04/01/2020
Here is an update on next meeting and my newsletter, blog, video podcast, tons of guest vloggers and bloggers as well. Super useful in these concerning times:
Subject Line: This too will pass, important video links from numerous experts, a must read!
Reno Real Estate Investors Group
Special Newsletter re; these current times, please take a look at this whole newsletter to inform you (next meeting is 6/2/20)
I have spent a lot of time putting this newsletter together and just when I am ready to send it, something else changes so please take the time to at least scroll down and cherry pick what may help you. A good trick with videos is just reduce screen and keep multitasking. (I am out of the N95 masks I handed out at the last meeting BTW)
Message from Ron
Mortgage interest rates, changes etc in video and text
CNBC frequent guest and trusted friend Louis Navellier on stocks, treasury's, rates and real estate
Cary Crites and Ron Bell creative real estate and exchanging podcast
SBA immediate CARE loans for Realtor's, Investor's and 1099 people
Legal information on tenant laws in Nevada (subject to change)
Incredible wild ride mortgage blog at the bottom!
The important thing is to be looking and planning ahead! "Invest in the future, not today". I think in Reno area since it is not as dense and our statewide measures, we may not be as affected so don't freak out but take this very serious!
Don't get hung up on the stock market if you are mostly a Real Estate Investor except the 10 year treasury of which is pontificated in Aaron's video below. The stock market has and will continue to be volatile, the Dow is weighted by some of the heaviest hit so watch the S & P for a broader perspective.
Plan ahead and get liquid so you go into this with your powder dry! Start looking now and familiarize yourself with prices sou know a good deal when you see it. Be careful not to catch a falling knife though so buy calculated and average into the real estate investment market so you hopefully are invested for the upcoming rebound. This is a great time to buy a primary residence and I would not gamble on missing low rates and more willing sellers BTW!
We have a mortgage holiday for many of us so confirm with your lender to make sure it is okay and no credit reporting etc. If your tenants find out you are not paying mortgage, guess what they may stop paying? Do whatever you can to maintain good tenants through this. Bad ones may be tough if you can't evict them so be prepared with cash for keys and cut your losses if possible as they may take advantage of the new tenant no eviction laws.
Income property buyer's may have some good entry points after the 2020 rent rolls if rent gets compromised or lowered which may effect their cap rates/prices. Still no news on 1031 time frame extensions according to Kandas Myer's last video update. New homes at good prices are worth a look. For a measly $5,000. (which you may or may not lose depending on builder if you bail) you can tie one up and if they keep going down, renegotiate or bail, watch overbuilt areas though. We may be back to 1,000% returns if the new homes go up $50000. which may be possible in an election year/low rates and when we get this virus behind us.
Here is my video on investing in corona virus et al crisis times:
https://youtu.be/2UmlcTQ9e6k
Angela Parker Doorway Homes Loans [email protected] on interest rates and the market:
https://youtu.be/TLsaa4gjHvE
Two videos from Aaron Dehart Mortgage Broker 379-5012:
This one explains the wild rate ride the last two weeks: https://www.facebook.com/AaronDeHartMortgage/videos/278614093142923 .
Aaron's other video will help you understand how mortgage rates work.
http://bit.ly/2vzNJw8
Louie Navellier on the stock market, real estate, corona virus etc. 3/30/20: https://vimeo.com/401070585
Louie on another bullish day last week:
https://navellier.com/wp-content/uploads/2020/03/Market-Podcast-March-25-2020.m4a
Louie on a bearish day last week:
https://navellier.com/wp-content/uploads/2020/03/Market-Podcast-March-19-2020.m4a
Ron Bell with Cary Crites video podcast:
https://youtu.be/S96dr_QZiZk
Creative Real Estate Investing, Real Estate Exchange, Owner Finance Lease Option Real Estate Podcast
Ron Bell Coldwell Banker Select Reno NV. 775-750-5256 email: [email protected] Website: www.ronbellrealtor.com Opinions are of Ron Bell's, are not l...
youtu.be
You may qualify for the SBA disaster loan:
https://covid19relief.sba.gov/ #/
SBA - Disaster Loan Assistance
Federal Disaster Loans for Businesses, Private Non-profits, Homeowners and Renters
covid19relief.sba.gov DownloadtheGuide Apply
John Spinola's email forward; This was sent by Chris DeMay regarding Tenant & landlord rent loss legal questions.
