Forecasting Financial Issues with Mortgages in COVID-19
Were you impacted by COVID-19? Are you planning to work with your lender and communicate your needs and work on contingencies for your financial situation? Do you have any tenants that are falling behind on rent and worry about making your payments? Recent laws have been passed to help both renters and mortgage holders. You will want to be sure you are communicating with everyone and discussing what to do if there is any problem. M1 Capital Corp in White Plains, NY is here to help you plan and adapt during all the changes in the mortgage market during COVID-19.
Reviewing the Rules of Your Current Mortgage
Whether you have a commercial or residential mortgage, it is time to pull out all your paperwork and ensure you understand any agreements you may have signed. Did you have an attorney review these items too? Is it time for an updated review with all the current legislation being passed? Are you at risk of breaking any covenants due to failure of tenants to pay rent? It is important to keep open communication with your lender about what is going on. We discussed the best ways of doing this in our recent blog topics.
Reviewing the Status of Your Tenants
Equally important to having a good relationship with your lenders is to have a good, trusting relationship with your tenants. Tenants who are avoiding you or failing to communicate and starting to fall behind on rent are the wild cards you should be concerned about. Did you send any notices out about eviction moratoriums that encourage tenants to communicate difficulties to your office? You should keep a detailed log of every discussion that takes place and be prepared to share with your lender any plans you are making to avoid trouble.
Certain covered properties allow eviction moratoriums up to July 25th at the earliest. Your local state and county may have also passed moratorium rules you need to understand. A covered property includes the following:
- The property includes a “covered housing program” as defined by the Violence Against Women Act (VAWA).
- The property includes a “rural housing voucher program under section 542 of the Housing Act of 1949”.
- The property includes a federally backed mortgage loan including any multifamily loan.
The property most likely falls into these rules if it includes any government subsidized programs for the residents. This is about 25% of the total rental units in the United States. You need to look at debt coverage and discuss openly with your lender regardless if you are concerned about your property. The lenders may also have relief available. Many governments and philanthropy are creating rental assistance programs to help tenants as well. M1 Capital Corp is here to help if you need to discuss refinancing your mortgage or understand the recent laws. Feel free to reach out to our team in White Plains, NY.