As with millions of other businesses across the US, Cambridge Realty Capital is operating remotely during the COVID-19 pandemic. So while it’s not quite “business as usual,” it’s “about as close as it can be,” according to Cambridge President Jeffrey Davis. And he has some good news to offer to HUD borrowers who may be feeling pressure and anxiety during this unprecedented time: “HUD is making some concessions,” he stated. “HUD is supporting its senior housing and healthcare borrowers by offering several unique programs to assist them with the financial challenges caused by the COVID-19 virus.”
He continued, “HUD, like many lenders across the United States, realizes that they need to support their borrowers and help them get through this terrible time. Obviously of great concern to operators is the ability to continue delivering the necessary level of service to residents, and not just maintaining the status quo but also being able to respond to emergent needs that arise due to the COVID-19 virus, which has infiltrated many senior facilities across the country.”
With that in mind, HUD has created a series of four benefits as part of its COVID-19 assistance program, all helping borrowers address their obligations to HUD and also to take care of their residents. These benefits that will be offered to borrowers do not need HUD review or approval, provided that HUD has not notified the Lender that the subject property is with ORCF’s Risk Mitigation Branch; if it is, then HUD approval is required.
The benefits are:
1) Suspend monthly deposits to be placed for replacement reserve through July 31, 2020, or longer if the authority to grant this benefit is extended. At the conclusion of the suspension period, the sum of such suspended payments shall be paid into the reserves for replacement in equal monthly increments over the next 12 consecutive months.
2) Use operating deficit funds to make debt service payments, subject to repayment provisions if any contained in the subject escrow agreement.
3) Use debt service reserves to meet debt service payments, subject to repayment provisions, if any, contained in the subject escrow agreement.
4) Use replacement reserves to meet debt service payments required, so long as the reserve for replacement reserve account does not fall below $1,000 per unit.
Davis believes that these programs send a message to HUD borrowers that “we are all in this together” and that the senior housing and healthcare population are extremely important, and the landlords and owners of these buildings need to be properly funded to address their growing and continually-changing healthcare needs.
As for Cambridge Realty Capital, its staff members have been doing their usual jobs, just not at the Cambridge office. “We stay in regular contact via the internet and phone,” Davis said. “And while it’s not the same as being able to walk into a co-worker’s cubicle or office, our lines of communication are flowing. Our staff members remain committed to open and timely conversation, not just with one another, but with our clients. If you pick up the phone to call Cambridge and make an inquiry, you’ll still be directed to a human being. If you need to talk to a specific staff member, you’ll be able to reach her or him, if not directly then through a callback.” Davis also assures operators that HUD is still processing applications, “and Cambridge is still submitting those applications during this time, as well as closing on loans that were and still are in process.”