Delays In The Mortgage Process Due To The COVID-19 Outbreak

This article covers The Delays In The Mortgage Process Due To The COVID-19 Outbreak

Delays In The Mortgage Process Due To The COVID-19 Outbreak is becoming a major problem in many areas where the housing market is booming.

• The housing market is booming throughout the nation
• The housing market is hotter now than it was prior to the coronavirus outbreak hit the United States
• Mortgage rates are at historic lows
• Mortgage rates on a 30-year fixed-rate mortgage are now under 3.0% for prime borrowers
• Never in the history of the U.S. has lenders been so busy as they are now
• Everyone, from support staff to licensed loan officers at Gustan Cho Associates, is working 12 plus hour days including weekends and holidays due to the overwhelming mortgage loan applications
• Many lenders have stopped altogether taking any more new loan applications due to the overwhelming capacity in volume
• Many borrowers are not getting return phone calls and correspondence timely which is frustrating them
• Home mortgages normally that took less than 30 days to close now have been extended to a 45 to 60-day closings
• Many mortgage companies take over 70 days to close a home loan
• There are floods of mortgage loan applications and not enough personnel to process all of these loans
• Lenders are having a historic business boom like never before in history

The Impact Of The Economy Due To The Coronavirus Outbreak

The coronavirus pandemic hit the United States like a category V hurricane.

• The whole country shut down
• The severity of the economic shutdown was up to the governors of each state
• The COVID-19 outbreak started in Hunan, China, and spread throughout the world
• The world economy was in shambles
• Over 50 million Americans applied for unemployment
• President Trump and his administration approved the coronavirus economic stimulus package which was in multiple phases
• The Dow Jones Industrial Averages tanked from a February 2020 high of 29,000 down to a low of under 18,000 in a matter of weeks
• Many experts feared another Great Recession and housing meltdown much worse than the 2008 financial crisis
• However, due to the fast actions of President Trump and his administration, the economy is better now than it was prior to the coronavirus outbreak
• The housing market is booming
• The Central Bank has lowered interest rates to zero
• Never in history were interest rates zero
• Mortgage rates are at historic record lows
• Today’s 30-year fixed-rate mortgages for prime borrowers is 2.96%. 15-year fixed-rate mortgages are now under 2.50%

All indications and data indicate mortgage rates will slide further lower.

Delays In The Mortgage Process Due To Changes In The Mortgage Industry

The coronavirus pandemic outbreak in the U.S. turned the mortgage markets upside down.

• Lenders panicked due to the secondary mortgage bond market
• Investors in the secondary mortgage bond markets halted buying mortgages from lower credit score borrowers
• Investors considered any mortgages with credit scores under 700  FICO as junk and had no appetite
• Due to the sudden change in risk tolerance of investors, most lenders increased minimum credit score requirements on FHA, VA, USDA, and Conventional loans
• Thousands of borrowers who were pre-approved with lower than 680 credit scores were left with a pre-approval letter that was null and void
• It is tough but not impossible to get qualified for a mortgage with a lender with no lender overlays
• Non-QM loans were halted until further notice
• Non-QM home mortgages were one of the most popular loan programs prior to the coronavirus pandemic
• Bank statement loans for self-employed borrowers were one of the most popular loan programs at Gustan Cho Associates
• Gustan Cho Associates recently just re-launched non-QM loans as well as the 12-month bank statement loan program for self-employed borrowers with no income tax returns
• The great news is that lenders with no lender overlays still exists
• Gustan Cho Associates is one of the very few national mortgage companies with no lender overlays
• Gustan Cho Associates has zero lender overlays on government and conventional loans during the coronavirus pandemic crisis
• However, due to the exploding demand from borrowers with lower credit scores and seeking a lender with no overlays, delays in the mortgage process is expected

The average loan closing that was 30 days from processing to closing was 45 to 60 days. Often times delays in the mortgage process were up to 90 days. However, as time passes, the turnaround times are getting better.

Delays In The Mortgage Process Due To The Skyrocketing Number Of Mortgage Loan Applications

The housing market is booming despite over 50 million Americans filing unemployment claims and a 10% unemployment rate. The Dow Jones Industrial Averages are almost back to 29,000, the all-time historic record high. More and more Americans are returning to work. The mortgage industry has never been as busy as it has been. Countless mortgage lenders have stopped taking new mortgage loan applications due to the explosive volume of borrowers applying. Mortgage companies like Gustan Cho Associates are flooded with new purchases and refinance loan applications. All of our support and licensed personnel are working over 12 hours a day, 7 days a week, and holidays. Luckily, Gustan Cho Associates is not suspending any new mortgage loan applications. Everyone from processors, underwriters, closers, loan officers, and senior management are working 80 hour weeks. Delays in the mortgage process will be the norm for the next few months until the mortgage industry stabilizes. There is no sign of any mortgage rate increase in the next few years. The economy is booming despite the coronavirus pandemic. The housing market and mortgage markets are booming and are expected to do so in the coming months into 2021.