Mortgage Industry Improves…And Gets A Bit Worse. Allow Faith to Prevail Over Fear.

On one front, the crisis as it’s been effecting the mortgage industry is abating. The mortgage-backed securities market has stabilized and at least for conforming-sized loans, interest rates are returning to normal. Yet on another front, the problems are just beginning.

Chase is no longer lending to borrowers unless they have 700 scores and a 20% down payment. Flagstar and Caliber Home Loans are no longer accepting new jumbo mortgages, construction loans, renovation loans, and application for first-time buyer programs. Wells Fargo is no longer lending in the jumbo market – except to their existing clients and then only for the very best qualified borrowers – and by the way, these borrowers must deposit two hundred and fifty thousand dollars with Wells Fargo in order to obtain the loan!

Why is this happening?
This is another unanticipated consequence to the poorly thought out CARES ACT which allows borrowers to obtain a forbearance on their mortgage simply by asking, whether they’re having a hardship or not. Lenders servicing these loans are losing money hand over fist and they don’t wish to add more potentially harmful loans to their already pained servicing portfolio.

Since the CARES Act became effective, the amount of forbearance requests already measures well into the millions. The banking industry anticipates this number to grow exponentially – as well as the resulting loses. To add some perspective, if just 10% of homeowners seek forbearance, those costs would be more than $4.2 billion per month.

While all these lenders – and more – are canceling loan programs for the foreseeable future, it should be noted that as a mortgage broker, Mortgage Wealth Advisors maintains a repertoire of lenders in order to ensure we can provide the mortgage that best suits your needs. Just say’in.  🙂
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I’ve been speaking to many home buyers and homeowners these past few weeks. There are some that are speculating they believe home values will crash on Long Island due to this pandemic. If we are referring to the multi-million dollar homes on the Gold Coast, we’re already seeing depreciation. However, for the vast majority of homes on Long Island priced below $1M, these fears are NOT warranted.

There is absolutely no evidence to support fears of home values crashing. In fact, there is significant data to support that home values will remain stable! Since this crisis began, fewer homeowners are putting their homes on the market. In the first two weeks of April, there were just 469 homes listed for sale in Nassau and Suffolk Counties. That’s nearly 79 percent fewer homes listed for sale in the first two weeks of April 2019. Yet there is still tremendous demand from buyers to purchase! Buyers are being handicapped by social distancing and not wanting to go into homes; yet homes are still going into contract and buyers are still searching online. The economics of supply and demand still hold true.

While the Pandemic has certainly disrupted the spring home-buying season, Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting recently stated, “The purchase market is still expected to rebound, as long as the public health measures to reduce the pandemic’s spread are successful and result in a broader recovery.”
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It will take weeks and months for this crisis to end. There will be a new “normal” which we will all learn to live. During these past few weeks and next several months, some people will panic and cower, afraid of what might be, while others will see the problems, hardships, and pains for what they are. They will also see the opportunities for their families, their businesses, and themselves to come through this crisis stronger and better.

“FEAR” can be defined in two ways:
1. Forget Everything And Run
2. Face Everything And Rise.

How will YOU define this crisis? The choice is yours.

Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist®, and a published author. His interviews include Blog-Talk Radio, Newsday, The Daily News, Anton Press, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.