Mortgage Lending Amid COVID-19
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Photo credit: Tierra Mallorca
Global Pandemic Forces New Mortgage Guidelines
We are 3 weeks into homeschooling and working remotely in our home and like many families, we’ve had some time now to adjust. To find out what works and what doesn’t and make corrections along the way. It’s been a process and something tells me we will continue to make tweaks as this unfolds for all of us.
The mortgage market has experienced volatility over the past several weeks like I’ve not seen before in my 15 year mortgage career. The stock market crash this month was historical and I witnessed interest rates plummet, then rise, and fall again, enough to give us all whip lash. Multiple interest rate changes daily amid Coronavirus news reports and trying to analyze and sort through it all and have conversations with borrowers literally by the moment as a play-by-play. I thought it would be helpful to borrowers to have a frame of reference when submitting their loan applications in our current environment. This is subject to change, however, we are working off of these parameters with many lenders at the time of this article.
Lender Overlays Amid COVID-19
Prepare to have your verification of employment checked 2-3 times at a minimum. Lenders are completing the final verifications of employment the day of funding your loan and must have either a verbal or written verification in order to release funds to close. Preparing ahead of time will greatly help the process. Have your point of contact for the verification in place if the WorkNumber or other electronic responses are not available.
Loss of Employment or Income will be factored in. Being transparent with your loan officer can save everyone time and energy. If you know your income or hours are going to be reduced, let the loan officer know as soon as possible. Paystubs are required to be at least 30 days new in order to fulfill the prior to loan document condition. In some cases the standard conforming, conventional 43% debt-to-income ratio may be reduced to 40% and/or require additional assets/reserves for qualify. Each lender is different and have their own company overlays.
Appraisals and Notaries-Full interior appraisals are often required on cash-out refinances. If your refinance loan is a cash-out, let the appraiser know when they contact you that you want them to follow the Appraisal Management Company guidelines which include protective clothing, gloves, and a mask. Notaries are performing their notaries on borrower driveways, front and back yards, placing the paperwork on the table and stepping away. They may be wearing gloves and a mask. Bring pens (black or blue ink) for signatures and hand sanitizer or wipes.
This list is not exhaustive. Check with your loan officer on lender requirements that may affect your loan process. We are here to answer any questions and help guide you through the loan process during your mortgage financing and COVID-19.
We are all in this together!