It’s a tough time for landlords…
Many landlords want to be able to forgive their tenants’ rent, but it’s really not possible if they still need to pay mortgages themselves. There is a respite: There are many options for landlords right now. But that doesn’t mean that everyone has the same options. Landlords need to educate themselves now if they’re facing the possibility of losing rent for the next few months.
In the end, this will all have a direct impact on tenants. Let’s take a look at the options.
The Situation Report
No one knows how long the Coronavirus quarantine is going to last, nor the economic struggles faced because of it. President Trump recently extended social distancing guidelines until April 30, but there are many states that have shutdowns for the next three weeks at minimum. Since many small businesses are likely to go under, many people are no longer working. Those in hourly positions have been effectively laid off.
For April, May, and June, it’s simply not guaranteed that tenants will have the money to pay rent. So, what does a landlord do?
Evictions and Foreclosures Stopped
The U.S. Department of Housing and Urban Development (HUD), Fannie Mae, and Freddie Mac, have already stopped foreclosures. So, landlords at least know that their HUD, Fannie Mae, and Freddie Mac loans aren’t going to go into foreclosure. But that doesn’t mean they aren’t going to owe money. They’re still going to owe the same amount of money, they just can’t be foreclosed on. This makes it very important for landlords to connect with their lenders now.
Mortgage Forbearance and Modification
Many mortgage lenders are taking it upon themselves to offer options such as forbearance and modification. They don’t want you to go into foreclosure any more than you do (and foreclosures have been stopped for the time, regardless).
But it’s important to understand the different options available. Forbearance, for instance, just means that they aren’t going to take action against you for the next few months. It doesn’t mean that they won’t take action against you eventually. A loan modification is better. This means that the payments will be added onto the end of your loan. You’ll need to pay the loan for longer, but you won’t get hit by a huge bill.
Eventual Relief for Tenants
Citizens are expected to get a $1,200 stipend under the bipartisan stimulus bill recently signed into law, as well as fast-tracked unemployment (with an additional $600 a month). Altogether, that does mean that people are going to have the money to spend eventually. It’s still in a landlord’s best interest to keep good tenants, even if they cannot pay for the next few months.
SBA Disaster Loans for Landlords
What are you as a landlord? If you answered a “small business owner,” you’re right. Landlords may also be able to qualify for SBA disaster loans, if their state has currently declared a state of emergency. A disaster loan will help you compensate for any lost revenue during this time.
But, there’s a downside: It is, after all, a loan that needs to be paid back. On the other hand, it will give you previous time, and will likely have a very low interest rate, which could let you eliminate some of your other debt.
The options are out there. When everyone is suffering, there really isn’t the option to let the entire housing industry collapse. But landlords are going to need to be proactive and vigilant if they are going to survive this.