From: Chris DeMay
Date: Fri, Mar 27, 2020 at 11:24 AM
Subject: Good Legal Questions answered for Landlords, Lenders - Prepared by Lewis Roca Rothgerber Christie law firm:
There are many perspectives on our current situation so I’m forwarding research that might offer insight as I receive it. Not necessarily our position on any subject but worth a read.
Prepared by Lewis Roca Rothgerber Christie:
Tenants Face Questions and Landlords Face Rent Losses During COVID-19 Pandemi. The COVID-19 pandemic has sent shock waves through the business world. Throughout the country, retailers and restaurants have been forced to close or dramatically limit services. In many cases, these changes have been ordered by state or local governments, which are requiring residents to shelter in place or requiring all non-essential businesses to cease operations. In other cases, businesses are simply closing due to lack of demand, employee issues or financial limitations. This rapidly changing landscape has resulted in many questions among tenants (some of whose businesses are closed) and landlords facing rent losses. This client alert highlights some of the issues and options.
Rent Concessions or Restructures
In many cases, both landlords and tenants will benefit from arrangements that provide temporary rent concessions, deferral, or restructuring. Landlords do not want spaces to remain vacant for any longer than necessary, and allowing existing tenants to reopen – even at reduced or restructured rent – is likely better for business than any alternatives. And of course, tenants want to keep their businesses open and operating, but to remain viable will need some rent relief. The key to obtaining rent concessions or the restructuring of a lease is early, constant, and honest communication between tenants and landlords, as such concessions and restructuring are generally not required under leases.
Force Majeure
Many commercial leases contain a force majeureclause. Such clauses generally excuse performance of certain obligations upon occurrence of enumerated conditions. Importantly, the mere inability to pay rent is likely not considered a force majeure. If the force majeure clause in a lease contemplates a pandemic, government restrictions on business operations, or has broad general language, it may relieve the tenant of the obligation to continuously operate or maintain the property in particular ways. It may also, depending upon the language in the particular lease, permit either the landlord or tenant to terminate if force majeure is applicable for an extended period of time. Landlords and tenants that may wish to exercise rights under a force majeure clause should carefully review that clause and ensure that all notice and other requirements are followed precisely. Courts have previously held that failure to do so can waive the right to rely on the force majeure clause.
Casualty Clauses
A casualty clause generally provides tenants and landlords the option to terminate, or requires a landlord to provide the tenant with rent abatement, in the event that the property is substantially damaged. Although a tenant’s ability to operate its businesses has been disrupted by the pandemic, a casualty clause is often drafted to explicitly cover fire, floods, explosions, or similar occurrences that degrade the physical or structural integrity of the premises. Casualty clauses that are this explicit often do not address circumstances where tenants cannot use leased space that remains physically available (including as a result of a communicable disease).
Insurance Provisions
To the extent insurance is required by the landlord, tenant, or both under a commercial lease, it is important to understand, based on the language of your particular contract, which party’s insurance is triggered by closures or disruptions arising from COVID-19 — the landlord’s insurance, the tenant’s insurance or both policies. Owners or tenants of restaurant spaces may be more likely to have business interruption or contingent businesses interruption coverage based on infectious disease than owners and tenants of other types of retail spaces. But be wary of exclusions from coverage that may be included in any such policy. In the event that you do have applicable insurance coverage, expect delays in collecting funds based upon anticipated increases in time for processing claims.
Monetary Default Provisions
If tenants unilaterally elect not to pay rent based upon a theory arising from any clause in their lease or otherwise, most landlords have the right to deliver a notice of monetary default. This notice will require tenants to cure the default quickly. If tenants fail to cure the default, landlords in many instances will have the right to accelerate all lease payments with possible immediate recourse to guarantors and/or letters of credit. Tenants should be aware of the risks associated with the decision not to pay rent.
