BREAKING NEWS: Home Buying Process During The Coronavirus Pandemic Crisis

As Americans received some puzzling news from the White House coronavirus task force briefing yesterday on March 31, 2020, we all must prepare for things to get worse before they get better.

• By the graphs and model charts presented, we are in for a dark two weeks (maybe longer)
• Let’s hope that the two-week period does not get extended
• Americans must brace themselves to see our death toll continue to rise before we are able to flatten the curve
• We already know the social distancing guidelines have been extended through the end of April, but will that be enough?
• It is no secret that COVID-19 coronavirus is disrupting every aspect of the global economy and hitting the United States economy in a devastating way
• A key pillar in our economy is the real estate sector
• The real estate sector is taking a beating from this virus
• In this blog, we will detail some hiccups we have seen in the home buying process due to the COVID-19 coronavirus outbreak

In this breaking news article, we will discuss and cover the Home Buying Process During The Coronavirus Pandemic Crisis.

Home Buying Process During The Coronavirus Pandemic Crisis Throughout The United State

MY TAKEAWAYS FROM 3/31/2020 Task Force Update:

• As we hear from the WHITE HOUSE and CDC, we are now bracing for the death toll to skyrocket
• We are going to have a very tough two weeks. We are trying to get through this and see the light at the end of the tunnel
• The death toll is predicted to shoot up for the next few weeks before we flatten the curve. Not easy news to hear
• According to Dr. Fauci, we are still seeing a rise in new cases
• Until there is a reduction in new cases, we will not see a reduction in hospitalizations or deaths
• Social distancing will need to continue to help stop the spread of COVID-19 Coronavirus
• The COVID-19 Stimulus package included nearly $350,000 billion in small business loans for payroll and other expenses
• The stimulus package is still confusing to me

My hopes are that the American people can get to work sooner than later.

The US Economy During The Coronavirus Outbreak

President Trump talked to companies such as AT&T, Comcast, T-Mobile, Sprint and others to catch up on the condition of the internet infrastructure. So far, all Americans have been able to stay online, which is huge. Not just for entertainment purposes but also for the global economy. Many Industries are still able to work from home. Staying connected during a time like this is important. I have used ZOOM and FaceTime more and more during the shelter in place. It is good to connect with loved ones. Especially those who may be in a compromised group.

Disruptions In The Mortgage Process During The Coronavirus Pandemic

Disruptions in the mortgage process due to COVID-19 Coronavirus:

• Gustan Cho Associates are starting to experience a disruption in our mortgage process
• When completing a home loan, there are a lot of moving parts that must be completed
• Most of these processes go on behind the scenes and clients are not aware of these tasks
• Yesterday we received an alert that verification of employment service called THE WORK NUMBER is experiencing heavy traffic and delays
• We are no longer able to complete verifications of employment unless we have an e-Signed mortgage application with a notice of intent to proceed disclosure returned to us
• This is bad news because individuals with variable income must have a verification of employment completed to accurately calculate income
• For example, if you receive a commission as well as a salary, we need to clearly document the past 24 months of your commission income to calculate how much will count towards your debt to income ratio

Not being able to use the work number is a major blow in the prequalification process.

Mortgage Processing And Underwriting Process During The Coronavirus Pandemic

• What about loans already in processing/underwriting? For loans that are further along in the pipeline and may have been submitted before the COVID-19 coronavirus outbreak, we are still seeing some disruptions
• For example, many appraisers are not taking new assignments because they are uncomfortable entering a stranger’s home
• Yes, Fannie Mae has recently loosened the appraisal requirements for a home loan, but other agencies such as FHA and VA have not
• This can be an issue, considering an appraisal is a key part of the mortgage process
• The appraisal process is one of the longest steps in the home loan process
• We have also seen the appraisers who are working add a surcharge to their services, costing our borrowers more upfront money. In times like this, money is tough

Please see our APPRAISAL UPDATE BLOG.

Economic Impact In The Mortgage Industry

Today is April 1, 2020, when millions of American’s mortgage payment is due. Yes, there is a 15 day grace period before you are charged a fine, but today is the actual due date. As mortgage servicers do not receive payment, and Americans fall behind on their home loans, you are going to see a ripple effect in the mortgage industry. It is no secret that many mortgage companies will go out of business due to the coronavirus outbreak. Most mortgage companies have increased their LENDER OVERLAYS to make their loans less risky! These overlays seemed to flood in overnight last week and really put borrowers in a bad spot.

Home Buying Process During The Coronavirus Pandemic Crisis And Mortgage Crisis

I have talked to a few friends in the industry who have raised their minimum credit score requirements from 600 all the way to 660 for FHA mortgages. That is scary because clients who have had a loan in the works, who’s interest rate was not locked in, are now being told that they cannot complete a mortgage loan. According to the automated underwriting system, this is allowed by number 10. A lender reserves the right to create their own set of overlays. Any good news out of this?

Gustan Cho Associates Approves Government Loans With Under 620 Credit Scores

Throughout my adult years, I have always tried to find the positives in a bad situation.

• As of today, Gustan Cho Associates are still able to complete mortgage loans without lender overlays
• We are one of the few remaining, and we will do everything we can to help you and your family purchase or refinance the property
• I have seen an addendum added to certain sales contracts for any COVID-19 coronavirus related delays
• This will help protect you, the buyer, from your earnest money being taken if any reason the loan doesn’t close because of coronavirus COVID-19

As you know, we will continue to bring our readers up to date on any coronavirus news as well as any mortgage guideline changes. The next few months are going to be tough on everybody throughout the world, and the mortgage industry is no exception. Please keep an eye on our YouTube CHANNEL and check our website frequently as we are receiving mortgage news on a daily basis. I will continue to share my experiences with our readers.

