Oro Valley Real Estate - Mortgage Market Update
COVID-19’S IMPACT ON THE MORTGAGE MARKET
I hope everyone is staying safe and healthy. I wanted to give you the latest intelligence we have concerning the mortgage market. The mortgage market, just like the brokerage market, is seeing changes on a minute-by-minute basis. Below are changes that you need to know.
County Bond Products – Despite some mis-information, bond products like Home Plus and Homebuyer’s Solutions are still funding loans. These products provide financial assistance towards a borrower’s down payment or closing costs when qualifying for a conventional, FHA, or VA loan. Assistance amounts vary from 3%-5% of the property sales price. Interest rates and specific assistance levels are subject to change. If your client is utilizing this program, it is best to stay in touch with your Lender.
FHA, VA and USDA – These loans are often, but not always, made to borrowers with lower credit scores or those with higher debt ratios, making these products a bit riskier for lenders. That risk level combined with the current legislation protecting borrowers by allowing forbearance for up to one year, has resulted in mortgage investors who typically buy these products either significantly cutting back or stopping purchasing completely. The loan products are still available, but they may be more difficult to close and will most likely come with higher interest rates than those offered just a few weeks ago. In some cases, these products will require payment of Origination/Discount points. This is changing on a daily basis so again, stay in touch with your Lender.
Appraisal Flexibility – Conventional (Fannie/Freddie), FHA, and VA have issued guideline updates that provide temporary flexibility due to the impact of COVID-19. Lenders must attempt to obtain a full traditional appraisal on all transactions. In situations where a full traditional appraisal cannot be obtained due to social distancing, shelter in place, or time constrains there are other options. Desktop or Exterior Only appraisals can be utilized to facilitate the closing of the transaction. Please consult with your Long Mortgage Consultant as this flexibility is transaction specific.
Jumbo Financing – There have been rumors going around that jumbo products are no longer available. This is not totally true. We have seen Niche investors exit the market. This means consumers who need jumbo products with a lower fico scores, lower down payment, or need to use alternative income documentation will be difficult to fund. Also, we received notice that some traditional investors are making the decision to no longer fund the traditional jumbo product as well. Things are changing rapidly, and we will keep you posted.
All loans currently through full approval process and underwriting will be closed provided that the borrower is still employed and not furloughed.
Most lenders have implemented a “day of closing” job verification. This means that lenders will conduct an employment verification the day of closing, where in the past this was done around two weeks prior to closing. This is important as sellers may get caught with a buyer unable to close on closing day should they lose their job.
This is a difficult time for all of us, buyers, sellers, lenders, closers and agents. Remember, this too shall pass.
These loan products will ultimately be reinstated once the market and unemployment stabilize or improves. Until then, communication is the key. Please visit https://www.orovalleyrealestate.com/Oro-Valley-Mortgage for More Help.