Last week we reported on the financial upheaval in the mortgage
market as a result of the coronavirus pandemic. The market remains extremely
volatile, with rates changing daily, even hourly at times. But we are very
encouraged by the fact that homes are being purchased and refinance mortgages
are closing, even under these extraordinary conditions. Everyone is taking
proper precautions, and avoiding face-to-face meetings.
Almost all parts of the mortgage lending process can be done
electronically. An interior appraisal inspection, however, is not one of them.
We have heard from our clients their very valid concerns about allowing the
appraiser to tour their homes. So, I am happy to give you some good news.
Fannie and Freddie have instituted temporary appraisal requirement
flexibilities that allow many mortgages to qualify for an appraisal waiver, or
an exterior only inspection. This includes purchases, which sometimes can
qualify for a desktop appraisal, for which the appraiser need not even visit
We expect more announcements regarding temporary accommodations
during the crisis, and we will report those to you as they happen. Also, please
keep in mind that rates are changing so often that locking a loan now requires
patience and close attention. Please contact
see what is being offered.
We want all of you and your families to stay healthy and safe.
Many self employed borrowers now only need one
year of tax returns to verify their income.* Also, now many borrowers only
need one year of being self-employed (instead of the previous
requirement of two years). Of course, like everything in the mortgage world,
there are exceptions and situations where clients still need to average two
years of income and two years of self-employment to qualify. However for a
majority of borrowers, this is going to be very helpful!
*In the past we have had to average two years so if your income
was growing, you did not get the full benefit of the increase.
Did you know that we grant Appraisal Waivers for approximately
20 percent of the loans we do? Eligibility for a waiver is based on the quality
and type of loan as well as the information in the data base on the property
and similar homes.
In September 2017, the Agencies also added appraisal waivers for
purchase loans. This can save clients money and speed up the process by as
much as two weeks. In fact, I just closed an appraisal waiver refinance in only
three weeks! As the database grows and the performance of these loans are
evaluated we should see the percentage of mortgages eligible for an appraisal
Whew! What a nail biting election. My initial reaction is that I am happy it is over, and I reserve judgment on the rest. Whichever side you are on, life, and the markets, go on.
The first and most obvious thing to notice is the uncertainty generated by the election of President-Elect Trump. Markets dislike uncertainty and almost always react negatively to it. The question for many market participants is whether President Trump will be mostly like Candidate Trump, or will there be some hedging. Initially the stock market futures were predicting a huge (“huuuge”?!) loss on Wednesday, but a well-received acceptance speech by Trump and some pleasantries exchanged by Trump and President Obama seemed to calm the markets down, and in the end the equities markets did extremely well last week.
In the mortgage markets, rates increased by about 0.500%, largely because the yield on the 10 year US Treasury Bond shot up to over 2.000%, the first time in almost a year that it is above that mark. Add that to the widely expected increase in short-term rates by the Fed in December, and an increase in inflation, and you get higher borrowing rates, at least for now.
It is important to note, however, that much of this market activity has as its basis uncertainty, and therefore volatility (the volatility index has risen sharply as well). Many important events are still to come. Among the most important is Trump’s selection for Treasury Secretary. Front runners being discussed are the super anti-regulation Representative Jeb Hensarling (R-Tex), and the CEO of JP Morgan Chase, Jamie Dimon, both of which signal a more business-friendly economy.
Enjoy your weekend!
Kindly,Steven Hofberg Operations Manager Residential Mortgage Center Inc.
