March 30, 2020
WOW – What Year the last two weeks have been!
Conversation Advancer:
We are (I am) here to help. What do you need? Good Write-ups (thanks Roberta) about Mortgages in this the Great Pause:
FRIDAY NUGGET: “INSANITY WEEK WRAP-UP” Today will end 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 as 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. Title companies tried to slip in a waiver to give themselves an out for virus issues. Lenders said “uh, no,” but provided other ways to protect the collateral. 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 down payment assistance program in the nation was suspended. 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. Congress may need to step in and rumor is they will. Many raised our credit score requirements from 580 to 640+. 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. Let’s hope next week is way less eventful and less stressful, than this one. As I posted earlier, 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.”
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