The New Jersey Housing and Mortgage Finance Agency (NJHMFA) recognizes the potential financial hardship some NJHMFA-financed properties may face in the wake of the COVID-19 pandemic. Requests for temporary economic relief may come in several forms, including but not limited to forbearance/deferment of mortgage payments, use of reserves such as the Operating Deficit Escrow Account (ODEA), Reserve for Replacement & Repair (R&R) and Working Capital to cover deficits, pay debt service, etc. or any combination thereof.
All requests for relief shall be directed to the NJHMFA Chief Financial Officer (CFO), John Murray, via email at
MFRelief@njhmfa.gov
. Requests shall then be assigned to the appropriate NJHMFA division(s) for review and processing. All requests shall be reviewed on a case-by-case basis to determine the most appropriate form of relief, if any, to be granted:
- Requests for use of reserves to cover deficits shall be reviewed by the Asset Management (AM) Division
- Similarly, before any requests for forbearance/deferment are granted, the initial form of relief to be evaluated by NJHMFA (via the Asset Management Division) shall be the availability and use of reserves to cover debt service payments The ODEA (if available) shall be the first source of funds to be utilized.
- Projects with insufficient reserve levels shall be reviewed by Delinquent Assets staff for consideration of other possible forms of relief, such as forbearance
REQUISITE DOCUMENTATION
Requests for relief must be based on a documented COVID-19 related hardship. The onus shall be on the project owner to demonstrate the COVID-19 related hardship and need for relief. Approval shall not be considered based on anticipated deficits.
Documentation shall be current (within the past 30 days) and may include, but not be limited to, the following:
- Formal request specifying the relief sought and detailing the COVID-19 related reason for the hardship
- Monthly or Quarterly Operating Report (MOR or QORs)
- Summary of Income and Expenses
- Schedule of Tenant Receivables
- Schedule of Accounts Payable
- Rent Roll
- Trial Balances
- Bank Statements
- If applicable, authorization from the project’s syndicator/investor to utilize the ODEA for the purpose(s) identified in the formal request
Staff reserves the right to request additional documentation as needed
REVIEW AND APPROVAL PROCESS
For reserve requests to cover deficits, AM staff shall review the requisite documentation, the project’s available cash flow, reserve levels and net cash position in order to determine if the use of reserves is warranted or if other funds are available to cover the shortfall.
For reserve requests to cover payments other than taxes or insurance, R&R levels should generally not fall below $350/unit (“minimum R&R balance”).
All decisions where the R&R account falls below the minimum R&R balance and/or involve forbearance or deferment shall be elevated to the CFO for approval.
TERMS AND CONDITIONS
Any relief granted by NJHMFA shall be for a maximum three-month interval, at which time additional relief may be considered upon satisfactory provision of updated documentation demonstrating a continued hardship.
Replenishment of the R&R account is expected and shall be evaluated by AM staff during each annual budget submission. While NJHMFA recognizes the ability to repay is conditioned on a number of factors, including but not limited to the size of the request, cash flow of the project, etc., to the extent feasible replenishment shall be structured in accordance with the following target timeframes:
- Requests of $100,000 or less shall have a proposed repayment agreement of 12 months
- Requests greater than $100,000 shall have a proposed repayment agreement of 18-24 months
All repayment agreements shall be based on the review of annual budgets and cash flow and may be subject to revision if such repayment schedule has a detrimental impact on project operations.
