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    Email: joe@joemetzler.com

  • Minneapolis Area COVID 19 Real Estate and Mortgage Resource Page

    Hello fellow Minneapolis, and upper midwest residents. This page is meant as a free resource surrounding the Corona Virus and home financing that has been interrupted by Covid-19. From selling your home, buying a home, or just refinancing your home... it is a new world, at least temporarily. 

  • Minneapolis MN
    Covid 19 and mortgages
    Corona Virus and mortgages
    Corona Virus
  • COVID 19 related mortgage guideline changes

    The economic impact of the shutting down of the economy to prevent the spread of COVID 19 is causing a big disruption in the financial markets. Fear and the unknown are the enemy of the markets, and obviously the there is a lot of fear and unknown going on right now. Hopefully this will all settle back down, but in the mean time, below you'll find some of the more important changes going on in the mortgage industry.

    BASIC GUIDELINE CHANGES

    Many loan guidelines have tightened up, with one of the most common is lowering of the maximum debt-to-income ratio allowed. Another big one is related to credit score requirements.

    A major issue today is massive job loss. While many people are still working, many more are not. If you have been laid off, furloughed, or had your hours reduced, this will likely be a problem until you return to work. It does not matter if you've been pre-approved, or your loan is about to close. Most lenders now require re-verification of employment a day or two prior to closing. This is because we may have verified your job two weeks ago, but you were furloughed yesterday.

    Contact your Loan Officer immediately for more information on your specific situation if you have been effected.

    Guidelines for age of documents have been shortened. For example, you may have supplied a 401k statement from 60-days ago, but the value today is a lot less, so they want the most current statement available.

    Start a basic loan inquiry - No SSN needed

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    I hereby certify that the information given in my submission is complete and correct and is given for the purpose of potentially obtaining a mortgage loan and/or financial services applied for. I also consent to Cambria Mortgage to reach out to me by phone, email, and postal mail, and by entered my social security number, I further consent to having my credit report pulled and reviewed.

  • SOCIAL DISTANCING

    Mortgage companies: In office loan applications have been falling for years as most people simply do online loan applications, do electronic signatures, and upload documents electronically, so not a huge disruption if you want to apply for a home loan.

    Title Companies: Most mortgage lenders still require live inked signatures on loan documents. A few have embraced electronic signatures, but very few. As with so many things, this virus may help make electronic signatures more common in the future.

    At the actual closing, I’ve seen both closers and clients in masks sitting at opposite ends of large tables. Buyers and sellers in different rooms, those not needed to sign staying away, and even closings in parking lots where the title closers hands you documents to sign through a tiny open in your car windows while you stay in your car.

    At Closing: 

    • Follow prevention and preparation guidelines from the Centers for Disease Control and Prevention, which are available at https://www.cdc.gov/coronavirus/2019-ncov/prepare/prevention.html.
    • Do not shake hands.
    • Bring your own pens or request a new pen to sign documents. Do not share pens.
    • Wash your hands before and after the appointment with soap and water for at least 20 seconds.
    • If soap and running water are not available, use an alcohol-based hand rub that contains at least 60% alcohol.
    • Avoid touching your eyes, nose, or mouth with unwashed hands.
    • Avoiding close contact.
    • Wear a mask. Your closer will be wearing one.

    Appraisals: Many people are afraid to let an appraiser in the their home, and many appraisers are also afraid to go in your home. New temporary guidelines from Fannie Mae, Freddie Mac, and FHA are helping by allowing alternative appraisals, know as Desktop Appraisals, or Drive by appraisals, where the appraiser still values the home, but does not physically enter.

    Homes For Sale: Real Estate Agents are trying everything possible to continue to sell homes with some sort of social distancing. Virtual tours, spacing of people at open homes, scheduling viewing so no two groups are in the home at the same time, requiring masks, etc, are all things I've heard.

    INTEREST RATES

    The quick answer is that if you've got great credit, you can grab some amazing historic rates right now. (get a rate quote). As your credit score drops, your rate will go up. Loans with riskier feature, for example, a cash out refinance will be higher, especially if you have weaker credit scores.

    Click here for current mortgage interest rate averages

    GOOD CREDIT RATES

    For good credit clients looking to either purchase a home or refinance a home using standard conventional loans under $510,400, mortgage interest rates are still great, and most everything is still the same.

    FHA loans and VA loans are still available. Rates for government backed loans initially jumped up a lot, but have since come back down to near normal.

