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HOPE Act Would Extend Relief to Small Businesses With CMBS Loans

Aug 05, 2020 by Marc Rapport

Advocates for countless small businesses across the country are hoping for help in the form of the Helping Open Properties Endeavor (HOPE) Act of 2020, a bill to provide relief to troubled businesses that hold commercial mortgage-backed securities (CMBS) loans. Introduced last week by a bipartisan trio of congressmen -- Florida Democrat Al Lawson and Republicans Van Taylor of Texas and Andy Barr of Kentucky -- the legislation seeks to extend to CMBS borrowers the same kind of protection homeowners have gotten from Fannie Mae and Freddie Mac beginning with the CARES Act.

Creating a new liquidity facility

"H.R. 7809, the Helping Open Properties Endeavor (HOPE) Act, works to prevent commercial real estate (CRE) foreclosures, specifically to borrowers of commercial mortgages, and protect millions of jobs across the nation," Taylor's office said in an announcement.

The bill would set up a government-backed funding vehicle that businesses could tap to stay current on their mortgages. "It is meant in particular to help those who borrowed in the $550 billion market for mortgages that are packaged into bonds and sold to Wall Street," The Wall Street Journal reported.

Pressure for a new deal raises hopes for HOPE

That comes as Congress continues to struggle for a deal on the next pandemic aid package, which would follow up on the CARES Act, the massive measure that included moratoria on evictions, the Paycheck Protection Program, and the beginning of a huge wave of forbearances for residential mortgages.

The expiration of much of that relief, including federal unemployment benefits, has ramped up pressure for Capitol Hill to strike a deal, and advocates for its passage hope the relief provided by the HOPE Act can be included.

In fact they say it's imperative to prevent a tsunami of CMBS foreclosures and business closings that could further destabilize an already battered economy.

Protecting financial markets, jobs, and communities

In Taylor's announcement, Tom McGee, president and CEO of the International Council of Shopping Centers, said, "Due to unexpected loss of revenue and rent, many shopping center owners are facing the challenge of paying debt obligations with impaired cash flow. Without federal liquidity assistance, we are looking at unnecessary damage to financial markets, increased unemployment and irreparable harm to communities across the country."

The Asian American Hotel Owners Association (AAHOA) says its membership of more than 19,500 own nearly half of the hotels in the United States and that many of those members use CMBS loans.

"This crisis hit them hard, and there is no other relief for them," said the organization's president and CEO, Cecil Staton. "Those with CMBS loans must clear numerous hurdles just to begin a conversation about forbearance with a special loan servicer."

"If we are to see the millions of jobs the hospitality industry creates recover from this crisis, these businesses need to come out on the other side. The HOPE Act can help make that reality more likely," Staton said.

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