Just as landlords are receiving rent relief requests from tenants, property owners are requesting mortgage relief from borrowers. Money360 began receiving relief requests in March, even before April rent collections, in anticipation of rent deferrals and reduced income. Money360—a direct, non-bank lender—is taking those requests on a case-by-case basis, and it is working with borrowers as needed.
“We have received some early requests for relief. We have notified our borrowers that we do expect them to make their payments, but we are here for them and if they need, we can talk about other strategies,” Gary Bechtel, president of Money360, tells GlobeSt.com. “We put an email out to all of our borrowers, advising them of our current policy and how to apply for the federal governments stimulus, whether that is the payment protection plan or some other government funding.”
Just like most professionals, he isn’t sure where the market is headed or when a recovery will start. He is hoping, like many, for a swift recovery and growth in the fourth quarter. “You have to deal with what is in front of you. My gut is that quarter two is going to be very dire,” Bechtel says. “There is going to be a contraction of the economy, but if we can get back to work in May or June, I think that quarter three will see some recovery. Assuming that we can rebound relatively quickly, I think that you are going to have a good quarter four. I think the next three to six months, assuming that we can get away from these shelter-in-place policies, I think that we can recover within six to nine months.”
Still, he is also anticipating a waiting period once shelter-in-place restrictions are lifted, not a rubber-band rebound to pre-pandemic life. “People like to be around other people, but I think that you are going to see people hesitant to go out in public, even after the shelter-in-place policies are lifted,” says Bechtel. “We have had a shock to the system. The faster that we can get back to work and restaurants and public gatherings, the faster the economy will rebound. I think there will be a transition period.”
Bechtel, however, doesn’t anticipate needing to change his strategy much to adjust to the new market. He already had largely exited the hospitality and retail markets, which were considered higher risk prior to the pandemic, and he is waiting to see how office reacts before he makes any decisions there. “We were already very conservative on hospitality because of the shifts that were already occurring in that sector,” he says. “We were also pretty conservative on retail, again, given the trends that were happening. That trend will probably continue for us. For office, I think that it is to-be-determined. Until there is data, I think that we will continue to lend on office. Our leverage will probably go down, but that is still to-be-determined and we need more data before we make that decision. Multifamily and industrial will continue to be the darling asset classes.”