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The mortgage loan process during COVID-19

In the midst of the COVID-19 pandemic, you may be wondering what’s happening in the mortgage industry. Although things in the world seem to be changing quickly, here’s what we’re seeing right now.

Interest Rates

The Federal Reserve has taken emergency action to cut rates to zero.

While 0% interest rates sound great to anyone who owns a home or is planning to buy, it’s important to slow down and talk through a few things.

The Fed does not control mortgage rates. Their cuts apply to rates for loans between the Fed and banks, or from one bank to another. Mortgage interest rates are not at 0% and have been fluctuating daily due to extreme volatility in the markets.

Turn Times

As with most mortgage lenders in the United States, we’ve had an increase in our volume and, in turn, there has been an increase in volume for third party vendors (such as appraisers, title companies, insurance agents, etc.) which can cause some delays.

Although our year-to-date average from application to funding is only 28 days, please anticipate longer turn-times during this time. In most cases, we have begun recommending 60-day rate locks.

Submitting Documents

With our upgraded online application system, POP, our customers are easily able to digitally (and safely) submit everything from your application to income and assets, etc.

Verifying Income

As always, we are requiring a Verbal Verification of Employment to be completed 10 days prior to the loan closing. Employers who have instructed their HR employees to work from home must have their normal business phone number (that can be found on the internet) forwarded to an alternative number. We cannot directly call a personal cell phone of an HR employee to verbally verify employment.

Taxes

In light of the 90 day IRS extension granted by the IRS, 2017 and 2018 tax returns will suffice until July 15, 2020.

Appraisals

In some situations, we may be able to provide an Appraisal Waiver (which gives you the option to waive your appraisal or accept the value provided by the Automated Underwriting System). If available, we will extend that option to you prior to ordering an appraisal. If a full appraisal is required, please expect longer turn times.

Signing

As of right now, our friends in the title business tell us it’s business as usual. You’ll make an appointment and meet with your title agent to sign your final loan docs. We know how quickly things are changing, and we’ll revise this should things change.

Recording

We anticipate a delay from the County Recorder during this phase of the loan process.

The Bottom Line

Rates are volatile and loan volume is high.

Navigating this global outbreak is uncharted waters for all of us. Things are changing daily, so now is the time to be patient and rest easy knowing we are working diligently to close loans as quickly and efficiently as possible. 

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