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CARES Act: How It Affects the Real Estate Industry

On March 27, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion dollar economic stimulus and economic, tax, and regulatory relief package for businesses and individuals created to bolster the U.S. economy during the COVID-19 pandemic. 

Several provisions within the legislation directly pertain to real estate, including mortgage holders and renters; business owners; and those in the retail, restaurant, and hotel industries. 

Mortgage Holders

Homeowners with mortgages backed by federal loans can request 180 days of mortgage forbearance up to 360 days, regardless of delinquency history. A federally backed mortgage loan is insured by a federal agency, such as the Federal Housing Authority (FHA), Freddie Mac, Fannie Mae and the Department of Veterans Affairs. Payments will be suspended, no questions asked, for six months. At the end of the six months, borrowers can ask for additional extensions. 

Those receiving mortgage forbearance will not be penalized in any way – no late fees or penalties and no delinquencies on credit reports. 

This does not apply to borrowers who are using private lenders or banks. 

Tenants

Servicers of a federally backed mortgage loan may not initiate any foreclosure, foreclosure-related eviction or foreclosure sale, provided the borrower is current on payments as of February 1, 2020. This means landlords cannot lose their properties during the forbearance period. Further, tenants of homes receiving forbearance cannot be evicted for nonpayment of rent, nor can they be charged late fees or other penalties. 

Tax

The CARES Act provides several tax relief measures:

  1. Immediate depreciation for “qualified improvement property”

  2. Deductions for net operating losses (NOL) occurring in 2018, 2019, and 2020 can carry back for the five years preceding the NOL

  3. Elimination of limits for business loss deductions from 2018-2020

  4. Increase in the maximum amount of tax-deductible business interest expenses from 30-50% of adjusted taxable income

  5. Provision of the payroll tax credit for employee retention to businesses affected by COVID-19

Business Loans

Small businesses, those with 500 or fewer employees, can apply for a forgivable loan program to help support payroll and operating expenses during the pandemic.

Mid-size businesses, those with employee counts between 500 and 10,000, are eligible for five-year or less loans. Interest is capped at 2%. The first six months are payment-free. 

If you have any questions about how the CARES Act applies to your particular situation, do not hesitate to contact us at 402-301-7098. We are always here to help you experience your good life, and this is especially important during the COVID-19 pandemic. 


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.