Co-Tenancy Provisions
Some leases provide tenants with certain rights, such as rent reduction, if the shopping center exceeds a certain vacancy rate. These provisions are generally known as co-tenancy provisions. The closure of businesses as a result of COVID-19 could lead some tenants to try to exercise their rights under such provisions. The availability of such rights will depend on the lease language.
Continuous Operation Clauses
Many leases require tenants to operate their business continuously, or they permit closures only for limited periods of time. If COVID-19 or associated governmental restrictions necessitate extended closures, many landlords and tenants may find that these provisions have been violated. It is important for both landlords and tenants to plan ahead for this possibility and consider whether to negotiate accommodations.
Landlords and tenants are likely to take different positions about lease terms’ meanings and potential litigation. And every lease is different, so solutions may differ from lease to lease. In considering the appropriate course of action, parties should assess the inevitable delay given that courts are likely not able to redress conflicts in the short term. Working together to keep leases in place and employees employed, even where the government has required local businesses to stop operating, may be the best method to minimize the damage to all parties during this time of crisis. Effective communication between the parties will be a key component to the success of both landlords and tenants.
As landlords and tenants continue to face these and other issues arising out of the COVID-19 pandemic, the experienced landlord/tenant and workout attorneys at Lewis Roca Rothgerber Christie are here to help.
As issues surrounding COVID-19 are fluid and rapidly changing, the information in this alert should not be construed as legal advice. It is intended to provide information as it is currently available.
Mortgage blog provided by Trish Kirsch at Guild
From: Trish Kirsch
Sent: Tuesday, March 31, 2020 10:00 AM
To: [email protected]
Subject: A wrap up on last week's Insanity - 3/30/2020 Lending Update
Last week was the craziest week in the mortgage business in the last 12 years.
Here’s a recap of what’s occurred:
Mortgage investors are so spooked out by cities and businesses shutting and the thought of 20% unemployment that they completely abandoned the mortgage market. Mortgage rates went skyrocketing from an all-time low into the mid 4’s in just a few days.
The Fed said, “don’t worry… we will buy all the mortgages like we did in 2008.” Rates then came crashing back down into the low to mid 3’s….in one incredible day.
Fannie and Freddie announced they would allow borrowers to reduce or defer up to 12 mortgage payments with no credit hit. They obviously don’t want a foreclosure or short sale crisis like 2008. Call your mortgage company for details.
Fannie and Freddie acknowledged that appraisers may be freaked out going into stranger’s homes so they made it so they don’t necessarily have to physically inspect the property. They now allow for desktop and drive-by appraisals on some transactions. Mostly owner occupied purchases but some second homes and investment homes too.
The IRS extended the tax deadline to July 15 but then shut down their offices making tax transcripts very challenging to obtain. Lenders must now use alternatives.
Fannie and Freddie told lenders to start being way more cautious. Confirm employment on, or very near, the day of funding, don’t trust dated documents, make 100% sure the borrower has the ability to repay the loan for the next few years and make sure again at closing. Do not fund loans where you have any doubt even if that means denying loans on closing day.
Congress gave Americans $2 trillion in relief to help get us through the coming weeks or months.
The jumbo loan market completely melted down. Those loans will be very hard to get going forward and will take way longer to close. Those loans are not backed by the government. Talk to your lender about alternatives.
The non QM market (bank statement loans and alternative doc loans) completely melted down and those loans have nearly all disappeared going forward. Those loans are not backed by the government.
Nearly every lender offering down payment assistance programs suspended these products.
Lots of lenders had to make very difficult decline calls to crying borrowers this week…some who were at the closing table ready to sign. Just awful.
FHA and VA loans are struggling for survival. They will make it but with massive changes. Some lenders shut them down. Some Lenders raised credit scores and raised interest rates to limit risk.
The good news is Guild still does both FHA and VA. We only raised our credit score requirement from 580 to 600, not to 640+ like nearly every other lender.
Not all lenders will make it through this. Some may not make it through next week. Quicken, the nation’s biggest lender, is rumored to have alerted the government that they may need help to survive.
It pays to be a 60-year old company, like Guild, the oldest government lender in the nation, a company that sells directly to Fannie, Freddie and Ginnie and a company that survived 2008 while not taking unnecessary risk.
