If Freddie and Fannie Aren’t Enforcing the CARES Act, Do Landlords Still Have to Use a 30-Day Notice?
This blog post was drafted by Atty. Gary Koch of Pettit Law Group S.C.
If you’ve been paying attention lately, you’ve probably seen this bit of news:
Fannie and Freddie End CARES Notice Enforcement | National Apartment Association
Fannie Mae (officially the Federal National Mortgage Association (FNMA)) and Freddie Mac (officially the Federal Home Loan Mortgage Corporation (FHLMC)), both government-sponsored enterprises that sell mortgage-backed securities, are no longer enforcing the CARES Act’s 30-day notice requirement.
Great, right? No more 30-day notices, right? Well, not so fast.
The CARES Act was passed by Congress and signed into law on March 27, 2020. It is the CARES Act that requires landlords in “covered entities” to issue notices giving tenants 30 days to act (whether to pay rent or non-rent breach notices). As such, it will take either a repealing of the CARES Act (by Congress and the President) or a court declaring the CARES Act void or no longer enforceable to eliminate the Act’s requirement that Landlords issue 30-day notices to tenants in Covered Entities.
There have been attempts in Congress to repeal the CARES Act provision requiring 30-day notices, but they have not gained any traction.
There have been a few reported cases outside of Wisconsin, most of which have upheld the CARES Act’s requirement to use 30-day notices for Covered Entities. One non-Wisconsin case limited the 30-day requirement to failure to pay rent notices only (and not to non-rent breach notices), and one Iowa case ruled that the 30-day requirement had expired. Please remember that non-Wisconsin appellate cases do not apply in Wisconsin.
Fannie Mae and Freddie Mac are, in essence, mortgage servicers, and their indication that they will not enforce the CARES Act’s provisions in no way binds any other regulatory agency (such as Wisconsin’s Department of Agriculture, Trade, or Consumer Protection) or the courts. Just because Freddie and Fannie aren’t going to penalize you doesn’t mean that a court won’t dismiss your eviction case because you used a 5-day notice instead of a 30-day notice.
Hopefully, Fannie and Freddy’s decision will spur a cascade of action by other agencies, Congress, and the courts to officially reverse or end the 30-day requirement of the CARES Act. Until then, however, issuing anything less than a 30-day notice for a Covered Entity will continue to carry risks.
Drafted by Atty. Gary Koch of Pettit Law Group S.C.
To read additional posts dealing with the CARES Act, check out:
With the COVID-19 Pandemic over, Is the CARES Act Still In Effect?
CARES Act Eviction Restrictions Apply To More Landlords Than You Think
Who CARES? - Status on the Coronavirus Aid, Relief, and Economic Security (CARES) Act