Virginia Housing Development Authority (VHDA) loan forbearance is available to any Borrower who documents and certifies that the Borrower, the development, and its tenants are experiencing hardship as a consequence of the COVID-19 emergency. A hardship will be defined by a decrease in actual monthly rents collected of at least 15% compared to those collected March 15, 2020, and an inability to make monthly payments. The Borrower must also certify that existing operating reserves are insufficient to make monthly payments.
Eligible vs. Ineligible Loans
- Eligible loans will include VHDA loans and loans that the VHDA services that are made by the Department of Housing and Community Development (HOME and National Housing Trust Fund Loans) and the Virginia Housing Trust Fund.
- Ineligible Loans will include those that are not current as of March 31, 2020 (unless current in an existing Workout Agreement), and loans in the construction interest only phase, or interest only lease up phase.
Terms of Forbearance
- Payments can be forborne for up to 3 consecutive months beginning as early as the May 2020 payment, but may commence as late as September 2020.
- Forborne amounts include monthly principal, interest, and reserves. Monthly tax and insurance escrows will be collected. Borrower may elect to make optional partial payments from NOI during the forbearance period, which will be applied to deferred interest.
- At the end of the Forbearance Period, Borrower will repay the amount forborne in 48 equal monthly installments, in addition to normal monthly payments. Prepayment of any amount without penalty is also optional. Forborne replacement reserve deposits are not required to be replenished, absent unusual circumstances as determined by Virginia Housing.
- No late fees, additional interest, or prepayment premiums will be charged on the amount forborne.
- Borrower agrees not to initiate new, and to suspend existing, evictions for any nonpayment of rent, fees, and charges until the longest of: (i) July 25, 2020, (ii) the forbearance expiration date, or (iii) any longer period otherwise mandated by applicable law.
- Borrowers should work with tenants unable to pay to develop reasonable payment plans, including possible waiver of late fees. VHDA also encourages all tenants who can pay their rent to do so.
- Rent increases are not permitted during the forbearance period for existing tenants.
- Business Interruption Insurance: If Borrower receives interruption or loss of rents insurance claims, it is applied first to the amount forborne and then to standard monthly payments.
- Distributions: Borrower cannot make any distribution of amount forborne to partners or members until four months after the end of the forbearance period, and then only if paying as agreed on payment schedules. Borrower may pay housing management fees.
- Reporting: Borrower will submit monthly reports as requested by VHDA by the 20th of the following month, which may include but not be limited to: rent rolls, rent collections reports, operating statements, certification of no distributions.
Eligible Borrowers should have received an email from VHDA on April 15. Applications are due no later than the 20th of the month preceding the requested commencement of forbearance (e.g. April 20 for a May 1 forbearance start date). The current deadline to request forbearance is August 31, 2020. All applications and paperwork will be available electronically. AREC is available if you have questions while navigated this process.