An Update from HouseAmerica Financial – 03/23/2020
First and foremost, we hope this message finds you and your loved ones in good health. Without a doubt we are all living through unprecedented times but as one writer wrote in his article that I read over the weekend, “The big picture is that we’re Americans, we’ve overcome countless disasters before, and we’ll all get through this.”
We will continue to provide ongoing updates as they are made available to us by Fannie Mae, Freddie Mac, and other investors and warehouse banks. Last week’s turbulent and volatile conditions have continued to spill over to this week as the equity markets are having extreme swings this morning. And the bond market is too trading in a volatile fashion, all due to the uncertainty with respect to the Coronavirus and its impact on the global financial markets.
Some notable events from last week:
- Mortgage rates: interest rates spiked for all conforming loans surpassing pre-Coronavirus levels. Uncertainty, concern over liquidity, and fears over unemployment rates that could perhaps reach 20% contributed to the jump in mortgage rates.
- non-QM mortgage market: the market for non-QM mortgages (bank statement loans, reduced documentation loans, VOE loans, investor cash flow loans, etc) practically came to a screeching halt on Thursday due to concerns over how borrowers who were obtaining loans without fully documenting their income, would continue to have the ability to repay. This was a typical correspondence from non-QM lenders: “… we are temporarily suspending all new lending activity in order to determine the appropriate products and programs for our customers moving forward. We appreciate your patience during this challenging time, as these steps are necessary to restoring stability to an otherwise unstable Non-QM lending environment”
- Mortgage Relief measures: HUD extended an automatic moratorium on foreclosures and evictions on single-family properties with FHA or reverse mortgage loans. Please note, however, that HUD does NOT have authority over offering temporary payment forbearance – that authority lies with individual loan servicing companies.
- Failure in Congress to pass a stimulus package this weekend: the much-anticipated stimulus package did not pass over the weekend for several reasons including restrictions on corporate bailouts and the scope of assistance to state and local governments. There will be another attempt today to reach an agreement.
Looking forward to this week, we are awaiting continued guidance on several topics from the Fannie Mae and Freddie Mac regarding underwriting guidelines to clarify documentation timing requirements for income, assets, collateral, and verbal verification of employment (verbal VOE) requirements. As of a few moments ago, we have received some guidance from Fannie Mae on temporary verification of employment procedures as well as appraisals. Fannie Mae emphasizes that “We are releasing information to our customers as quickly as possible and will update and republish this Lender Letter as new guidance becomes available.”
Regarding verbal verification of employment, Fannie Mae is “offering flexibilities related to the lender’s process for obtaining the verbal verification of employment.” Details are forthcoming but it is encouraging, to say the least, that we are seeing flexibility from the agencies.
As it relates to appraisals, Fannie Mae states “During this COVID-19 national emergency, in many cases lenders are unable to obtain an appraisal based on a full interior and exterior inspection of the subject property. In response, we are allowing temporary flexibilities to our appraisal requirements.” The Lender Letter from Fannie Mae addresses several procedures including but not limited to the following:
- Temporary appraisal requirement flexibilities: allowing exterior-only inspection appraisals or desktop appraisals.
- Desktop appraisals: allowing for purchase transactions when an interior and exterior appraisal is not available.
- Exterior-only inspection appraisals: allowing for purchase and refinances of Fannie Mae-owned loans.
- Revisions to the scope of work, statements of assumptions and limited conditions, and appraiser’s certifications: requiring modified language to be used with exterior-only and desktop appraisals.
- Additional form instructions for appraisals: requiring identification of “exterior” or “desktop” on the interior and exterior reports.
Updating our borrowers and business partners with timely and accurate information remains a key goal for us. As more news flows from the agencies and non-conforming investors, we will pass them along as quickly as possible.
In the meanwhile, please note that we are open for business. California has ruled that the finance sector (including mortgage companies) are essential and therefore we continue to move forward with our business with the utmost attention to the safety and well-being of our employees. Accordingly, the majority of our staff has been deployed to work from their home as a precautionary measure and I am pleased to report that we have realized a very efficient and effective output from our staff.
Please do not hesitate to reach out to your HouseAmerica mortgage advisor for any further questions or concerns and as always, we appreciate your continued trust in all of us here at HouseAmerica Financial during these challenging times.
HouseAmerica Financial – President