April 9, 2020

We are now more than a week into April, and the reality of rent payments, or lack thereof, is setting in.  Today is the day we pay out all of our property owners who have houses that received rental payments.  Normally, we are at a 5% delinquency rate at this point.  Today, we are about 15%.  Several tenants have made partial payments, but unfortunately, more than half of delinquent houses have made no payments.

I personally have yet to hear of anyone receiving government stimulus checks, although, I see the US Treasury has announced payments would start being deposited electronically this week.  The SBA’s Payment Protection Program (“PPP”) is also supposed to start paying small businesses this week, in order to help those businesses maintain substantial portions of their payrolls.  Both of these programs will go a long way towards helping lower to middle income individuals make rent and other necessary payments.  I remain optimistic that the government will be able to help many individuals before the end of the month, and thus many of our property owners that are lacking rent payments in their banks.

The government recognizes many individuals will have a difficult time making mortgage payments in April and possibly future months.  As part of the $2 trillion CARES Act passed on March 27, there are allowances for mortgage forbearance for federally backed mortgages such as FHA, Fannie, Freddie and VA loans.   This could allow you to temporarily suspend mortgage payments if you are experiencing financial difficulties due to COVID-19.  It starts with contacting your mortgage lender.  For more details, this link has a helpful video and other resources from the Consumer Financial Protection Bureau – https://www.consumerfinance.gov/coronavirus/cares-act-mortgage-forbearance-what-you-need-know/?utm_source=newsletter&utm_medium=email&utm_campaign=wc&utm_term=April820

Social distancing and temporary closing of businesses has come at a major economic cost already.  But it’s important to look at the positive impact that has already come out of it as well.  At the beginning of this week, the US government was looking at models that estimated more than 80,000 deaths in the US by August 4.  On Wednesday this week, those models had been revised down to about 60,000.  Dr. Deborah Birx, the White House coronavirus response coordinator, said this dramatic decrease is a result of what Americans are doing.  From her press conference:

“What has been so remarkable, I think, to those of us that have been in the science field for so long, is how important behavioral change is, and how amazing Americans are at adapting to and following through on these behavioral changes…That’s what’s changing the rate of new cases, and that’s what will change the rate of mortality going forward.”

I’ll continue to give updates as we receive info that affects property investors.  Thank you to all of our clients, residents, and vendors who are working with us, I continue to appreciate the work we are all doing as Americans.

Charlie Roseland