Federally Backed Mortgage Payments, May be Suspended Due to COVID -19
An article from TheTaxBook, FYI as a courtesy of EA TAXES, [email protected]. REMOTE Tax Preparation Assistance Services.
Cross References: ? Rev. Proc. 2020-26 ? Public Law 116-136
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provide that during the period beginning on March 27, 2020, and ending on December 31, 2020, borrowers with federally backed mortgages experiencing financial hardships due to COVID-19 may request a temporary postponement of making their mortgage payments. A federally backed mortgage is any loan that is secured by a first or second (subordinate) lien on residential real property and insured or issued by:
? The Federal Housing Administration,
? The National Housing Act,
? The Housing and Community Development Act of 1992,
? The Department of Veterans Affairs,
? The Department of Agriculture,
? The Federal Home Loan Mortgage Corporation, or
? The Federal National Mortgage Association.
Residential real property is property designed principally for the occupancy of from one to four families and includes individual units of condominiums and cooperatives.
Upon a request by a borrower experiencing a financial hardship due to COVID-19, mortgage payments may be suspended for up to 180 days. Mortgage payments may also be extended for an additional period of up to 180 days at the request of the borrower provided that the extension request is made during the period beginning on March 27, 2020, and ending on December 31, 2020. During the initial or extended period, the borrower can also request that the suspension period be shortened.
During the suspension period, no fees, penalties, or interest beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract shall accrue on the borrower’s account.
Borrowers of multifamily loans (real property designed principally for the occupancy of five or more families) may also request a suspension of up to 30 days (plus up to two additional 30 day extensions) of their mortgage payments if the borrower was current on all loan payments as of February 1, 2020.
The IRS recently issued Revenue Procedure 2020-26 with guidance for mortgage loans held by REMICs and investment trusts in which the mortgage payment suspension provisions of the CARES Act may also apply under certain circumstances. See Revenue Procedure 2020-26 for details.