Essential information for nonprofits navigating COVID-19 - - PowerPoint PPT Presentation

Essential information for nonprofits navigating COVID-19

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CARES ACT: RELIEF FOR THE RESIDENTIAL RENTAL MARKET? KYLE M. BALTES Chicago

INTRODUCTION

• CARES Act
• Coronavirus Aid, Relief, and Economic Security (CARES) Act
• Signed into law March 27th
• $2 trillion economic relief package
• Targeted relief for workers and families, businesses (large and small) and

state/local governments

3

CARES ACT

• General Eviction Moratorium
• 120-day moratorium from date of CARES Act enactment on court filings to

initiate actions to recover possession for nonpayment.

• Cannot charge fees, penalties, or other charges related to nonpayment of

rent.

• Cannot give a notice to vacate until after expiration of the 120-day period

and cannot require tenant to vacate until date that is 30 days after notice.

4

CARES ACT

• General Eviction Moratorium
• Applies to any dwelling that is occupied by a tenant (with or without a

written lease) located at a property that participates in certain federal housing programs or that is subject to a federally backed mortgage loan

• r federally backed multifamily mortgage loan

– Covered housing program under Violence Against Women Act of 1994 – Rural housing voucher program under section 542 of Housing Act of 1949

5

CARES ACT

• Federally Backed Mortgage Loan
• Includes any first or subordinate lien on residential property (including

individual units and condo co-ops) principally designed for occupancy of 1 to 4 families and is made, insured, guaranteed, supplemented or assisted in any way by an officer or agency of the Federal government or in connection with a housing or urban development program administered by HUD, or a housing or related program administered by any other such

• fficer or agency, or that is purchased or secured by the Federal National

Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac)

6

CARES ACT

• Federally Backed Multifamily Mortgage Loan
• Includes any first or subordinate lien on residential multifamily property

principally designed for occupancy of 5 or more families and is made, insured, guaranteed, supplemented or assisted in any way by an officer

• r agency of the Federal government or in connection with a housing or

urban development program administered by HUD, or a housing or related program administered by any other such officer or agency, or that is purchased or secured by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac)

7

MULTIFAMILY HOUSING

• Basics
• According to National Multifamily Housing Council, nearly 40 million

people live in apartments of 5 or more units.

• Typical structure, particularly for ownership of large apartment complexes

is for asset to be owned in a SPE or special purpose entity. – 51% of 5-49 unit properties and 75% of 50 unit properties are owned by LLPs, LPs, LLCs, GPs or real estate corporations.

• Rental income is used to service debt secured by the asset.

8

MULTIFAMILY HOUSING

• Financing Basics
• Government-Sponsored Enterprise (GSE)

– Federal National Mortgage Association (FNMA/Fannie Mae) – Federal Home Loan Mortgage Corporation (FHLMC/Freddie Mac) – Each account for ~20% of multifamily financings annually

• Other sources: FHA, Private CMBS, Life Company and CRE CLO

9

CARES ACT

• Loan Forbearance
• Any multifamily borrower with a federally backed multifamily mortgage loan

current on payment as of February 1, 2020 now experiencing financial hardship due to the COVID-19 emergency

• From enactment of CARES Act through the earlier to occur of the declared

termination of the COVID-19 national emergency and December 31, 2020

• Request must affirm that the borrower is experiencing financial hardship

during the COVID-19 emergency

• 30 days, with 2 additional, 30-day extensions available upon request from

the borrower (total of 90 days)

10

CARES ACT

• Forbearance Related Eviction Moratorium
• For the duration of any forbearance, the borrower cannot:

– (1) evict or initiate the eviction of a tenant at the property subject of the forbearance solely for nonpayment, – (2) charge the tenant any late fees or penalties on account of late payment, or – (3) give a notice to vacate to any tenant at the property.

• Following the forbearance period, the borrower cannot require the tenant to

vacate the applicable property before a date that is 30 days after delivery of a notice to vacate.

11

FANNIE MAE IMPLEMENTATION

• Repayment in equal installments over 12 months following the end of the

forbearance period. If business interruption/rent loss or any other financial assistance is received by borrower, the obligation to bring the loan current is accelerated.

• Until the loan is current, borrower is permitted to apply revenue only toward

normal operating expenses, approved capex and management fees.

• Borrower must provide eviction relief until the later of the date required under

the CARES Act (120 days from enactment), the forbearance period or such longer period mandated by law (consider impact of state/local laws and possible subsequent extension of the 120-day moratorium).

12

FREDDIE MAC IMPLEMENTATION

• Similar requirements to Fannie Mae, however:
• Other sources of relief will not shorten repayment period
• Borrower must keep servicer informed of material impacts due to COVID-

19

• Recent revisions to Freddie Mac program expand forbearance and eviction

protection consistent with CARES Act:

• Tenants are not required demonstrate that their nonpayment is due to

COVID-19

• Last day to enter the program extended from August 1st to December 31st

13

STATE/LOCAL EVICTION RELIEF

• Varies widely and in some cases more robust from a tenant-protection

perspective than CARES Act

• Court closures make evictions practically impossible in many states
• Other states have expressly prohibited eviction actions and/or exercise of
• ther landlord remedies (with some carve outs) for the period of the

COVID-19 crisis or until some specified date (some expiring soon) – Prohibitions on increasing rents or initiating collections – Late fees

14

PA EVICTION RELIEF

• The Pennsylvania Supreme Court has closed all state courts, banning

“eviction, ejectment, or other displacement from a residence based on the failure to make a rent, loan, or similar payment” until at least April 30.

