- Due to the Covid-19 pandemic, we have seen many significant changes in the mortgage industry that will have an impact on how you conduct business moving forward. With underwriting guidelines and loan programs changing, we will all be living and operating in a plain vanilla loan world for the foreseeable future. A strong down payment, strong credit scores, documentable income, and strong post-closing liquidity, also known as reserves, will be necessary.
- We have also seen the collapse of the non-traditional mortgage market, also known as Non-QM loans, that provide programs such as: bank statement loans, asset depletion loans, and other specialty loans. We caution all of our partner agents to take into consideration who the lender and investor is when representing a buyer or reviewing offers.
- We have started to see underwriting guideline updates to Conventional, FHA, VA, and other government backed loans to be more conservative.
- Keep in mind that before the pandemic, home sales hit their highest point in 13 years. In early March, mortgage rates hit historic lows boding well for home-buying in 2020. We can expect the Feds will do anything that is needed to promote and stimulate a strong housing market. We are hopeful for a V shaped recovery where we have a steep decline followed by a sharp and robust recovery. This may seem like the Great Recession of 2008, but remember that in 2008, we had a financial crisis. Today, we are dealing with a health crisis: two very distinct catalysts. Well capitalized mortgage lenders will continue to thrive post Covid-19 with an anticipated low interest rate market.
Forbearance Is NOT Forgiveness
There is an important message for clients who are experiencing hardship and are in need of assistance. If you are in need of a forbearance because you have no other options, please contact your servicer to obtain information regarding The Cares Act and other mortgage relief programs. The intention of The Cares Act is to assist homeowners who have a true hardship. Most importantly, it’s unclear what exactly is being done with the differed payments and what impact it will have on your mortgage moving forward. Also remaining unclear, is the impact a forbearance will have on the ability to borrow in the future, whether it be a refinance or purchase. We expect additional information on this in the coming months.