My 90-Day Payment Deferment is Up, Now What?

My 90-Day Payment Deferment is Up, Now What?
Robert Withers, President and CEO of M1 Capital Corp.

Each commercial real estate asset class has been impacted by the COVID-19 pandemic in one way or another. Many commercial lenders extended 90-day payment deferments to their borrowers as a way to help relieve immediate financial hardship in case the tenants (sometimes the borrowers themselves) were unable to pay rent.

These deferments are ending in June (although there is discussion on extending them for another 90 days) and many owners/landlords have not had their properties “stabilized” yet.

So, what can you do?

How Well Do You Know Your Mortgage Lender?

When all is going great, who speaks to your bank mortgage officer? Unless you are considering another transaction, many real estate investors do not take the time or effort to cultivate a relationship with their mortgage lenders.

I have seen, during these volatile times, clients who have had such relationships and were able to collaborate with their lenders and come up with viable solutions.

This is a great time to form a better relationship with your lender and, as markets are shifting, understand the growing importance of having a lender/advocate you can depend upon.

Know What Legislation is Pending and How it Can Help You

On Friday May 15th, 2020 the House of Representatives passed the HEROES Act. This $3T Corona Virus Relief Bill is over 1,800 pages and has many implications for real estate. While the bill will face stricter scrutiny in the Senate, experts believe the bill will likely be passed into law sometime this month. Below are some of the provisions included that directly affect multifamily real estate.

Multifamily Mortgage Forbearance

The bill upholds the CARES Act’s 90-day forbearance rule for multifamily mortgages but extends it to include private loans in addition to federally-backed mortgages.

While they benefit from forbearance, property owners shall not evict renters. Once forbearance is over, landlords would have a year to catch up on their loan payments.

Liquidity Help for Servicers, Apartment Property Owners

The bill also dictates that the Department of Treasury shall provide mortgage servicers with access to loans and investments to maintain liquidity during borrowers’ forbearance.

Moreover, the proposal would establish a credit facility to offer long-term, low-cost loans to residential rental property owners who have incurred financial losses caused by reduced rent payments. During the course of their loans, landlords shall not evict or charge any rent nonpayment penalties.

The so-called HEROES Act would also coordinate rural rental and public housing assistance.


It is very important that owner/landlords who find themselves in this position maintain an open dialogue with their current lenders over what goes on with the property and if there are any financial concerns (i.e. missed financial and debt service covenants) or tenant issues such as missed payments and vacancies.

Many borrowers forget about the covenants they agreed to when taking out a commercial mortgage. When was the last time you read (or had your attorney review) your commercial mortgage note and mortgage associated with your investment property?

This goes back to my first point, the importance of fostering a relationship with your lender! So much trouble and misunderstanding, leading to ruined lending relationships and even legal proceedings, can be averted by knowing what you agreed to and keeping the lines of communication open between yourself and your lender.

It is equally important that tenants are open and in dialogue with the owners (you). If you have tenants, residential or commercial, encourage these lines of communications so a tenant can feel comfortable approaching you when issues arise.

Many of my past clients said they “Never saw it coming” when a tenant broke a lease or became a collection nightmare. My first question is: “When was the last time you spoke to or met with your tenant?” As long as all the participants in a particular real estate investment are communicating, much can be accomplished. The goal is for misunderstandings to be avoided, to the benefit of all.

KNOW YOUR MARKET – Plan for The Worst-Case Scenario

Do you have any idea of what your property is really worth right now?

What is the market square foot price for your property? If you are the owner/occupant of a commercial piece of real estate, what is your contingency plan if business is impacted by COVID-19?

What other uses of your property would make sense in this market? Do you have a reliable commercial real estate broker with whom you can discuss potential options and who will keep you informed on shifts in the market?

Who’s Looking Out for You?

Even if you own only one investment property where tenancy could pose an issue in these volatile times, who do you have on speed dial that can help develop solutions when issues arise?

It is my experience that most successful commercial and multifamily investors have a “team” in place to help them through times both good and trying. They include a seasoned real estate attorney with experience in commercial real estate matters, counsel that will respond quickly to your call or e-mail, and a seasoned commercial real estate broker who knows your market and the active players.

For larger, multi-tenant property investors, do you have a reliable, go to source for repairs (big and small) that can be done quickly, inexpensively, and professionally?

Lastly, do you have a competent source to arrange financing? Someone who knows the market and can offer solutions if your current lender ceases lending or becomes intolerable.

These are difficult times for the commercial real estate investor, filled with challenges and opportunities. In this trying period, the savviest investors won’t be flying blind.

They have a plan!

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