March 27, 2020
There’s a great deal for the commercial real estate industry to unpack in the nearly $2-trillion emergency stimulus package to confront the economic impacts of the coronavirus pandemic. The Commercial Real Estate Finance Council (CREFC) has done much of the unpacking already.
Among the key provisions that are especially relevant to the industry are the following:
• Forbearance for multifamily borrowers with a federally-backed mortgage through the GSEs or HUD
• Eviction moratorium for certain rental units with a federally-related mortgage or other assistance
• Implementation of the Current Expected Credit Loss (CECL) accounting rule, paused for banks until year-end 2020
• Codifies Troubled Debt Restructuring (TDRs) relief, temporarily suspending the TDR categorization for loan modifications related to COVID-19
• $350 billion in forgivable loans to small business under the Small Business Administration’s section 7(a)
• $454 billion in support of the Federal Reserve’s lending facilities to eligible businesses, states and municipalities
• Tax relief on payroll taxes, net operating losses, and qualified improvement property
In a letter to members, CREFC also drilled down into the relief package’s main points. Of particular note is the bill’s provision of up to 90 days of forbearance for multifamily borrowers with a federally-backed multifamily mortgage loan who have experienced a financial hardship. Borrowers receiving forbearance may not evict or charge late fees to tenants for the duration of the forbearance period.
Applicable mortgages include loans to real property designed for five or more families that are purchased, insured, or assisted by Fannie Mae, Freddie Mac, or HUD. The authority provided under this section terminates on Dec. 31, 2020, or at the termination of the coronavirus national emergency, whichever occurs first.
Along with providing relief to businesses and individuals, the bill also provides funds to combat COVID-19, which has already claimed more than 1,000 lives domestically. The legislation provides $340 billion to stem the outbreak, including a $150-billion Coronavirus Relief Fund for state, local, and tribal governments. Hospitals and veterans’ health care will receive $117 billion.
The bill also apportions $11 billion for vaccines, therapeutics, diagnostics, and other preparedness needs; $4.3 billion for the Centers for Disease Control; $16 billion for the Strategic National Stockpile; and $45 billion for the Federal Emergency Management Agency’s disaster relief fund. Airports would get $10 billion and Amtrak $1 billion.
For comments, questions or concerns, please contact Paul Bubny