Forbes Publisher, Rich Karlgaard, published 5 Bold Predictions for the Post COVID-19 World.
He imagined what we might see by the Spring of 2021 and predicted the following:
- A rebounding world economy with a fantastic global growth rate of 4%.
- Fully resumed global travel b/c human nature makes people want to travel no matter what.
- The death of Silicon Valley’s famed “unicorn startups” now that capital has dried up and investors have shorter time-horizons.
- More extreme politics and calls for a more activist government.
- INFLATION.
I recommend the column b/c it is short and interesting, but what really stood out was the inflation concern.
In the near term the entire world is worried about major deflation resulting from mass unemployment and reduced demand.
But at the same time, the Fed is literally printing or creating trillions of dollars out of thin air.
And many pundits fear that this massive infusion of manufactured money will finally result in inflation.
And inflation always results in higher interest rates.
This is b/c investors don’t want to sit on a mortgage-backed security yielding 3% if inflation is at 10%, b/c that investor would effectively be losing 7% on his or her money (investors want yields that exceed inflation).
In any case, this is another huge reason to refi now instead of “waiting for rates to bottom out,” as inflation could show up at any time and quickly push rates much higher.
APPRAISAL UPDATES
Fannie, Freddie and HELOC lenders continue to relax appraisal guidelines, making it easier for lenders to get appraisal waivers and/or limited appraisal requirements (exterior only or desktop).
Appraisal Time-Frames: For purchases, JVM’s appraisal time-frames are almost back to normal – thanks to our phenomenal pool of appraisers!
I share this b/c we are hearing nonstop horror stories about slow and nonexistent appraisals from agents – particularly for transactions in the broker channel.
HOME EQUITY LINE OF CREDIT (HELOC) – ADVICE
After the 2008 meltdown, all equity line lenders drastically changed guidelines and even froze borrower accounts.
In light of the fact that we are seeing some equity line lenders adjust guidelines again, HELOC borrowers in need of cash might consider drawing on their lines now.
So far, most of our 1st/2nd combo lenders have not adjusted guidelines, but we will not be surprised when we do start to get notices.
FORBEARANCES AND CREDIT – FORBEARANCE RESOURCE CENTER
Borrowers who obtain a formal forbearance approval from their mortgage servicer should not see their credit adversely impacted. Borrowers who just stop making payments, however, without getting a formal approval will see their credit adversely impacted.
In addition, borrowers with forbearances will most likely not be able to get a new mortgage loan (refi or purchase) until they make up all of their missed payments.
We have additional info in regard to credit in our JVM Forbearance Resource Center – please share this with anyone who might be interested in it.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
