Unprecedented Disruption
All of us right now are experiencing unprecedented health, social and market disruptions and are directly impacted by the frequent changes and uncertainty. What started as and continues to be a global health crisis has quickly added a financial crisis to its challenges. We’re seeing a previously unimaginable disruption in health, community, and finance.
We Are Still Here
I want you to know that my mortgage practice continues to be open for business and my team and I are actively coordinating the closing and funding of mortgage loans during this time.
It is our plan to be a continuous mortgage resource throughout this crisis in health, community, and finance. Like many of you, most of the lenders my colleagues and I work with are working remotely — which is new to them. So, my staff and I appreciate your patience and support as everyone at every level of the mortgage lending process is implementing new systems, as part of all of our efforts to remain healthy, while we strive to continue delivering good service and efficient closings for our clients.
State of the Financial Marketplace
However, we must all acknowledge that the world of lending today, in this moment, is markedly different than it was yesterday. We must recognize these changes and adjust to the demands of the capital markets, even if only on a temporary basis.
Here is what is currently happening in the financial marketplace:
1. Volatile Guidelines & Processes
The capital and financial markets are not functioning properly and are highly volatile. In fact, a sudden lack of liquidity for non-conforming (Jumbo) mortgages (mortgages not earmarked to be sold to the government entities like Fannie Mae, Freddie Mac, FHA, and VA) mid-last week, has prompted many lenders to halt originations and reduce product offerings. The result of this is an inability by lenders to have any level of confidence in their ability to see beyond a few days with their loan products and commitments.
This means you will see lending guidelines changing often (even daily) as well as a loss of loan product offerings. And mortgage rates will continue to be out of step with what the bond market is doing. Many lenders who offer non-conforming loans have pulled these products and put them on hold for the time being. In some cases, loans that were currently in-process are being declined, because originators have stopped waiting for the investors to come back online.
2. Scheduling Difficulties
Practical difficulties are arising with scheduling appraisers, inspectors and in-person notaries, mostly due to limited resources and safety concerns. My team and I appreciate your patience and we will do our best to push the loan process along. However, you should expect some delays in closings, due to this issue.
3. Closed Courthouses & Offices
Additionally, we’re seeing the closing of county courthouses and recorders offices across the country. Currently many courthouses are closed or on limited staffing. With e-closings and electronic records not universally available, this further lack of access will prevent us from obtaining clear title policies in many geographic regions where we are now trying to close loans. If the government recording office pertaining to your loan has closed, the closings will have to be delayed until the government offices reopen. Loans cannot fund unless the title insurance company is able to issue the lenders’ title insurance policy, which is required on every mortgage loan transaction.
We’re Watching Closely
Please be reassured, my team and I are working diligently to get everyone’s loan requests in process and in the best position to lock the market at the most favorable rate, once the mortgage markets open up again and return to a more regular level of function. In the meantime, I personally am watching the markets all day, every day, and will update you all once my lenders’ offerings are hitting your target rate.
Our country will be in a low rate environment throughout this year as the Federal Reserve continues to act to suppress interest rates in order to keep the economy moving as well as pull us out of a recession or depression caused by the fallout from the pandemic.
Because I’ve been in this industry so long, I’m aware of its trends and inner workings. I’ve witnessed the impact on buyers resulting from changes in the industry through lending booms and crashes, but I’ve never seen a disruption so pervasive to health, community, and finance. My thoughts and prayers are with you, our country, and the world as we get through this historic and unprecedented time.
— Vic