All Forum Posts by: Michael Masters

I owned a condo at 549 Columbus Ave which I lived in and then rented out from 2003-17.  This is just Northeast of Mass Ave near Wellington St.  When I sold it in 2017, I was looking to roll the money into an entire apartment building in the South End.  I found the cap rates were horrendous and eventually invested in the North End where better cap rates existed.  The South End was expensive as I was competing with families looking to convert apartment buildings back into single family homes.  Cap rates were like 2-3%, whereas the North End gave me around 4.5%.

If I were to buy southwest of Mass Ave, I would stick very close to Mass Ave and not venture too far away.  But consider other neighborhoods where the return is better.

Just as an FYI, I bought in central Boston to get a safe investment.  In the last two months, my 20 units in the North End have given me 100% of the rent due.

Applied 3/31 at 8am

Applied as sole proprietor

Got $1000 on 4/21

No other communication yet

FYI, this is from the FAQ I got from my loan servicer:

Can Borrowers participate in the SBA Loans, Economic Injury Disaster Loans (EIDL) or Paycheck Protection Program (PPP) while in forbearance?

Answer - Fannie Mae: Fannie Mae has said that it is still reviewing these programs. EIDL loans are likely to require consent as they will be secured debt. PPP loans may be available, but it is not guaranteed. Your Borrower will need to execute the Pre-Negotiation Letter and request the ability to obtain a PPP loan. Greystone would need to include that recommendation in its Covid-19 Forbearance risk memo and discuss with Fannie Mae for approval.

Answer - Freddie Mac SBL: Borrowers can pursue the Payroll Protection Program as it is unsecured debt, but cannot pursue EIDL with out Lender Consent for subordinate debt.

Answer - Freddie Mac Non-SBL: Borrowers cannot pursue the SBA Loans (EIDL or PPP) without first pursuing Lender Consent for subordinate debt

FYI, this is from the FAQ I got from my loan servicer:

Can Borrowers participate in the SBA Loans, Economic Injury Disaster Loans (EIDL) or Paycheck Protection Program (PPP) while in forbearance?

Answer - Fannie Mae:  Fannie Mae has said that it is still reviewing these programs. EIDL loans are likely to require consent as they will be secured debt. PPP loans may be available, but it is not guaranteed. Your Borrower will need to execute the Pre-Negotiation Letter and request the ability to obtain a PPP loan. Greystone would need to include that recommendation in its Covid-19 Forbearance risk memo and discuss with Fannie Mae for approval.

Answer - Freddie Mac SBL: Borrowers can pursue the Payroll Protection Program as it is unsecured debt, but cannot pursue EIDL with out Lender Consent for subordinate debt.

Answer - Freddie Mac Non-SBL: Borrowers cannot pursue the SBA Loans (EIDL or PPP) without first pursuing Lender Consent for subordinate debt

And while anyone with 10 or more employees gets the $10k, he didn't say you HAVE to have employees to get anything.  While not a bad assumption, it is an assumption.

If someone submitted an EIDL application during the last couple of weeks prior to passage of the CARES Act, can they still get the $10,000 advance? How do they go about doing so, since it’s part of the application?

SB: Yes, if someone applied for EIDL, they will be contacted by the SBA and made aware of the $10,000 advance and give them directions. They can go back into their EIDL application and apply for the advance. Even if you don’t get approved for EIDL, you can still get the $10,000 cash advance. Now whether you get the full $10,000 depends on the size of the business. If you have 10 or more employees, you will get it.

Another quote from Steve Bulger from the SBA is below.  Rate will likely be less than 3.75%.

Why does EIDL have a 3.75% interest rate when the Federal Reserve just lowered rates to almost zero?

SB: We have heard a lot about that from small businesses. This goes back to the law for emergency relief passed by Congress years ago. The rate for EIDL is set at the beginning of the quarter. So in January, the rate was 3.75%. Since then the Fed has lowered rates. We are waiting to see what the rates will be for the second quarter, but they should be lower based on that. I wish we could change it in real time, but by law we can’t.

https://www.bizjournals.com/ph...

 Thanks for the info.  What's your source of the $1,000 per employee?

Here's the back-and-forth with my loan servicer:

From Me:

The reason I am getting in touch is to find out about ability to get additional borrowing or to cut these payments back to interest only. I really don't need this money now but I'm worried about what COVID-19 could do to all of us landlords in the future. Cash flow could get tight if renters stop paying. I'd rather be ahead of the curve with getting prepared.

