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Beware of Lending Delays; Layoffs & Unexpected Refi Boom

Beware of Lending Delays; Layoffs & Unexpected Refi Boom

2018 was an absolutely horrific year for the mortgage business.

Interest rates were up significantly, all but wiping out most of the refi business.

And overall purchase volume was down to boot.

As a result, there was massive over-capacity in the mortgage industry so everyone started to compete with lower interest rates to maintain market share.

But, that only caused further problems b/c lenders lose money when they offer too low of rates.

B/c of this almost every lender went through massive layoffs late last year in an effort to deal with the “new normal,” to cut expenses, and to somehow remain profitable.

But then the unexpected happened again – rates plummeted to surprisingly low levels, and purchase volume picked up significantly.

So now every lender is getting slammed with a huge number of both unanticipated refis and purchases while also being significantly understaffed b/c of their recent lay-offs.

Lenders that used to be able to easily underwrite files in one to two days now need seven to ten business days, for example.

I might add that we are holding our own for the most part at JVM, but this situation is nevertheless affecting us too.


Unfortunately, this means that both borrowers and agents alike need to expect longer contingencies, longer closing periods, and unexpected delays (as many lenders are having great difficulty managing all of their volume and estimating turn-times).

Most lenders remain fine with 21 to 30 day closing periods, but faster closes may be impacted. It might be prudent to reconfirm closing periods and contingencies before writing offers.

Lastly, everyone is re-staffing like crazy so we don’t expect these delays to last long.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646