Thank you for your interest in our recent webinar "Navigating New Challenges: What Asset Managers Should Be Thinking About Now Right Now". As a follow-up, we wanted to share the answers to the questions received during the webinar. If you need any additional information, please email

Q: Any suggestions on how to approach payment plans when there is significant uncertainty about future recovery and tenants' ability to make extra payments?

  • Despite the economic uncertainty, plans are being executed when a tenant comes forward and demonstrates a hardship.
  • State and local municipalities often have requirements about rent payment plans due to COVID-19 so it is best to make sure management is following such guidelines.
  • Guidelines and individual plans may stipulate waiving of fees, suspending credit bureau reporting and repaying over a specified time period, often between 3 – 12 months.
  • As there is too much uncertainty to accurately evaluate the prospects of individual tenants’ ability to repay, most managers are using standardized arrangements established by company policy, informed by government guidelines.

Q: Do you foresee delays and hesitations with lenders/investors in re-syndications, too?

  • It depends…but generally, yes.
  • For re-syndications that are already well underway with capital parties committed and close to closing, these should generally get to the finish line, although possibly with some delays.
  • All other kinds of deals are likely to encounter some hesitation as capital providers figure out how to underwrite in this uncertain environment.
  • Ultimately, while operating history and the ‘known entity’ quality of a re-syndication – as well as longstanding investor/developer relationships – will help, tax credit demand and their overall risk appetite will likely be the primary drivers.

Q: Do you think that service requests and maintenance will increase when the pandemic ends? Will there be a surge of leaks, repairs, etc.?

  • Almost certainly yes, at least to some extent.
  • What we’ve generally observed is that both owners and tenants, understandably, have been trying to limit the number of people coming into units. This has meant that non-urgent items have likely been deferred and are essentially building up. 
  • There may not be a sudden flood of requests, but there’s a certain amount of maintenance that is just needed over time – and this may be even more during this time when people are spending even more time in their homes than they normally would.

Q: Have you seen any data on providers having difficulty completing recertifications - especially with the new restrictions related to COVID-19? How are folks addressing these challenges?

  • Yes, recertifications have been a challenge given the limits on personal contacts and the difficulty of reaching many providers of information, such as employers.
  • Fortunately most state agencies have been trying to be accommodating, working with owners and managers to waive or defer some rules.
  • If you haven’t already done so, check with your state regulatory agency. And if you have a good workaround to propose to them, try it. They are generally open to solutions.

Q: How are people managing in-place rehabs?

  • Unfortunately, we do not have good answers for you on this one. As far as we can tell, developers are still figuring this out on a case by case basis, working with their partners to keep the deal together while they wait to make sure the rehab can be safely handled.
  • We suggest you talk with your peers in the area as local circumstances, requirements, and physical conditions vary so greatly.

Q: Have you heard of HUD allowing the use of replacement reserves or residual receipts to pay debt service?

Nixon Peabody has published this great resource summarizing FAQs from HUD. Among other information, it notes that the most recent FAQs “restate the policy of allowing for advances from reserve for replacement and residual receipts accounts in accordance with existing handbook provisions and [the FAQ] also clarifies that, with prior HUD approval, residual receipts can be used for costs related to safety and preventative equipment for staff use, including maintenance staff. And there is a new FAQ that implies, but does not directly state, that reserve for replacement accounts may potentially be accessible for payments of debt service on FHA-insured loans.” (Source: Affordable Housing Alert by Nixon Peabody LLP, Copyright © 2020 Nixon Peabody LLP.)

Q: What kinds of debt restructuring options are there for a property where the hard debt is financed by bonds?

  • Even in the best of times, bond restructurings are complex matters given the many parties involved and the complexity of the documents.  That said…
  • First, if you have bond debt that is issued by a state agency or credit-enhanced by FNMA (FannieMae) or FRMC (FreddieMac), you should be eligible to apply for a 90 day deferral/forbearance programs that we discussed (assuming you meet other criteria discussed in our webinar). 
  • Beyond COVID-related deferrals, if your debt is in the form of bonds, there do not appear to be any special debt restructuring options at this time other than what is generally available in your bond documents.  If you determine that, in the post-COVID world, your property will not be able to service its debt, a discussion with your bondholders should be initiated sooner rather than later.

Q: Can you tell me what differences you have seen in rent collection based on geographic location, and why?

  • There are many location-specific issues, of course, so broad statements can be misleading. But generally:
  • Areas that experienced limited impact on the economy because of shorter or less comprehensive shutdowns are seeing much less impact on rent collections. For example, properties in Utah seem to have had very little impact.
  • Conversely, properties in areas with more extensive shutdowns have more tenants struggling  to pay rent.
  • Rural properties, with some exceptions, seem less affected by the virus than properties in urban areas.  In addition, the extra unemployment compensation has gone further in low-cost and low-wage areas in terms of making rent payments and keeping tenants solvent than it has in high-wage urban areas.
  • Of course, all these location-specific issues continue to change as the pandemic works its way through the country. As we talked about on the webinar, it remains to be seen what will happen once the initial measures to offset the economic damage (such as the extra Unemployment Compensation) run their course.

Note: The answers above do not constitute financial or legal advice.