Original Response from Servicer:

Hello Mike – We understand the concerns you have regarding the COVID-19 virus and the effects it will surely have on our Borrowers. We are working closely with our investor partners, and have a meeting scheduled with them this Wednesday to discuss all options. In the past, we have seen Freddie Mac give forbearance to Borrowers who have been directly impacted by catastrophic events. I believe this will be what we see this time around as well. I will be able to provide you with more information after our meeting with them.

Since it is likely that this will get worse before it gets better, we are encouraging our Borrowers to increase their strategic reserves by creating a 1-2 month debt service reserve. Also, any large capital improvement projects might need to be shelved until the cashflow has stabilized. Thank you for reaching out and let me know if you have any questions. 

Second Response from Servicer following call with Freddie:

Hello Mike – As we discussed earlier, Greystone had a Call with Freddie Mac to discuss potential relief for our Borrowers who will be affected by the current events. The call was very productive, we voiced our concerns to Freddie Mac and they seemed to be responsive to some eventual concession for Borrowers. While nothing binding was received or laid out during this meeting, we do expect something official within the coming weeks. Unfortunately, not a lot that I can give you at this time as the situation is still very fluid, but I wanted to update you on where we stand currently. Once we receive something official, then I can let you know.

Below is what I've seen from Freddie Mac where I got my loan.  Please note that "borrowers are eligible for forbearance regardless of whether their property is owner occupied, a second home or an investment property."  Unfortunately this is only for single-family business, I own multi-family and have not heard yet what will be done for us.  Please share if you've heard anything from your lender.

Freddie Mac Announces Enhanced Relief for Borrowers Impacted by COVID-19

MCLEAN, Va., March 18, 2020 (GLOBE NEWSWIRE) -- (OTCQB: FMCC) today announced it is taking numerous actions to protect those affected, either directly or indirectly, by the novel coronavirus, known as COVID-19. Specifically, for its Single-Family business, the company announced a nationwide suspension of all foreclosure sales and evictions of borrowers living in homes owned by the company. It also announced a variety of additional mortgage relief options, including an expansion of its forbearance program, to incorporate additional impacted borrowers. The company also has reminded Servicers of its existing suite of mortgage relief options to assist borrowers, while also making additional disaster related loan modifications available.

These measures are effective immediately and apply to borrowers who are unable to make their mortgage payments due to a decline in income resulting from the impact of COVID-19, regardless of whether they have contracted the virus.

Forbearance plans provide borrowers with payment relief for up to 12-months and suspend borrower late charges and penalties. It also suspends reporting to credit bureaus of past due payments of borrowers who are in a forbearance plan as a result of hardships attributable to this national emergency.

“We are doing all we can to help those adversely impacted by the coronavirus, including by immediately suspending foreclosure sales and evictions during this challenging time,” said Donna Corley, executive vice president and head of Freddie Mac’s Single-Family business. “These eviction and foreclosure stoppages are just one part of the comprehensive assistance we’re providing borrowers to help protect our communities. We are also expanding relief available through our well-known forbearance programs, allowing us to reach the majority of affected borrowers as expeditiously as possible.”

Borrowers who may be experiencing financial challenges due to COVID-19 are strongly encouraged to contact their mortgage servicer – the company they send their monthly mortgage payments to – so they can explore one of the Freddie Mac workout options.

“We are committed to helping families affected by the virus and we are instructing Servicers to work with borrowers who are unable to make their mortgage payments to ensure they are evaluated for a forbearance plan or other appropriate assistance,” added Kevin Palmer, senior vice president of Single-Family portfolio management at Freddie Mac. “We ask that Servicers be responsive to potential requests for assistance from borrowers who may be impacted by COVID-19.”

Freddie Mac’s mortgage relief options for borrowers impacted by COVID-19 include:

• *Ensuring payment relief by providing borrowers forbearance for up to 12 months;
• *Waiving assessments of penalties or late fees against borrowers;
• *Suspending the reporting of delinquency related to forbearance, repayment or trial plans to credit bureaus; and
• *Allowing Servicers to offer borrowers additional loss mitigation options that are typically only enacted to address natural disasters. This includes loan modifications that give servicers options to provide payment relief or keep the payment the same post the forbearance period.
  

Borrowers are eligible for forbearance regardless of whether their property is owner occupied, a second home or an investment property.

The suspension of foreclosure sales and evictions is effective immediately and applies until May 17, 2020. If necessary, and at the direction of the Federal Housing Finance Agency, Freddie Mac may extend the suspension of evictions beyond May 17, 2020.

Freddie Mac has helped more than 1.3 million financially troubled borrowers avoid foreclosure since 2009. For more information on Freddie Mac mortgage relief, visit (SM).