All Forum Posts by: Christian D.

@William Coet this is the bill I am referring to. Am I missing something?

https://www.nysenate.gov/legislation/bills/2019/s8125

Regarding renters and Landlords, nobody is getting anything for free from this bill, Tenants are not going to be given "free rent" and Landlords are not giving anything away for free. 

This bill is to defer rental payments for 90 days not to forfeit rental payments for 90 days. Tenants are still obligated to pay their Landlords the full rental amount outlined in their lease agreement before the end of their lease term. Landlords already know how much they can expect to receive in rent at the end of the Tenants lease term. It doesn't make a difference if you receive 12 monthly payments or 9 monthly payments the dollar figure doesn't change. 

Tenants will simply defer payments for the next three months and will have to make it up on the back end after things normalize. The question is, will things normalize in three months? And can tenants realistically afford to defer rental payments for three months onto the remaining term of their lease if they are unemployed (probably not). So now what? In order for a renter forbearance to work, you now need to move up the channel to Landlords and banks. Banks need to issue a forbearance to Landlords for 90 days so they can defer debt payments for three months. I believe this is also mentioned in the aforementioned bill.

Even if a bank issues a 90 day forbearance, the Landlords still owes these three months of debt payments they just don't go away. Nothing has been forfeited in terms of payment from the Tenant, Landlord or bank. Now you would think the banks would just follow suit and extend loans out three months on the back-end for Landlords? However, remember, you are also dealing with private and Non-QM lenders (who are just private investors) and are in the same position as you except they are at the end of the food chain.

It just comes down to the timing of payments with Tenants, and Landlords, and banks and who is allowed a temporary forbearance and who is not -- but nothing is being forfeited or given away for free. The annual rent the Tenant is obligated to pay the Landlord per their lease doesn't change, and the Landlords annual debt payments he/she is obligated to pay the lender on the property does not change.

Out of the 6 lenders I am working with only 1 has refused to issue me a forbearance on my properties and it's a commercial loan.

Also, i'm confused why people think the government would classify Landlords in the same bucket as small businesses when it comes to governmental assistance in a time like this. Again, a forbearance is simply a deferral and not a forfeiture, the government is not going to be as generous as issuing Landlords money. When you mandate the closure of a small business, there is no deferral on that businesses income, they simply lose it and how do you gauge how much income that business lost? The answer is you can't. That's exactly why all of these stimulus packages and loan programs are pivoted to small businesses.

https://therealdeal.com/2020/03/31/its-scary-landlords-praying-tenants-pay-april-rent/?utm_source=internal&utm_medium=after_article&utm_campaign=related_article

@Peice Livingston the government is not going to create a separate stimulus package exclusively for the assistance or bailout for Landlords, it's not going to happen. It's already been made clear Landlords can ask their lender for a temporary forbearance, or they can apply for an SBA loan (EIDL) if they need some sort of immediate economic relief from loss of rents -- this is already part of the $2T stimulus bill.

@Peice Livingston regardless, my point is it's unlikely the state will flat out "forfeit" rent payments for tenants. If a forbearance is not implemented and we continue business as usual then what happens in the immediate term? The uncertainty of having no direction on the payments in the rental and mortgage market could potentially spill over and shock the equities market which is what the government is trying to avoid. Obviously, this is just kicking the can down the road we already know that.

@Willie Bradley depending on your market, an FHA loan may be your best option due to the low DP requirement. If you find a duplex or a triplex, you can reside in one of the units and rent out the other unit(s). The lender will also use a percentage of the potential rental income from the other unit(s) to help you qualify for the loan (I believe 75%). Yes, you will need to pay monthly MIP, but if the property allows you to live rent free and still cash flows it could be a viable option.

I used the same technique here in NYC.

I have a non-QM loan on a apartment building. The current monthly mortgage payment is on auto-pay which I believe I set up with the current mortgage servicing company when I bought the property last year. I called them last week to inquire about a possible forbearance, but I also asked them why I could not remove the payment off auto-pay on their website as I was just curious (their website blocked me from doing so). The response I received was auto-pay is part of the "current loan terms" and they could not remove the payment off auto-pay.

Now, I honestly don't recall if there is a clause or language in the mortgage/note regarding the payments needing to be on auto-pay, but has anyone else experienced anything like this before dealing with a non-QM lender? I understand I may not have the same borrower protection rights as I would if the mortgage was a conventional loan, and I'm not going to have my bank put a stop or hold on the payment, I just thought it was strange.

@Jacob Hanson all you can do is inform the tenant that their monthly rent will continue to accrue with late fees. If your state has not implemented any sort of rent freeze/forbearance legally the tenant is still obligated to pay rent if financially able. Once the courts re-open you can then proceed with an eviction. If you have a debt obligation you can try going to your lender and seeking a mortgage/debt forbearance.

This is not going to pass -- the most they will do is issue a rent forbearance for 90 days.

@Evan Polaski I am reading now that the FHFA is implementing a 90 day forbearance for mortgages on single family homes, and for owners of multi-family properties where the mortgages are insured by Fannie and Freddie. The contingency for owners of multi-family properties is that they cannot proceed with evictions against tenants who are directly impacted by covid-19 during the forbearance period.

I have a few other properties (2 & 3 unit properties) that have conventional financing and insured by Fannie Mae, I am prepared to withhold April's mortgage payment on these properties until the rent payments for the month shake out and I see what the NET collection number is.