Sean Andrade was recently quoted in Carter Stoddard’s article “Bankruptcy attorneys concerned about whether loan deferments will help landlord clients.” The article, published in the Los Angeles & San Francisco Daily Journal, discusses the impact COVID-19 has on the real estate industry. Sean commented on how landlords have been affected.
Sean Andrade of Andrade Gonzalez LLP in Los Angeles said landlords banking with major financiers other than Citigroup, JP Morgan, US Bank and Wells Fargo, were in an even tighter position as they were not party to an agreement made with Gov. Gavin Newsom, in which he secured deferment for borrowers from those banks.
“I think folks need to be prepared that you can’t get your payments moved forever,” Andrade said. “They can’t do foreclosures or evictions currently, but from a legal standpoint that day is fast approaching. When the period is over and you have to pay this huge sum, that doesn’t really help people.”
Even for those borrowing from banks that are party to the agreement with Newsom, who have been promised no negative credit impact, no evictions for 60 days, and a workable payment structure after the pandemic abates, there’s no guarantee any of these handshake agreements will be honored, Andrade said.
In the meantime Andrade said he’s heard from clients borrowing from other banks that they will need to pay lump sums at the end of the forbearance period. Further uncertainty around what relief could be expected from insurance coverage complicated the issue, he said.
Even those kept whole by the end of the deferment process could face borrowing issues in the future, Andrade said, “Is a bank going to look at three recent non-payments and still give you money?”