Guardian Residential Lending Industry News, April 23-30, 2020

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April 23, 2020
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In the Know: A Roundup of This Week’s Local and National Real Estate Stories 

Mortgage Rates Lowest Since Early March, But Not For Everyone (Mortgage News Daily, April 29)

Mortgage rates moved down nicely last week and have either maintained or improved upon those levels this week.  The catch is that the good times aren’t rolling for everyone.  Borrowers with lower credit scores, less equity, and especially those needing a cash-out refinance are quickly finding the landscape to be very different than the last time they received a mortgage rate quote.

Coronavirus has had far-reaching effects for the economy, obviously.  The impact on the mortgage market isn’t nearly as publicized but it’s no less significant in the context of this particular industry.  Nearly 7% of mortgage holders have sought forbearance arrangements–a higher number than the industry ever imagined.  Mortgage investors risk heavy losses on those loans.  Thus demand has dried up for the loans seen as having the greatest risk of entering forbearance (or simply those that would be the most costly for investors in the event of forbearance).


The Forbearance Chaos is Yet To Come (The M Report, April 29)

With more than 6% of borrowers in forbearance plans on their mortgage loans, the question on many housing professionals’ minds is what’s next?

More than 3.4 million homeowners will benefit from temporarily suspending their mortgage payments, according to data from Black Knight, but the details of how and when they repay those missed months of payment are still being ironed out.


Pending home sales tank nearly 21% in March, but Realtors claim prices will hold up (CNBC, April 29)

-Signed contracts to buy existing homes, referred to as pending home sales, fell 20.8% compared with February and were 16.3% lower annually, according to the National Association of Realtors.

-“The housing market is temporarily grappling with the coronavirus-induced shutdown, which pulled down new listings and new contracts,” said Lawrence Yun, NAR’s chief economist.

-The average rate on the 30-year fixed mortgage fell to a new low of 3.43% last week, according to the Mortgage Bankers Association


Fed pledges to keep rates near zero until full employment, inflation come back (CNBC, April 29)

The Federal Reserve painted a dour picture of current conditions and pledged Wednesday to continue its historically aggressive policy stance until it is comfortable that the U.S. economy is back on its feet.


Freddie Announces No Lump Sum Required After Forbearance (Mortgage News Daily, April 27)

Freddie Mac has laid out options that borrowers who have been granted forbearance on its loans have when it comes to repayment. The company’s CEO David Brickman stressed that borrowers will never be asked to repay missed payments in one lump sum (though it is one option).

Homeowners with a hardship can have up to 12 months of forbearance although servicers will typically start with a shorter timeframe, reassessing it over time. Once the hardship has been resolved the homeowners will have the following options.

  1. Full repayment or reinstatement. Missed payments are repaid, putting the loan back on track
  2. A repayment plan which allows borrowers to pay their regular monthly payments and an additional amount so they can catch up gradually.
  3. Payment deferral or modification. This would keep the monthly payments as originally agreed. The missed payments are added to the end of the loan.
  4. Loan modification. Changing the interest rate, loan term, or some other feature to lower the original payment amount.

Freddie Mac said servicers will contact homeowners 30 days before the expiration of their forbearance to discuss options. If borrowers feels a loan is not being handled properly, they should contact the Consumer Financial Protection Bureau.


Rural Oregon estate with $1 million pool sells to buyer wanting to escape the big city (Oregon Live, April 27)

The coronavirus pandemic instantly shifted many homebuyers’ desires. Suddenly, there’s less interest in walking to downtown eateries and more willingness to live remotely and with extended family.


Real estate agents are creatively showing listings amid stay-at-home (HW, April 23)

With real estate deemed an essential service in many U.S. states, and potential buyers under orders to stay at home, agents are showing properties the only way they can during the COVID-19 pandemic: Virtually.


Vice President Mike Pence Briefs Mortgage Industry Stakeholders (The M Report, April 24)

Secretary Carson said that the FHA took a series of important actions to provide relief to the American people across the country.

HUD enacted foreclosure and eviction moratoriums for 60 days in March and announced in April that homeowners insured through the FHA could either make reduced payments or defer payments, for six months if they were impacted by COVID-19.

Commissioner Montgomery added that the FHA will “obviously evaluate” the length of the policy as needed in the weeks ahead.

He also said that the FHA issued a temporary waiver related to the in-person contact of early-default intervention.

“In accordance with the CARES Act, we swiftly issued a mortgagee letter with loss-mitigation options for single-family borrowers affected by COVID-19. These policies should ease the stress of both borrowers and servicers,” Commissioner Montgomery said.


Thanks for reading, and be well out there!