Let’s hope this week is way less eventful, and less stressful, than this one.
An agent partner/friend of mine and I were talking this morning about today’s crisis vs. the one in 2008.
I said “In this crisis we were driving down the freeway at 75 mph and now we have to stop and wait as there’s a 25-car accident pile up ahead. Once it clears, we’ll get going again. In 2008, we were driving down the same freeway at 75 mph and the entire freeway collapsed.”
Hang in there. Be patient. Make take a few months but there’s light at the end of this tunnel.
Last Weeks Market Overview
Today is a significant market day with the announcement that Congress has reached an agreement on the stimulus bill. The stock markets are up over 4% in value and MBS bonds are mostly flat to yesterday as the markets seek to digest the full impact of the bill. The 10-year is currently yielding 0.848 percent.
Bottom-line. Mortgage rates should be getting better, but this will not be immediate as described in the market details below.
Mortgage Market Details recap last week (courtesy of Guild Mortgage)
Here are the four key forces driving the markets today:
Stimulus Bill.
After a contentious, bi-partisan debate, the US Senate has reached preliminary agreement on a $2 trillion stimulus bill to help the US economy get through the negative impact of the COVID-19 virus. The bill still needs to through final Senate approval, then House approval, and there could be some final reconciliation between the Senate and House versions before it goes to President Trump to be signed.
The bill is over 1,000 pages long and the full details have not yet been released. The markets expect that the bill will provide $250 billion for direct payments to individuals, $350 billion to small businesses, $250 billion for unemployment insurance, and $500 billion for loans to distressed companies. One early concern is that the bill will significantly increase the amount of unemployment insurance a person can receive. This is good news for a person who has lost their job, but many hourly paid workers would earn more from the unemployment insurance than if they went back to work, so this would undercut efforts to get the US economy back up and running.
Bottomline – No final deal is yet official and the timing and final contents of the stimulus package may still change. The impact to the market will not be clear until the final bill is approved, and all details are released. In general this will be good news for the stock markets and should keep an upwards pressure on stock prices. In a normal market, improving stock prices will push down bond prices and thus push up interest rates. However, because of the Fed’s previous commitments to buy MBS, we should see a short term market where both stock and MBS bond prices are improving at the same time.
Fed Buying of MBS and US Treasuries.
The Federal Reserve has stepped up their commitment to buy MBS and US Treasury bonds, moving from last week’s position of only buying a specific amount of bonds, to now saying they will buy whatever amount of bonds will be necessary to support the US economy until we get through the COVID-19 virus. The markets interpreted this as a significant step to lower interest rates. The markets are still digesting what types of MBS the Fed will and will not buy, and at what price levels, so it will take several trading days for the Fed and the markets to have a clear mutual understanding of the full scope of the Fed’s daily buying patterns.
Bottomline – The Fed’s announcement is very good news for mortgage rates, however, in the short term this created more volatility in the markets as existing MBS buyers and sellers seek to understand exactly what the Fed’s buying appetite will be. It will take several trading days for the markets to fully adjust to the impact of the Fed’s new buying activity.
Market Volatility
The stock and bond markets seek to take in all known existing data and all expectations of forecasted future data to determine what today’s market price should be for a given stock or bond. The capital markets are very efficient in how they price in all known facts, but are not efficient in how they analyze rapidly changing and unknown future expectations. Every day when we see large up and down moves in stock and bond prices, this is telling us that the markets still have not yet figured out what the actual impact of the COVID-19 virus will be to the US and world economies. Everyone knows there will be a significant impact to the US economy, but the key question is has the stock market sell off in the last several weeks been too much or not enough to price in the actual impact to US economy once this is fully known?
On many days MBS prices may change by 1.00 point or more within ten minutes. This extreme volatility makes it very difficult for the mortgage industry to price and manage rate sheets to offer a rate lock to a borrower, when the market may not be there a few minutes later for the lender to sell the loan into. Additionally a borrower’s ability keep a rate lock only if the market moves in their favor and walk away or renegotiate if the market moves the other direction also adds significant costs to the mortgage industry. The ideal scenario for the mortgage industry and borrowers is to have low market volatility and bond prices to consistently move in one direction as the overall economy is expanding or contracting. This lowers the friction costs in the system and gives borrower the most efficient cost to lock their loans.
