How The CARES Act Will Impact Real Estate, Individuals, & Small Businesses
So much information has been released about the CARES Act and how that will bring aid to small businesses and those who have been laid off due to COVID-19. Watch the video below for Danny's thoughts and contact us with any questions you have.
On March 27th, 2020, President Trump signed and authorized the Coronavirus Aid, Relief, and Economic Security Act. This is a $2 trillion economic stimulus that will help the United States economy during the COVID-19 pandemic. Here is a link to the entire document.
Families & Small Businesses
Most people are concerned about the cash stimulus for their families calling for $300 billion to be spent on this portion alone. A family of four earning less than $150,000 can expect to receive a payment of $3,400. Those who have also file for unemployment will receive $600 each week, plus what they would normally receive. The Federal Pandemic Unemployment Compensation is supposed to be in place in four months.
This Act will offer up to $350 billion in low-interest loans to small businesses. The important thing to note is that part of the loans go toward rent, mortgage interest, and utilities with may be eligible for forgiveness through the Small Business Administration. Bigger companies are eligible for part of $500 billion in funding meant to keep jobs.
Mortgages, Evictions, & Foreclosures
A section of the CARES Act deals with mortgages and foreclosures, including mortgage forbearance and evictions. In this section, it states that a borrower with a federally backed mortgage can request forbearance regardless of delinquency status by requesting it through their loan servicer. This will last up to 180 days and can be extended for an additional 180 days if the borrower requests. During that period, no fees, penalties, or interest beyond the amount of the contractual payments can accrue. The period can also be shortened any time at the borrower’s request. This part blocks the servicer of Federally backed mortgage loan from initiating any foreclosure process for not less than a 60-day period.
Multifamily borrower’s with a Federally backed mortgage loan can request forbearance for up to 30 days with two additional 30-day periods, a total of 90 days. The borrower must be current on payments and they will not be able to evict tenants for nonpayment of rent and cannot charge late fees due to the late payment of rent. There is also a section that creates a 120-day moratorium on tenant evictions that are part of government programs or have a Federally backed mortgage loan.
Overall
The CARES Act should provide some relief to homeowners and investors during this time. It may also only be the first of upcoming legislation to bring up the various aspects of real estate and housing as the situation evolves.
Source – Motley Fool