    WEAKER CREDIT RATES

    For clients with weaker credit, primarily those under 680, we are seeing huge changes. Either loan options have temporarily gone away completely, or if any lender is still offering loans, the rates have jumped up A LOT.

    Bad credit loans, primarily credit scores under 640, there are pretty much little to no loan options today for those people.

    JUMBO LOANS

    Many jumbo loans have seen minimum credit score requirements increase, along with bigger down payment requirements.  Interest rates are also up a bit. Anything less than 20% down is near impossible to find right now.

    NON-TRADITION LOANS

    Most non-traditional loans loans, sometimes known as Non-QM loans, have completely disappeared. This includes bank statement loans, and asset based loans. A small number of them are starting to come back into the market, but expect at least 20% down, and higher closing costs, and needing to pay discount points.

    REHAB LOANS

    Rehab loans that let you buy a home, and get the money to repair it all in one loan, primarily the FHA 203k loan, and the Fannie Mae Homestyle loan, have been suspended by most lenders.

    FORBEARANCE

    The government have made getting a forbearance, essentially just a pause in your mortgage payments, very easy, with no proof of hardship required.

    If you are struggling financially, understand that this just pause your payment. Once the pause is over, you owe all the back payments, plus the current month.

    Forbearance is NOT forgiveness, or deferred payment. It is a short term pause, then you owe everything.

    What Can Happens When The Forbearance Is Over?

    When you are ready to resume payments, the money from the forbearance (pause) needs to be paid back. There are three ways to go about that:

    Lump Sum Payment: If you can afford it, the simplest thing to do is make a lump sum payment and pay off the whole amount you owe. That sounds like a big chunk, but one of the options you have is to pay whatever you can during the forbearance in order to cut down on the amount you owe at the end. See above example.

    Repayment Plan: The second option is to go on a repayment plan. With this, you make your regular mortgage payment plus some extra in order to pay off the amount you still owe from your forbearance over a set period of time. This means they will take the past due payments, divide them by 12 months, and add them to your next 12 mortgage payments. See above example.

    Modification: By modifying your loan, you can potentially roll the balance back into the mortgage. While this sounds simple, modification is a very complete process. All you need to do is look back to the crash of 2007 / 2008 to see the heartache, pain, and hassle of trying to get a loan modification. Many people asked for loan modifications, but few actually got them.

    DO NOT DEPEND ON OR ASSUME YOU CAN GET A MODIFICATION.

     

    Will forbearance hurt my credit score?

    No and Yes:

    Per the CARE ACT, lenders are not allowed to report any paused (missed) payments as a late payment on your credit report, so technically no, it shouldn't hurt your credit score.

    BUT, the word forbearance WILL show up as a comment under your mortgage (I've seen it already). Lenders will know, and will be extremely reluctant to lend to you in the near future.

    Long standing underwriting guidelines have always required lenders review a minimum of your last 12 months mortgage payment history, which we normally just see on your credit report.

    Lenders will likely NOT lend to you under you can prove, document, and verify you've had a normal on time payment history for at least the last 12 months.

     

    Can I get a new loan after forbearance?

    Homeowners who have been granted forbearance from making full payments on their Fannie Mae or Freddie Mac backed loans during the COVID-19 crisis may still be able to refinance or buy a new home when the crisis ends.

    The Federal Housing Finance Agency (FHFA) has announced that Fannie Mae and Freddie Mac will permit people to obtain a new mortgage under the following conditions.

    If you entered into a mortgage forbearance because of COVID-19 here are your options:
     
    • You entered into a Covid-19 forbearance with your servicer (lender) BUT continued to make all your payments AND are current on your mortgage – the borrower is eligible for a new refinance loan or purchase loan immediately.  Borrower must call their servicer and provide proof that the forbearance plan is removed
    • You entered into a Covid-19 forbearance with your servicer (lender) AND chose not to make their payments– then you can contact your servicer and pay your mortgage current AND remove the forbearance plan. You would then immediately eligible for a refinance or purchase loan. Note you do NOT have to prove where the money came from to get current)
    • You entered into a Covid-19 forbearance plan with your servicer (lender) AND chose NOT to make their payments. You have not yet paid back the missed payments, and will need time to pay back the missed payments. You will need to enter into some sort of pay back plan to pay back missed payments.  You will have to make at least 3 consecutive monthly payment in your pay back plan, after which you would then be allowed to do a new refinance or purchase loan. You will need to provide proof of the payment plan and proof you've made at least three consecutive payments on the plan.
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