Coronavirus Lending Update 03/23/2020

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
We've seen a lot happen over the period of time this pandemic has started and today was another one of those days.

Here are your latest updates:
MORTGAGE RATES: The Fed announced this morning that they will purchase as much US debt as necessary to stabilize the economy. This will include buying lots of mortgage debt, which should help keep mortgage rates low for some time.

PAYMENT DEFERMENT: Fannie Mae and Freddie Mac plans to initiate a mortgage forbearance program allowing some borrowers relief of up to 12 months of mortgage payments. The plan will reduce, or delay payments, and will depend on the borrower's loss of income during the COVID 19 outbreak. Important to note that this does not eliminate the debt payments. It only defers them. Borrowers should continue to make their usual payments until granted the relief. This plan will not affect the borrower’s credit. Do not stop making payments!! For more information, contact your current lender.

APPRAISALS: Fannie and Freddie are changing the requirements for physical inspections for some appraisals. If an appraiser cannot go inside the home, for any reason, they will allow desktop and exterior-only appraisals on primary residence purchases and second homes/investment purchases with 15% down or more

VERIFICATION OF EMPLOYMENT: Fannie Mae and Freddie Mac came out with guidelines today that allow for more flexibility and alternatives in verifying employment for customers whose workplaces are temporarily closed. They also allowed for some flexibility for those on leave but did caution lenders to use their best judgement when making loan decisions to ensure the borrower clearly has the ability to repay the loan.

CONGRESS STIMULUS AND RELIEF BILL: Congress is currently in a stalemate over the administration's proposed stimulus plan. Democrats don’t believe it has enough direct funding for relief of workers. Some economists have said it’s also not substantial enough, despite being over $1 trillion. Although it’s expect they will find common ground very soon, maybe even later today, this debate will continue to affect markets.

NON QM AND JUMBO LOANS: Due to extreme market volatility, most Non QM and, even some jumbo lenders, have suspended all loan applications, locks, closings and funding's at this time. Non QM loans are non-traditional loans like bank statement loans, no doc investment loans and some other asset based loans. These loans are not backed by Fannie Mae and Freddie Mac, nor the government, so loan investors have pulled the plug, or substantially raised the rates, out of economic uncertainty.

*IMPORTANT - During the mortgage meltdown of 2008, loan guidelines changed almost every single fay, for months, as loan investors tried to get their arms around the crisis. We are in a similar place right now. What's true today could be untrue tomorrow. We will be doing our best to update everyone with the most current information as it comes and confirm it*

From secondary markets:
This morning the Federal Reserve announced they will do open-ended treasury and MBS buying in the amount needed. In the announcement, the Fed will also now be able to support municipals, corporate and asset backed securities via lending facilities and open ended purchases. Think of this as QE unlimited, along with now being able to buy corporate, municipal and asset backed bonds. While the Fed came out with another round of stimulus, Congress failed to pass the coronavirus stimulus bill over the weekend, although work is being done today to get a bill completed. The latest estimates is that the bill may be $2 trillion in relief, while financial markets are worried that the delay in getting the bill signed and implemented will further damage the economy.

Markets are risk-off with the news of more Fed stimulus for the bond markets and the failure of Congress to have a stimulus bill completed. The additional stimulus from the Fed is showing for both the 10-year and MBS markets, as the 10 year is at 0.747% and the UM30 2.5% is up 51/32, while stocks are getting hit with the Dow down 288 points. That said, the volatility is still very high, I’m hoping that with the Fed’s QE we won’t be seeing so many dramatic swings intra-day and day over day in the MBS market. For data this week, we have New Home Sales on Tueday, Durable Goods Orders and FHFA Home Price Index on Wednesday, Initial Jobless Claims, Real GDP Advance International Trade on Thursday. Friday we have Personal Income, Consumer Spending, and University of Michigan Consumer Confidence. The report to watch this week is the initial jobless claims, as early reports are we may see over 2 million claims, which would be unprecedented.

Any questions on the above please give us a call here at LoanSafe - 800-779-4547 or [email protected]
 
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Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
How Does All This Impact Borrowers Directly?
  • Highly volatile rate market
  • Temporary layoffs or shut downs could make it more challenging for all borrowers to get approved
  • Government recording offices and third-party vendors shutting down will potentially affect borrowers being able to successfully close on the purchase loan of their new home
 

Jeffrey L. Shurtliff

LoanSafe Member
Dec 4, 2010
3,823
139
63
One of the major issues here is the price of homes. Four years ago I rented a house with option. The price of the house $155,000. two years later appraisal at $250,000. This is a house built in the 1970s. A $100,000 increase in two years is crazy. There has to be some kind of control to keep the cronies from profiting off of the people. People do not make enough money to keep paying these prices. I have saw the writing on the wall from my previous experience in the last real estate crash. Banks pushing HELOCS , credit cards. This is the crony part of the economy. As soon as the last tax cut was approved, I knew that a possible crash was coming. My 27 year repair business does not take debit or credit cards as I believe these card are the problem with this economy. There has to be some way to stablize home prices. This seems to be the problem with the whole economy and why we have problems every three or four years.
 

NewbieFed

LoanSafe Member
Jun 6, 2011
82
2
8
We've seen a lot happen over the period of time this pandemic has started and today was another one of those days.

Here are your latest updates:
MORTGAGE RATES: The Fed announced this morning that they will purchase as much US debt as necessary to stabilize the economy. This will include buying lots of mortgage debt, which should help keep mortgage rates low for some time.


Erik, does this purchase include non-secured investor loans like the investment pool (U.S. NATIONAL BANK ASSOCIATION TRUST SARM 2005-23?) that I am in? If so, does this mean us that have such loans will receive help?
 

Garry

LoanSafe Member
Aug 7, 2009
3,978
24
38
It sucks having one of those Fannie Mae loans. Maybe I'll get lucky this time and they'll just completely wipe it out.