December 31, 2020, or if earlier, termination of the COVID-19 national emergency), mortgage loan forbearance for owners of Federally Impacted Property that were current on loan payments as of February 1, 2020, as well as a temporary moratorium on evictions of residents of Federally Impacted Property.  All such financial relief is dependent upon the owner certifying that it has been impacted by the COVID-19 outbreak.

Owners can request forbearance from a loan servicer; and upon receipt of such request, a servicer shall (a) document the hardship and shall provide forbearance for up to 30 days, and (b) shall extend the forbearance for up to two additional 30 day periods upon the request of the borrower provided that, the borrower’s request for an extension is made during the covered period, and, at least 15 days prior to the end of the first forbearance period described above.

A multi-family borrower that receives such a forbearance may not, for the duration of the forbearance—

(1) evict or initiate the eviction of a tenant living in the applicable property solely for nonpayment of rent or other fees or charges;

(2) charge any late fees, penalties, or other charges to a tenant described in paragraph (1) for late payment of rent;

(3) require a tenant to vacate a dwelling unit before the date that is 30 days after the date on which the borrower provides the tenant with a notice to vacate; or

(4) issue a notice to vacate under paragraph (3) until after the expiration of the forbearance.

Temporary Eviction Moratorium

Even if forbearance is not requested or granted, for a 120-day period beginning on the date of the enactment of the CARES Act, any owner of Federally Impacted Property (as well as property subject to the Violence Against Women Act or rural housing voucher programs) may not:

(1) initiate a legal action to recover possession of the covered dwelling from the tenant for nonpayment of rent or other fees or charges; or

(2) charge fees, penalties, or other charges to the tenant related to such nonpayment of rent.

After the 120-day period expires, the owner of the Federally Impacted Property may then issue a notice to vacate to a tenant, but may not require the tenant to vacate the covered dwelling before the date that is 30 days after the date on which the lessor provides the tenant with such notice to vacate.

HUD Program Appropriations

The CARES Act appropriates approximately $17 billion to certain United States Department of Housing and Urban Development (“HUD”) programs, including:

• Public Housing Agencies and Native American Housing
  • Public Housing Operating Fund
    • HUD’s Office of Public and Indian Housing was appropriated $685 million for the Public Housing Operating Fund.  Unlike most appropriations to the Public Housing Operating Funds, the CARES Act allows public housing agencies considerable flexibility for the use of the appropriated operating funds.
  • Tenant Based Rental Assistance
    • The CARES Act appropriated $1.25 billion for “Tenant-Based Rental Assistance” that provides additional funds for public housing agencies for Housing Choice Vouchers.
  • Office of Native American Programs
    • HUD’s Office of Native American Programs received $300 million allocated through the Indian Community Development Block Grant program and through Title I of the Native American Housing and Self-Determination Act.  

• Community Planning and Development impacting States, Counties, and Cities
  • Appropriation of $5 billion to the “Community Development Fund” that will remain available until September 30, 2022, and which was allocated as follows:
    • $2 billion to be distributed pursuant to Section 106 of the Housing and Community Development Act to State, county, local and tribal grantees that received allocations pursuant to the fiscal year 2020 formula.
    • $1 billion allocated directly to States and certain other insular areas to address conditions related to COVID-19 within such States or insular areas.
    • $2 billion that will be distributed, on a rolling basis, directly to State or local governments according to a formula based on factors to be determined by the Secretary, prioritizing risk of transmission of coronavirus, number of coronavirus cases compared to the national average, and economic and housing market disruptions resulting from coronavirus.
  • In an effort to help expedite the process, the CARES Act also suspends the requirement of in-person public hearings, but requires the grantee to provide the public with notice and a reasonable opportunity to comment of no less than 5 days.  Additionally, for as long as national or local health authorities recommend social distancing and limiting public gatherings for public health reasons, a grantee may create virtual public hearings to fulfill applicable public hearing and notice requirements.

Emergency Solutions Grants

The CARES Act provides $4 billion for “Homeless Assistance Grants”, which will be available until September 30, 2022.  The Emergency Solutions Grants will house individuals and families who are homeless or receiving homeless assistance and to support additional homeless assistance and homelessness prevention activities to mitigate the impacts created by COVID-19.   Up to $2 billion of such funds shall be distributed to grantees that received allocations pursuant to fiscal year 2020 formula.

Housing Opportunities for Persons with AIDS

HUD’s Housing Opportunities for Persons with AIDS (“HOPWA”) program received $65 million.  The appropriation provided the Secretary of HUD with allocation discretion over $10 million of the HOPWA appropriation.

Project-Based Rental Assistance

The CARES Act appropriated $1 billion for “Project-Based Rental Assistance” for project-based assistance to maintain normal operations and take other necessary actions during the period that the program is impacted by COVID-19.

Sections 202 and 811

Section 202 and 811 were appropriated $50 million and $15 million, respectively.

This alert was prepared for informational purposes for the benefit of our clients, and is not intended to provide legal advice with regard to any specific matter.  If you have specific questions or require further information, please contact Jeffrey C. Adams, Orlando J. Cabrera, or Marissa J. Coleman.