COVID-19/Mortgage Industry Update

black dog lying on couch at home during the COVID-19 Shelter In Place Order in the Bay Area.

Here are a few reminders and key updates that are warranted (despite some repetition) b/c the overall situation remains so fluid and b/c we are still getting so many questions.

MORTGAGE INDUSTRY REMAINS OPEN

Most lenders remain open and fully operational and are still funding and recording loans (with most team members working remotely), as most escrow, title companies and counties remain functional too.

DELAYS

As I repeat often, there are far more parties involved in every transaction than what meets the eye – and many of these parties are unable to do their jobs in a timely manner right now b/c of the COVID-19 crisis. As a result, all lenders are experiencing delays that are beyond their control and are pushing out closing periods. We only request patience and understanding.

APPRAISAL DELAYS

This is less of an issue in Texas but a major issue in the Bay Area – with a “Shelter In Place” order in effect. Many appraisers are simply not accepting orders and there is now a massive backlog of appraisal orders. We are working through this by making sure it is OK for appraisers to inspect despite the “Shelter In Place” rules (and it appears that it is); by increasing our rush fee (that WE pay, not borrowers) by $300; by seeking more appraisal waivers when possible; by seeking more “exterior inspection only” appraisals; and by making appraisals our final “prior to funding/closing” condition. We will keep everyone updated.

APPRAISAL WAIVERS ARE NOT “GRANTED” BY LENDERS

An agent told us yesterday that “the lenders involved with three of her listings ‘granted’ their buyers’ appraisal waivers.” In other words, the loan officers did a great job of convincing the agent that they did something special. But, “appraisal waivers” are obtained if and only specific criteria, set by Freddie Mac and Fannie Mae, are met. I blog about this often with one example here.

INTEREST RATES REMAIN 1/2 PERCENT HIGHER

This is another dead horse I have beaten a few too many times, but the Fed’s cut to a “zero percent Fed Funds Rate” did not push mortgage rates down. Rates remain a full 1/2 percent higher than where they were in early March. This is both b/c the Fed can’t always influence long-term mortgage rates and b/c the mortgage industry has more volume than it can handle.

NO SHORTAGES

This is not really mortgage related but it is something I wanted to illuminate b/c I keep hearing about people waiting in long lines at grocery stores to “stock up” on key supplies. Numerous major news outlets (including NBC as recently as yesterday) are reporting that there are no major supply-line issues and no pending shortages. The empty shelves people see are simply a result of hoarding and will be re-stocked. So, I wouldn’t spend too much time in line right now in an effort to stock up.

THANK YOU AMAZON!

This is another aside, but I can’t imagine where we’d be right now without Amazon. Not only are they driving a huge portion of our commerce during this crisis, but they have also revolutionized online retailing and package delivery overall (enabling all retailers to better help). I know Amazon is controversial, but without them, we would all be much worse off.