It’s time to celebrate 30 years in the mortgage profession!The year was 1984. Prince, Lionel Richie and Bruce Springsteen were among those that ruled the music world, along with a personal favorite, Tina Turner (“What’s Love Got To Do With It”). In the summer of that year, a young woman named Margie Hofberg left her job as Youth Director at the JCC in Rockville for a career in mortgage banking. With her father, Jay Krampf, they started a tiny mortgage company. Back then, loan applications were typed by hand on IBM Selectrics. No whiteout was allowed – if you made a mistake you had to start over! By the way, there is no shame if you don’t know what a Selectric is. And if you don’t know what a typewriter is, then stop reading this now and go check your Facebook updates.But Margie learned fast and she moved fast. Within a few years the company was growing and prospering. Early on the company became a true family business with Margie’s brother Richard Krampf and then her mother Marian Krampf joining Jay and Margie. Besides running her own business, Margie jumped into a number of industry associations, most prominently becoming the founding President of what is now known as the Maryland Association of Mortgage Professionals. And by the way, she gave birth to two boys, in 1987 and 1988, and was their soccer coach and baseball bench coach for all their “little league” years.Fast forward to the 21st century. Richard had sadly left us in 1995. Margie’s husband Steve joined her in 2000, just as father Jay retired. The company was rebranded as Residential Mortgage Center Inc. Margie continued to build a successful business by emphasizing customer service and an unwavering fidelity to her clients’ interests. Her reputation in the industry is impeccable, as evidenced by the number of national lenders that seek to associate with her and benefit from the high quality mortgage loans she produces.In 2005, Margie trained in Collaborative Practice. She was introduced to Collaborative by a good friend, an attorney who was very involved with the movement. Margie saw Collaborative as having tremendous potential to help her clients who had gone through, or were going through, separation and divorce. Mortgage applications require cooperation from all parties to be successful, and she thought the Collaborative model offered the best chance for that kind of cooperation. Margie has since become a leading expert in the field, to whom many attorneys, CPAs, financial planners and mental health professionals turn for help when their separating and divorcing clients need mortgage financing.So if you see Margie, be sure to congratulate her on 30 successful years as a mortgage professional!Steven H Hofberg, Operations ManagerResidential Mortgage Center Inc
So what can be done for those who need to close on a home purchase before they can put their current home on the market? Provided the potential buyers can briefly afford to pay for two mortgages, they will need to come up with money for the down payment on their new home. If the buyers had sold their current home before purchasing a new one, they would most likely use any proceeds from the sale of their home to make a down payment on their new home. In a case such as this, however, the proceeds from the sale of their home don’t exist. In the past, buyers may have turned to a bridge loan, a short-term loan that allowed borrowers to obtain financing for a short period of time before it was due. Borrowers could use the bridge loan to cover their down payment, and then pay back the loan with the proceeds from the sale of their home. However, with bridge loans no longer in use, we’ve had to find a different way to assist potential home buyers in this situation.
Using simultaneous home equity lines of credit, obtained during the purchase of the new home, buyers can make the down payment without selling their home beforehand. The buyers can then use proceeds from the eventual sale of their previous home to pay down the line of credit immediately! And as an added advantage, the line of credit can be kept open for the buyers to access over the life of the home equity loan.
We are proud to note that we have helped multiple borrowers who were in this situation buy the home they desired, while waiting to sell their home until it was right for them. If you feel like this scenario describes you or someone you know, call or e-mail Marge or myself to discuss whether this solution can help you!
Thanks for reading!
Residential Mortgage Center Inc
If you are a regular reader of my weekly messages you know that the mortgage business is a pretty difficult one right now. Our company is actually doing quite well all things considered, but it is still a very stressful environment. Sometimes, though, we get to laugh. A recent article on Forbes.com did just that.
The article, by Mark Greene, which appeared on Forbes.com on March 9 2012, started by saying that getting a mortgage is difficult these days not because of underwriting standards, but because of paperwork standards. To make a long story short, lenders are demanding more paperwork from borrowers, and also applying exacting standards to that paperwork. They are doing this because they believe (probably correctly) that this paperwork will help insulate them from a repurchase claim by Fannie, Freddie or an intermediate lender.
These exacting document requests are causing friction between mortgage originators and their clients, something we can attest to. Forbes advises that loan applicants carefully read each document request that they receive and then give their loan rep exactly what they asked for. Not an approximation; not almost; but exactly what was requested. If a bank statement is needed, and it has 5 pages, then you should send all 5 pages. Not a summary or an online printout. You will be saving yourself the aggravation of having to send it again.
So now you are probably wondering what we found funny about this. It was Mr. Greene’s comment that the borrower should consider his or her loan rep to be just like their parents. Meaning that if the loan rep asks for something, it is “because I said so.”
Have a wonderful week.
Steven Hofberg, Operations Manager, Residential Mortgage Center Inc
To contact Margie Hofberg email her at firstname.lastname@example.org. If you wish to be notified when she posts the weekly Newsletter simply click on the Subscribe button below. To be added to the weekly Newsletter email distribution list email Renee Bourassa at email@example.com.