DFW REI Club

 Dallas/Fort Worth Real Estate Investor Club

COVID CHAOS

  • 20 Mar 2020 2:53 PM
    Message # 8845757

    Landlords can't evict. Banks can't foreclose. So, landlords are now strapped into seats on a plane that is in a nosedive and certain to crash. If tenants decide not to pay rent, and landlords stop paying the mortgage, even with a lender forebearance or deferral, the loss is fully absorbed by the landlord who will in the end be left with a uncollectable judgement from some Justice of the Peace.

    This sets the stage for the probability of an unlimited and indefinite equity transfer from property owners to lenders. So, since mortgages account for the largest portion of most households monthly bills. Basically, the Fed is deliberately trying to insure that the majority of the economic burden resulting from this crisis comes from home equity. 

    Also, why would any lender fund a new loan under these conditions.




    Last modified: 24 Mar 2020 10:29 AM | rockne ardoyno
  • 21 Mar 2020 10:19 AM
    Reply # 8846818 on 8845757

    Rocknye:

    In response to your last question about lenders, here is my point of view:

    I have no problem making new loans right now.  As a matter of fact, I am supposed to close one early next week.

    Most foreclosures do not go through the courts, they are handled by a trustee.  I do not believe that is restricted.
    Even if they are restricted, the foreclosure ban will be lifted in a month or two.

    So, if the borrower does not make the payments, I will eventually get the property at something close to the 70-80% LTV I lent on it. That is not a bad result for a lender.

    Don't take this wrong.  I do not want to foreclose. I don't force borrowers to take a loan.  They have to be aware of the risks and understand what they can handle. I do not want to enforce the deed of trust. But, if forced into it, I will do what I have to do to protect my money.

    Thanks,
      Neil Aggarwal
      Property Financing, LLC


  • 21 Mar 2020 9:14 PM
    Reply # 8847591 on 8845757
    Robin Carriger (Administrator)

    The emergency order issued by the Texas Supreme Court on Thursday regarding evictions expires on April 19, 2020, so there's NO reason to panic.  Evictions can still be filed, but processing them will just be delayed until after the order expires.  Tenants would, IMHO, be extremely unwise to try to exploit this order by not paying their rent if they could pay it, AND by April 19, the US government should've already paid most of them an amount that will more than cover their rent as part of the Coronavirus Stimulus bill the US Senate is hashing out this weekend.

    For what it's worth, anybody who owns property should, as a basic part of asset management, keep several months of mortgage payments and other expenses in reserve at all times, so they can endure black swan events like this.

    BTW, the full text of the emergency order can be found by clicking here.

    Thanks,

    Robin


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