I have been watching videos of other investors in the US. Mainly the real estate investors who are greatly affected by the crisis, hoping to learn a few things or so on how to handle their investments when shit hits the fan. One investor said that the banks in the US are just pretending to help. Making it look like they are postponing the payments for mortgage but in fact, they are going to collect all the missed payments when all things settle down.
In other words, if they said that its ok not to pay your mortgage this April, and you felt grateful, you will pay twice in May. They only delayed the inevitable. And made it look like they are the good guys looking after the people.
I thought to myself, “well, that won’t happen in the Philippines. We have the Bayanihan Act of 2020. We are in this together. The banks are honest and looks after the wellness of people. Right? Right?”
Or so I thought…
1:00 PM today while taking our lunch, my wife’s phone rang. She answered it and gave the phone to me. She says its from the bank and I should talk to them.
I got on the phone.
“Hello? Who is this?”
“Hi sir, this is Coleen from the bank. Meron lang po kaming update tungkol sa mortgage nyo from us.”
“Ok. What about it?”
“Bali sir, we understood po the situation with regards sa COVID, kaya sir hindi po mag-aauto deduct yung account nyo para mabayaran yung mortgage nyo po.”
“Ah yes. I am aware. May nareceive akong text. That’s because of the Bayanihan Act right?”
“Yes sir. Pero sir, bali ang mangyayari po, kung mag-avail po kayo nung grace period [bayanihan act], bali hindi po mawawaive yung mortgage payments nyo. Mag-move lang po ng isang month yung end ng mortgage. So for example, mag end ng Aug 2035 ang loan nyo, magiging Sept 2035 dahil sa situation.”
“Ah ok. May paperwork pa ba if I avail of the grace period?”
“Wala naman po sir. Kaya lang, yung months na nagmove yung payment po, babayaran nyo parin po yung interest. May interest accrual po.”
“Ha? Eh di bale wala din pala yung Bayanihan Act na yan? Na-move lang tapos yung interest tumatakbo parin?”
“Yes sir. Sorry po sir. Pero ano po ba ang gusto nyo? I-move na lang po ba natin or …?”
“Ok. I’ll pay nalang yung due this month.”
“Ok po sir, I’ll send po further instructions by email.”
— end —
Though I know that paying the full amount of the mortgage at this time is a burden, and giving them the chance to move the payment to next month, I don’t think its fair to say that banks are doing their sacrifice to help alleviate the suffering of the people (they don’t). We still pay interest. And we still pay the mortgage.
Now compare that to real estate investors with properties who are actually waiving the rent payments to help. They offer the houses rent free at this time because of the Bayanihan Act.
Well, its just one of those things that value investors has to deal with. As investors we need to be prepared in this kind of situations. I’m not complaining that the dividends are still coming in every month. Nor will get angry if the dividends get suspended. So I guess, banks wanting their money when its raining is just fair game.
Making me believe that “Banks are your friend where they want to lend you an umbrella when its a fair weather. And take away the umbrella when its raining.”