This ARTICLE Is About COVID-19 Mortgage Guidelines Changes On Home Loans
COVID-19 Mortgage Guidelines Changes have created stress for borrowers with less than perfect credit. Many analysts and economists predicted a housing meltdown in 2020 due to the coronavirus pandemic. However, despite the unemployment rate of 10% and more than 50 million Americans filing for unemployment, the housing market, and mortgage markets are booming. The housing market is skyrocketing now more so than prior to the coronavirus pandemic outbreak. COVID-19 Mortgage Guidelines Changes include most lenders raising credit score requirements and making it tougher for borrowers with lower credit scores and bad credit to qualify for a mortgage. The entire non-QM lending industry went through major changes. Many non-QM lenders no longer offer home loans one day out of bankruptcy and/or foreclosure due to the shaky secondary mortgage bond markets. Gustan Cho Associates has never discontinued non-QM mortgages one day out of bankruptcy and foreclosure. Non-QM wholesale lenders have reopened their operations. Many have made changes to their product offerings while others have expanded their non-QM mortgage loan programs.
Stabilization Of The Secondary Mortgage Bond Markets
The good news is Gustan Cho Associates has not implemented any lender overlays during the coronavirus outbreak:
- Gustan Cho Associates still do not have any minimum credit score requirements on VA loans
- Gustan Cho Associates does not have any lender overlays on debt to income ratios on VA loans
- VA home mortgages do not have any maximum cap on DTI
- The minimum credit score on a 3.5% down payment home purchase FHA loan is 580 FICO
- Gustan Cho Associates still offer FHA loans with credit scores down to 500 FICO with an approve/eligible per automated underwriting system (AUS) with a 10% down payment
In this article, we will discuss and cover the COVID-19 Mortgage Guidelines Changes On Home Loans.
COVID-19 Mortgage Guidelines Changes On Home Loans And Impact On Borrowers
The coronavirus pandemic not only has changed the economic engine of the U.S. but has turned the mortgage markets upside down. The COVID-19 outbreak hit the nation without any warning with no one seeing what was coming. The coronavirus outbreak also has changed the U.S. mortgage industry. It nearly wiped off the non-QM lending markets. Specialty loan programs like FHA 203k loans, Reverse Mortgages, One-time FHA and VA Construction loans, manual underwriting, and low credit score loans have been shut down without notice. Millions of pre-approved borrowers with lower credit scores and bad credit had their pre-approval become null and void.
The coronavirus pandemic caused most lenders to increase their credit score requirements across the board due to fear the secondary mortgage bond market will not purchase loans of borrowers with lower credit scores.
The Panic On The Secondary Mortgage Bond Markets
Millions of borrowers with pre-approvals, conditional loan approvals, and clear to close had their approvals revoked after the coronavirus pandemic. All clear to close on non-QM home mortgages were revoked. This was because most non-QM lenders either went out of business and/or suspended their operations until further notice. 99% of mortgage companies have increased their minimum credit score lender overlays to 660 to 680 FICO on FHA and VA loans. This was due to the opinions and attitudes of the secondary mortgage bond markets. Investors of Mortgage-Backed Securities (MBS) considered any mortgages with under 700 credit score worthless and not worth the risk due to the coronavirus pandemic. The coronavirus pandemic also affects first-time home buyers. This is because most first-time homebuyers do not have established seasoned credit tradelines to have higher credit scores. Many workers have been temporarily laid off due to the pandemic.
Mortgage rates are at historic lows. Borrowers with high credit scores and solid income will not have any problems qualifying for a home mortgage during the coronavirus pandemic. Mortgage rates of a 30-year fixed-rate mortgage are now under 3.0% for prime borrowers. Mortgage rates of a 15-year fixed-rate mortgage are under 2.5% for prime borrowers. Borrowers with under 680 credit scores will have problems qualifying for government and conventional loans. However, Gustan Cho Associates has no lender overlays on government and conventional loans. To qualify for a home mortgage during the coronavirus pandemic with a lender with no lender overlays, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