Changes In The Home Buying Process During The COVID-19 Pandemic

The whole world got affected by the coronavirus pandemic.

• Here in the United States, all state governors declared a state of emergency and issued an executive stay at home order
• What this means is all non-essential businesses were ordered to stay closed until further notice
• Over 41 million Americans filed unemployment claims in the past nine weeks
• The great news is many states started to reopen
• Many experts thought there would be another housing and mortgage meltdown
• However, with the prompt actions of President Donald Trump and his administration, the housing and mortgage markets seem to have stabilized and are back in order
• Mortgage loan application numbers seem to be increasing
• Housing sales are also increasing in the past month
• These are great signs for the once stellar strong housing markets
• The mortgage markets are still in chaos due to liquidity issues on the secondary mortgage bond markets
• Non-QM loans are coming back after being suspended for two months but with tighter credit restrictions
• Bank statement loans for self-employed borrowers with no income tax returns are now back in full force
• So are asset-depletion mortgage programs for high net individuals with no income documentation

Gustan Cho Associates Mortgage Group is one of the very few lenders with no overlays on government and conventional loans during the COVID-19 pandemic.

Credit Score Overlays When Home Buying Process During The COVID-19 Pandemic

The coronavirus pandemic created havoc in the mortgage markets.

• Agency mortgage guidelines did not change
• However, most lenders increased credit score requirements across the board on all loan programs
• The issue is the secondary mortgage bond market has no appetite for buying mortgage-backed securities on borrowers with under 700 credit scores
• Due to these liquidity issues, most lenders raised credit score lender overlays
• Prime borrowers with 740 credit scores and 25% equity will greatly benefit from great low mortgage rates during the coronavirus pandemic
• Prime borrowers with great credit and lower loan to value will benefit from low mortgage rates
• Unfortunately, borrowers with under 700 credit scores and higher LTV’s will face hurdles qualifying for a mortgage at low rates
• Most lenders have increased credit score requirements to 660 to 680 FICO during the COVID-19 pandemic
• Many borrowers who were qualified and fully pre-approved prior to the pandemic are no longer qualified due to changes in the mortgage company’s lender overlays

The great news is Gustan Cho Associates has no lender overlays during the coronavirus pandemic.

Suspension Of Mortgage Programs Due To The COVID-19 Pandemic

http://www.youtube.com/watch?v=roSVPBeIsKI

Due to the liquidity issues on the secondary mortgage bond markets, several loan programs have been either suspended and/or discontinued until further notice.

• Most lenders have suspended doing manual underwriting on FHA and VA loans
• Gustan Cho Associates still continues to do manual underwriting on FHA and VA loans
• Many have stopped doing FHA 203k loans
• Gustan Cho Associates continues to do FHA 203k Renovation Loans
• Lenders have stopped doing FHA and VA one-time construction loans until further notice
• Down Payment Assistance loan programs have been stopped until further notice
• Non-QM loans have been completely halted for two months

Gustan Cho Associates have reopened Non-QM loans just this week. Credit and loan to value standards are higher.

Mortgage Rates For Non-Prime Borrowers

Prime borrowers will enjoy great historic low mortgage rates and terms.

• However, as mentioned earlier, borrowers with under 700 credit scores will get higher rates and may be charged discount points due to the liquidity issues on the secondary mortgage bond market
• There is absolutely no appetite for lower credit score borrowers in the secondary market
• JP Mortgage Chase has changed its credit requirements
• Chase Mortgage is no longer accepting mortgage applications on government loans (FHA, VA, USDA)

JP Morgan Chase Mortgage is only accepting conventional loan applications for borrowers with at least a 700 credit score with a 20% down payment.

Home Showings During The COVID-19 Pandemic

A home is one’s biggest investment in their lifetime. Without being able to see homes would devastate the housing market. Most buyers want to see the subject property prior to giving a real estate purchase offer. Home showings are possible during the pandemic as long as real estate agents and homebuyers take social distancing guidelines seriously. To avoid contact, realtors are utilizing video conferencing platforms versus in-person meetings with buyers, sellers, and third-party real estate vendors and/or professions. Virtual tours are becoming very popular. The National Association of REALTORS® created recommendations and practices for real estate agents and homebuyers to practice on in-person showings.

Here are the recommended practices to follow by the NAR:

• A maximum of ten people should be present when showing a home
• Everyone in a home showing should be at least six feet apart
• Buyers, sellers, and other visitors should wash their hands prior to entering the home and leaving the property with a hand sanitizer
• Require anyone entering the house to remove their shoes or cover their footwear with booties
• Leave all lights on and cabinets/internal doors open to prevent contact with frequently touched surfaces
• Encourage clients to disinfect their homes after a tour – particularly doorknobs, countertops, and faucet handles

Home Closings During The COVID-19 Pandemic

Closings are being quarterbacked by the title company. Most title companies are instituting new ways of conducting the home closing. Title companies are implementing e-signing as well as mobile notary services to limit face to face contact as much as possible. Many title companies have the closing process during the pandemic system perfected to eliminate human contact as much as possible. There are inconveniences and some minor hurdles in closing. However, many are getting adapted to the new changes with social distancing. Safety is key during the coronavirus pandemic. The team at Gustan Cho Associates has been keeping busy during the COVID-19 pandemic.

Qualifying For A Mortgage During The Coronavirus Pandemic With A Lender With No Overlays

Remember, even before this outbreak, 75% of our clients have been turned down by the current lender or not getting the customer service they deserve. If you have been turned down due to an added overlay, please give Mike Gracz a call on (800) 900-8569. You can also reach Mike Gracz at gcho@gustancho.com. The team at Gustan Cho Associates is working remotely so we are available seven days a week. Feel free to call day or night, we are here