Market Disruption to Mortgage Lenders and Investors
The extreme volatility in the markets has caused major disruptions to the mortgage market in the past few days:
Non QM-Mortgage Market Evaporation. Non-QM mortgages are loans which do not meet all of the requirements of the CFPB’s Qualified Mortgage rule. These are generally loans that have credit parameters outside of what Fannie Mae or Freddie Mac allow, and may include jumbos with DTI’s over 43.0%. The investors who offer these loans bundle them up and sell them into private label (PLS) securities. This week the PLS market completely dried up, and there is nowhere for these investors to sell Non-QM loans, so this week every Non-QM lender ceased their operations, and in some cases, lenders had no advance notice and were stuck with funded loans that they can no longer sell to any market investor.
Margin Calls. When mortgage lenders offer rate locks to borrowers, they typically sell MBS for forward settlement 60 days later to cover the rate lock made to a borrower. If bond prices then improve by 2.00 points, the lender who sold the MBS can be required to send an immediate funds wire of 2.00 points to the Wall Street dealer who they did the MBS trade with. This contractual requirement is called a “margin call”. Any lender who is offering borrower rate locks and using MBS trades to hedge their position has received multiple margin calls from their dealers in the past few weeks.
Rate Lock Renegotiations. If a borrower threatens to break their existing rate lock commitment or walk away, which causes their lender to renegotiate any price improvement, this is a cost the lender has to eat, since secondary market investors do not allow float downs.
Direct Fannie Mae, Freddie Mac or Ginnie Mae access. Many mortgage lenders do not have the ability to sell loans directly to one of the agencies. They must rely upon an intermediary to allow them to deliver directly under what the industry calls a “co-issue” structure. As a result of market volatility, most all co-issue entities stopped doing business this week. This has deprived many mortgage lenders of the ability to sell loans directly to one of the agencies.
Bottomline. Many mortgage lenders took significant hits this week. Many were stuck with Non QM loans that they had already funded, but their investors shut down without buying them, and there are few if any other investors anywhere willing to buy these loans, so they are taking large losses. Many lenders had margin calls from their Wall Street dealers that either depleted their operating cash or they simply failed to make their margin call, putting them in default on their trading line agreement and then also triggering defaults on their warehouse lines. Also many lender this week lost their access to Fannie Mae, Freddie Mac or Ginnie Mae as the co-issue market entirely shut down this week. For some of these lenders this may also result in a reduction or withdrawal of their warehouse lines.
Hang in there! From Trish Kirsch
Remember; as an Investor; you are not investing in the past or present but the future so watch your areas and types.
Thank you,
Ron Bell
[email protected]
[email protected]
775-750-5256
Videos:
10 Do's & Don'ts to Get Started in Mobile Home Investing
How to Use Pending Comps When Analyzing Deals
Articles:
3 Real Estate Networking Resolutions To Set For 2017
Driving for Dollars Important For Wholesaling Houses
Blog Posts:
How to Operate in All 3 Parts of the Single Family Triad
Rental Property Cash Flow Investor Tips
Secrets Of Wealth – Setting Personal Goals & Objectives For 2017
http://www.youtube.com/reiclub
http://www.facebook.com/reiclub
http://www.twitter.com/reiclub
Invite your Power Team: Realtor, Banker, Escrow Officer, Insurance Agent, Property Manager, Investors, Friends, Family, and Associates. Absolutely anyone that will benefit from this information. DONATION: $10.00
Comments are economic in nature, not real estate advice and do not reflect Coldwell Banker Select or any sponsor's or affiliate's of Real Estate Investor's Club
follow on Twitter | friend on Facebook | forward to a friend
Copyright © 2020 Coldwell Banker Select, All rights reserved.
Signed up for the Reno Real Estate Investors Club
The latest Tweets from REIClub (). Real estate investing site for creative real estate investors! https://t.co/0KUkDaW1Gd
