Loan to Value Ratio Decreasing Amid COVID-19

Why Are Loan To Value Ratios Decreasing Amid COVID-19?

As the weeks wane on, lenders have received over 3.4 million requests for Forbearance. This has an impact on lenders margins and the market is becoming more risk-averse as unemployment numbers increase amid the pandemic. Lenders are placing overlays that require a lower debt to income ratio, lowering cash out on refinances based on loan to value, and curbing Home Equity Lines of Credit.

What Can a Borrower Do Now on a Cash-Out Refinance

1. Apply soon. Just as the world is receiving updated news daily, we are hearing lenders change, redirect, and alter loan programs. The lower the loan to value ratio, the better the opportunity for cash-out refinances. Fannie Mae and Freddie Mac are still requiring full in-person appraisals on cash-out refinances. Does your lender have a COVID-19 package prepared for appraisers to enter the property? Let us know how we can help. Our borrowers with cash-out refinances are given COVID-19 packages to help curb the spread of infection during their home appraisal.

2. Be employed and receiving income. Lenders will verify income and employment multiple times during the loan process to confirm borrower(s) continue to receive income and will continue to receive income in the foreseeable future. Yes, there’s a lot of redundancy here.

3. Low loan to value ratios is key. Lenders are looking to mitigate risk, the lower the loan-to-value ratio, the less risk, and better rates are available.

ASK US YOUR QUESTIONS! WE ARE HERE TO HELP NAVIGATE YOU AND YOUR CLIENTS!

Mortgage Loans Amid the Coronavirus-Random Thoughts and Shares

California Governor's Signature Needed for E-Signing and Virtual Closing

We have been waiting for e-signings and virtual closings in California for many years and I can say with most certainty, “It’s about time!” Many of our tech-savvy lenders, notaries, and escrow companies are waiting for the roll-out of this program. Borrowers will be able to e-sign, have their documents notarized all via an electronic device. This service is currently being offered in many other states and is a game-changer for the industry. Not every client may want or use this new service, however, amid the current COVID-19 pandemic, many will appreciate it.

3 Tips For a Virtual Home Signing

1. Internet connection-A great signing at home will need a solid, secure, and fast internet service. This will be important as a 3rd party notary will need to verify over the screen borrowers drivers’ licenses and answer any questions as they would in a face-to-face transaction.

2. Comfort and Ease of Use-Borrowers that are currently using Zoom, iPads, FaceTime, Skype, and other devices allowing the virtual loan signing process to flow. Borrowers can also request assistance from their loan officer ahead of time or during the course of the transaction.

3. Location-Finding a good location at home like an office, dining table, living room, or space that is comfortable makes good sense during the signing. Managing noise and other distractions are important for streamlining time and effort.

Mortgage Questions and Faq’s Answered

Virtual Loan Signing Questions? Ask us!

Forbearance Amid COVID-19

Photo credit: Alexander-mils

As of this week, 3.4 million homeowners filed for forbearance on their mortgage loans amid the Coronavirus often referred to as COVID-19. Borrowers that have filed for employment in the State of California are at 2.7 million this week according to an LA Times article a few days ago. What does this mean for borrowers that may return to work in the coming months and want to refinance or purchase a new home?

Should Your Clients Apply for Forbearance Amid COVID-19?

• Borrowers who need a reprieve from paying their mortgage amid unemployment, furloughs, and lay-offs can apply to their servicer and lender for forbearance and in order to stay in their home, as a last resort, apply as soon as possible to get their paperwork in for review. Remind borrowers to keep a record or communication log and paper trail to reference.

• Borrowers that have the resources and means to continue paying their mortgage, should do so. We do not have a pulse yet on how the pandemic will affect credit scores and mortgage history should a lender want the history (they will) to have a full picture and understanding of a borrower’s financial history, especially during COVID-19.

• If a borrower has applied, been approved, returns to work, and applies for a refinance or new home purchase, they may not qualify. Please have candid conversations with your borrowers as we all navigate this unprecedented time.

Tips For Applying For a Mortgage Loan Amid COVID-19

For more information on forbearances, the Consumer Finance Protection Bureau may assist. Click here to learn more.