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March 20, 2020

Covid-19 The Mortgage Update

OFM is not locking rates until Monday. 

Most OFM staff is now working from home and most of the lenders we fund loans with are all working from home. 

Fannie/Freddie will be coming out with new guidelines for VVOEs and Appraisals in the next few of days.


Some Counties Are Delaying Recordings, Lenders will work with counties on how to handle lock extensions.

Freedom Mortgage is extending all locks for free during the outbreak.

Flagstar Bank is doing the same.

United Wholesale Mortgage President Releases 30 min video covering many changes, WATCH IT!

Jumbo Loan Pricing Jumps to unprecedented levels while conforming loans remain relatively flat around 3.25% to 3.375% for no closing cost and 2.75% for points and fees.

Most lenders are taking 60-90 days to close loans, I'm still closing in under 30.

The market is much lower than the rates, and investors are pulling out of MBS causing the feds to dump more money into MBS, causing major volatility in the market, one minute 3.0% is free, the next 3.5% is free. I have never see this much volatility in such a short amount of time, in my 10 years of doing this.

Clients are loosing their jobs in the middle of the process and cannot close their loan. Some lenders are not approving subordination's on lines of credit.

Employers are laying off employees in fear of the liability from having to pay them to not work. The president is offering to pay all employees sick pay and the employer wont have to pay for it, but employers are still laying off people.

Homeowners who have lost income or their jobs because of the coronavirus outbreak are getting some relief. Depending on their situation, they should be eligible to have their mortgage payments reduced or suspended for up to 12 months.

From a company that supplies credit reports.

1. We are starting to see that some creditors are closing completely and many (if not most) creditors have limited staff. This is causing a slowdown in creditor responses and long hold times and which sometimes prevents us from being able to complete requests.
2. If you are able to provide us with the borrower’s authorizations (if possible with a wet or ink signature) when the order is placed, this may help us to avoid delays.
3. If you are able to provide us with any documentation that the client may have when the order is placed, this may help us to avoid delays.
a. For example, loan statements with future due dates, mortgage notes and credit agreements are helpful, just to name a few.

4. Because creditor closure is out of our control, some credit verification/supplements/tradelines may not be able to be completed either now or in the near future. As a department, Credit Verification will notate in the file that we are unable to complete the request due to creditor closure/low staffing and we will communicate this to the clients via email.

March 10, 2020

Scary Mortgage Market

Russia just pulled out all of their investments in the US MBS’s, expect MBS’s to get worse and rates to climb, the Fed may announce some quantified easing shortly and agree to buy them but MBS’s are at the largest gap from the 10 year in the history .
Simply because all of the loans are paying off too early and investors don’t see the value anymore in mortgage backed securities (no return on investment). When the loans are bought the investors typically pay money to buy the loans and the recoup is 3-4 years then every year after they’re making money from the interest paid in on the loan but when the loans pay early they take huge losses and their appetite shrinks for mortgage backed securities as a whole so the spread widens between the 10 year and MBS.