• Pennsylvania Housing Finance Authority is strongly encouraging
• wners of multifamily buildings to be flexible with late payments and

to refrain from eviction actions.

15

CARE S Ac t He lp to I ndividua ls Asso c ia te d with No npro fits

PHI L I P HACK NE Y ASSOCI AT E PROF E SSOR OF L AW UNI VE RSI T Y OF PI T T SBURGH SCHOOL OF L AW

Cha rita b le Giving



T e mpo ra ry Unive rsa l Cha rita b le Co ntrib utio n De duc tio n in 2020 o f $300 c a sh – e xc lude s Do no r Advise d F unds a nd Priva te F

• unda tio ns



E limina te s Sixty Pe rc e nt Ce iling o n c a sh g ifts to pub lic c ha ritie s in 2020 (e xc lude s Suppo rting Org s & DAF s

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I nc re a se s T e n Pe rc e nt Co rpo ra te Ca p

• n de duc tib le do na tio ns to T

we nty F ive Pe rc e nt

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T ho se he lp Cha ritie s se e king de duc tio ns, b ut no te Re tire me nt c ha ng e s wa iving minimum distrib utio ns fro m I RA sho uld ne g a tive ly impa c t g iving

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I nc re a se d limit o f de duc tio n o f fo o d fro m fifte e n pe rc e nt ne t inc o me to twe nty five pe rc e nt ne t inc o me

Re tire me nt Pro visio ns

Wa ive s minimum distrib utio n re q uire me nts fo r I RAs in 2020, inc luding fo r inhe rite d I RAs

• F
• r tho se who a lre a dy to o k a distrib utio n – po ssib ility o f 60-

da y ro llo ve r

E limina te s 10% pe na lty fo r SOME withdra wa ls fro m re tire me nt a c c o unts o f up to $100,000 fo r tho se unde r 59 ½

• Yo u o r spo use o r a de pe nde nt must ha ve b e e n dia g no se d

with Co vid-19 OR yo u ha ve suffe re d fina nc ia l c o nse q ue nc e s & e mplo ye r must a llo w

• Re tro a c tive to Ja nua ry 1, 2020

Do ub le s a mo unt yo u c a n b o rro w fro m q ua lifie d e mplo ye r pla n to le sse r o f $100,000 o r 100% o f pla n b a la nc e

• De la ys re pa yme nt da te s sc he dule d fo r 2020

Une mplo yme nt Pro visio ns



Cre a te d Pa nde mic Une mplo yme nt Assista nc e – a va ila b le to tho se no t e lig ib le fo r re g ula r UI , suc h a s the se lf-e mplo ye d. So me No npro fit e mplo ye e s ma y find the mse lve s in this c a te g o ry. 39 we e ks, e nds 12/ 31/ 20

 Ne e d sho w Co vid-19 impa c t 

I nc re a se d the we e kly b e ne fit fo r Une mplo yme nt I nsura nc e b y $600 fro m a s e a rly a s Ma rc h 29th thro ug h July 31, 2020.

 Yo ur sta te must e nte r into a n a g re e me nt

with the De pa rtme nt o f L a b o r; de pe nding

• n yo ur sta te the sta rt da te is diffe re nt.



Une mplo yme nt I nsura nc e e xte nde d fo r 13 we e ks

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Pro vide s fe de ra l funds fo r wo rk-sha ring a rra ng e me nts – sho rt te rm c o mpe nsa tio n pro g ra m

Othe r No npro fit I ssue s

No npro fits with unre la te d tra de s a nd b usine sse s sho uld c o nside r whe the r the y a re a b le to use NOL s to g e ne ra te re funds. T he c ha lle ng e is tha t the UBI T silo la w e na c te d in the 2017 T a x Ac t is still a pplic a b le a nd ma ke s tra c ing tho se NOL s c ha lle ng ing . Still a wa iting T re a sury g uida nc e o n ho w to a ppro pria te ly se g re g a te unre la te d tra de s a nd b usine sse s. Gra nts fo r c o mmunity he a lth c e nte rs, sub sta nc e a b use a nd me nta l he a lth se rvic e s, c hild c a re pro vide rs, c o mmunity se rvic e o rg a niza tio ns fo r so c ia l se rvic e a nd e me rg e nc y e ffo rts. Hig he r E d pro visio ns: I nc re a se d a b ility to pro vide e me rg e nc y g ra nts to stude nts unde r F e de ra l Supple me nta l E duc a tio na l a nd Oppo rtunity pro g ra m fo r une xpe c te d e xpe nse s fo r stude nts with fina nc ia l ne e d & I HE s c a n c o ntinue to pa y stude nts unde r F e de ra l Wo rk Study pro g ra ms if the re is a q ua lifying e me rg e nc y

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