Forbearance Clarity
The mortgage industry, terrified of a mass onslaught of payment forbearances, was alarmed by a misleading report by CNBC.
Reporter Diana Olick said that borrowers obtaining a forbearance could tack the missed payments on to the end of the mortgage.
This is not true, however, as most servicers will try to recoup the payments as soon as the forbearance period ends.
I know I’ve beaten this dead horse a bit aggressively, but we don’t want to see consumers misled like what we saw with loan modifications after 2008.
Many consumers were caught off guard when their loan mods adversely impacted their credit and/or did not result in the elimination of any debt (they merely had payments restructured).
Borrowers truly impacted by the COVID-19 pandemic should definitely contact their servicers to ask about forbearances, but nobody should expect their payments to simply disappear permanently.
Refis Still Viable/Dominating Market
Even though rates remain over 1/2 percent higher than where they were in early March, refinances are still more than viable.
Borrowers with rates of 3.75% or higher should still consider refinancing, as should borrowers with PMI (who can still take advantage of higher values to eliminate PMI via a refi when their LTV drops to 80%).
Refis are up almost 170% in total volume year over year, and they now comprise over 75% of the total mortgage market (another record).
Purchases Still Rolling In
Despite everything that is going on, we are still getting new purchase contracts.
This indicates to us that many buyers still have tremendous faith in the long-term prospects of housing.
Pundit Barry Habib is still insisting that the pending housing boom will return in force at some point after the COVID-19 crisis ends simply because of the demographic pressure and overall shortage of housing.
Mortgage Industry Still Alive/Record Month
Despite all of its problems, the mortgage industry remains alive (if not well).
Our own mortgage bank had a record month in March, and April looks to be similar or better.
This is the case even though many transactions are falling out due to job losses or changing guidelines.
Fortunately, there are more than enough remaining “vanilla loans” (higher FICO, FHA, Fannie, Freddie, strong jumbo, etc.) to offset the fallout.
Lastly – please continue to expect delays resulting from the COVID-19 crisis (another dead horse I’ve beaten into hamburger).
