Sign Montana Banking Forbearance Agreement Safe

Industry sign banking montana forbearance agreement fast

welcome to the real estate espresso podcast your morning shot of what's new in the world of real estate investing I'm your host Victor man - the world is about to embark upon the largest economic experiment in history they have no choice really now in a Formula One race the yellow flag comes out when there's a problem on the track and the race is temporarily suspended my cars continue to circle around the track the speed is reduced to a safe speed and it's impossible to make forward progress meaning you're not allowed to pass anyone yes you can still be burning fuel the race is kind of temporarily suspended never before have governments try to put swathes of the economy into an induced coma hoping to gradually awaken them when things get better there is no yellow flag built into our economic system one of the biggest impediments the yellow flag is debt debt service appears as a fixed cost regardless of the level of business underway but of course the debt was procured with an assumed underlying level of business who was never an assumption that business would stop altogether or in fact that loan payments could stop on a large scale on today's show we're talking about whether you should take advantage of the loan payment holidays that some lenders might offer the fact is we don't know the scope of the kovat 19 problem we don't know if this period of social isolation is going to last weeks months or years we already know that many countries have been shut down for months and if a lender is offering you a payment holiday or perhaps an interest holiday they will ask you to sign a document called a forbearance agreement and a mortgage forbearance agreement is an agreement made between the lender and a borrower in which lender agrees not to exercise its legal right to foreclose on a mortgage and the borrower agrees to bring the long current on their payments the corona virus outbreak has triggered forbearance help from Fannie Mae and Freddie Mac which between them guarantee about two-thirds of all mortgages in the US and 95% of mortgage-backed securities which is why the Federal Reserve is buying all these mortgage-backed securities there are basically two methods to deal with a change in a loan payment number one is a loan forbearance agreement or number two a loan modification agreement the thing to remember is that we're only a few weeks into a pandemic of unknown scope and duration if you approach your lender now banks only are the tools that have been made available to the government and the central bank much of the economic stimulus was based on the assumption of a short-term situation let's put this in perspective the u.s. is spending 2 trillion in stimulus which is a huge amount of money but on a per capita basis if it was spread evenly only amounts to about $6,000 per person in the country when you remove a large amount that's being pledged to service corporate debt for industries and that represent national security the amount remaining isn't that much a report in The Wall Street Journal today suggests that we're expecting to see a contraction of about 30 percent in GDP in the second quarter and that the stimulus would cut that reduction in half or about 17 percent reduction in GDP it's highly likely that additional stimulus programs will be forthcoming as the breadth of the damage becomes visible now while I haven't seen the language of forbearance agreements directly what I'm hearing from investors that I've spoken with is that the terms of these agreements are pretty draconian as more stimulus becomes available in the coming weeks I expect that the terms of the forbearance agreements will become more generous and if you have the financial strength to survive a few more weeks you may get a more generous relief package and a more lenient forbearance agreement either in terms of terms or duration this is a fast-moving situation there are other programs that may apply for your business that you might want to consider first for example there are forgivable loans that are available in the US through the Small Business Administration program that you can access through any bank that participates in the SBA program under the recently passed cares Act the loans can be for as much as two and a half times payroll or ten million dollars whichever is less payments can be deferred up to a year and businesses will be able to apply for forgiveness on the loan or a portion of it based on the amount used during the eight weeks following the loan approval any amount not forgiven would have a maximum interest rate of 4% in Canada there are programs available through the Business Development Bank of Canada and in the UK employers can claim for 80 percent of furloughed employees their usual monthly wage costs up to 2,500 pounds a month plus the associated employer National Insurance Contributions employers can use this game during the period so my recommendation is to look at some of the other programs first a lender is likely to sign a single forbearance agreement but not two or three of them this is particularly important if this economic downturn gets extended beyond the initial number of weeks the governments around the world have been projecting as you think about that have an awesome rest of your day go make some great things happen I'll talk to you again tomorrow [Music]