NEW YORK CITY – With the mounds of information coming out from the government and media, real estate stakeholders are cautioned. Information is moving quickly and may not always spell out what is needed to navigate the market uncertainty amid the coronavirus pandemic, also known as COVID-19, Real Estate Equities Expert Terri Gumula tells GlobeSt.com.
“We’re in uncharted waters, and everyone is looking for information and guidance. One of the biggest challenges is incomplete information,” she said.
For example, both government sponsored enterprises Fannie Mae and Freddie Mac are offering to defer payments for unto three months, but for Fannie, a borrower can not evict a tenant, while the payment is outstanding. So if an owner took 12 months to repay the money borrowed, they couldn’t evict a tenant during that entire 12-month period.
Tenants hear on the television or read from their Twitter account that “April rent isn’t due’ because of the New York State legislation S. 8125, which is in committee as of April according to the NYS Senate Website, that would suspend rent payments for certain residential and small business commercial tenants and certain mortgage payments for ninety days in response to the outbreak of COVID-19, but the legislation has not passed the NYS Senate yet, Gumula said.
What is evident for owners is the big question about what will happen when collections come due the 10th or so of the month, will they have the cash flow to pay their staff and insurance bills, according to Gumula.
On the flip side, the recent $2 trillion stimulus package that has gone into effect is a silver lining, according to Gumula, who says it is a good step in the right direction since it will hopefully provide cash to keep tenants rent and insurance paid. “It is greasing the economic engine so people can get back to work when this is over. If everyone has a cash shortage, then people go into default, with a capital d, and that can set off a cascade of bad events that is hard to stop,” Gumula said.
Lenders, owners, tenants and the government will need to step up and realize that transparency is essential and give more than a little to get through this market cycle and reduce the damage that has been done, Gumula added. “It’s unclear as to what the future holds. I think in the medium term people are optimistic, short term, we’re all hoping we can get back in April or May, but I’m afraid it will be June,” she said.