Landlords, Lenders May Receive Direct Payments from CARES Act Relief Programs
July 2, 2020
Commencing July 6, 2020, Pennsylvania homeowners, residential renters, landlords, and lenders may receive grants with no obligation to repay from the CARES Rent Relief Program and the CARES Pandemic Mortgage Assistance Program. Both programs are structured to alleviate financial hardships created by the COVID-19 pandemic and keep individuals in their homes. Pennsylvania allocated $175 million in federal CARES Act funding to these programs which are being administered by the Pennsylvania Housing Finance Agency.
CARES Rent Relief Program
The CARES Rent Relief Program will provide monthly rental assistance up to $750 per lessee (or up to 100% of the monthly rental) to cover rent incurred between March 1, 2020 and December 30, 2020 for a maximum period of 6 months. The monthly rental assistance payments will be made directly to the landlords, through ACH payments or by check, each month.
Landlords are eligible to apply on behalf of tenants provided the tenant consents and cooperates with providing the necessary application information and documentation. If the landlord accepts the monthly assistance payment from the program, the monthly rent is deemed paid in full and the landlord may not seek the difference between the lease payment and assistance payment from the tenant. Landlords will be required to submit certifications and verifications of housing standards. The Program has recently been modified to allow applicants who have oral leases; however the applicants must supply documentation establishing the tenant’s residency.
CARES Pandemic Mortgage Assistance Program
The CARES Pandemic Mortgage Assistance Program will provide assistance for mortgage payments on owner-occupied properties incurred between March 1, 2020 and December 30, 2020. The monthly mortgage assistance payment is capped at $1,000 per mortgage for 1st and 2nd mortgages, at a maximum of $2,000 per total monthly mortgage assistance payment, for a maximum period of 6 months. The assistance payments will be sent directly to the lender, through ACH payments or by check, each month.
Lenders and homeowners may apply through the Pennsylvania Housing Finance Authority’s web portal PMAP Application or by downloading an application from the website to complete and submit by mail.
Lenders are eligible to apply on behalf of homeowners provided the homeowner consents and cooperate with providing the necessary application information and documentation. If the lender accepts the assistance payments, the lender must release the homeowner of any remaining obligation for the months for which the assistance payments were applied. The assistance payments can only be applied to mortgage payments and cannot be used to pay any other charges imposed by the lender such as late fees, legal fees, or property inspections.
Eligibility for the CARES Act Relief Programs
While each program application contains specific criteria and instructions, generally each applicant must establish that the tenants or homeowners:
- Have a current household income no greater than the median income by county as defined by the United States Department of Housing and Urban Development’s Fair Market Rents and Income Limits;
- Have experienced an income loss greater than 30% or have become unemployed since March 1, 2020;
- Are at least 30 days in arrears in the rental payments or mortgage payments; and
- Reside in the residential Pennsylvania property that is the subject of the lease or mortgage.
Countable income for tenant or homeowner eligibility includes unemployment compensation, pandemic unemployment compensation, and pandemic stimulus checks. Applicants can use wage statement, W-2s, bank statements, and letters from employers in order to provide documentation verifying income.
Both programs will close on September 30, 2020 and the last payments will be made on November 30, 2020.
Contact a member of our Real Estate Department for questions regarding the CARES Act Relief programs.