The Fed has purchased over $250 billion of mortgage-backed securities (MBS) over the last two weeks – an unprecedented record by far.
This has pushed MBS yields down significantly for investors in the secondary market, but mortgage rates at the consumer level are still not moving for reasons we keep repeating (not enough capacity; too much risk).
Changes In Industry/Types of Loans
Lenders across the industry are either greatly restricting or refusing to fund the following loans:
Weaker jumbo borrowers
All non-QM borrowers
FHA/VA borrowers with credit scores under 640 (680 at many lenders)
High debt ratio borrowers
Bond and down payment assistance loans
Lenders are also doing 11th hour employment verifications and not funding any loans with borrowers who are on furlough or laid off altogether.
What Agents Should Do
Agents should reach out to their lender to get a status update to make sure all of their pre-approved clients remain fully “pre-approved.”
We intend to update our entire agent-partner network today.
Forbearance/Deferment Confusion
There is a lot of confusion in regard to deferments or forbearance rules when it comes to mortgage loans.
What borrowers need to know is that payment deferments are not a free lunch; borrowers still have to repay missed payments.
In addition, borrowers have to “qualify” for deferments.
Here are a few articles discussing this:
B of A Inundated With Calls – According to this article, B of A will defer up to three payments but then ALL four payments will come due in month four.
Fannie/Freddie Payment Deferral Options – According to this article, payment deferrals will not be allowed until July 1st, and the related mortgage must have been originated at least 12 months prior to the deferral request.
Lastly – when borrowers request a formal deferral, their mortgage must still be current.
So once again – borrowers facing financial difficulties or employment issues who are in escrow now should not go through with their transaction.
