Unusual Issues Are Being Tackled During COVID 19: Some Not New

Unusual Issues Are Being Tackled During COVID 19: Some Not New

BY PAMELA M. MARRON | CONTRIBUTING WRITER, NATIONAL MORTGAGE PROFESSIONAL

Mortgage business has increased, though some issues never experienced before are popping up. Unusual circumstances have caused many in our industry to join forces for better processes, and some of the problem solvers from the housing crisis are making sure past solutions learned are ready to use.

URGENT NEED FOR REMOTE ONLINE CLOSINGS

I’ve had two “drive-by” closings in the last two months where clients, unable or not allowed to enter the premises of a title company, could sign closing documents outside of the building in a vehicle. Preparation and physically giving and retrieving closing documents to these folks was a process.

I’ve attended my closings for years. But In Florida, it’s highly uncomfortable being outside in summer months. So I was greatly interested in the effort of the Mortgage Bankers Association (MBA), National Association of Realtors (NAR) and the American Land Title Association (ALTA) who together have developed a model executive order for states to enable remote notarizations.

Remote Online Notarization (RON) allows banks, title companies and law firms to complete mortgage transactions that require signatures and a notary seal remotely but allow this to be done on a computer with online audio and video technology. There are still kinks being ironed out, but this benefit cannot come soon enough! Bravo to these trade organizations who are working to provide a secure legal method to use for home closings during this unusual time!

PAST LOSS MITIGATION AND CREDIT COLLEAGUES BEING PRO-ACTIVE

My past work with consumer credit code resulted in interaction with loss mitigation policy makers who could do something to fix problems. “Loss mitigation” is what the mortgageservicing industry calls the process where borrowers and their loan servicer work together to avoid foreclosure.

I have been surprised to hear from many of these folks who have their eye on credit and loss mitigation issues coming out of this pandemic. Many problems were found during the housing crisis, but solutions were ultimately found. The proclamation of a national disaster before new forbearance policies became effective due to COVID-19 seems to have thwarted an avalanche of disastrous credit for consumers that was experienced during the housing crisis. HUD housing counselors were deeply involved with many of these issues then and are already assisting those that need help now.

CREDIT TOOLS IMPORTANT NOW MORE THAN EVER

I am already documenting Fannie Mae and Freddie Mac automated system approvals for a few clients who have experienced forbearance of mortgage, student loan and car loans. This has resulted in memorizing forbearance credit rules for all loan types and checking with lenders on their documentation and if overlays are applied.

Deep analysis of credit was learned during the housing crisis, so where the best detail of which credit reporting bureau, Trans Union, Experian and Equifax, is reporting derogatory credit has become common to spot thanks to the credit reporting platform Meridian Link that allows detail to be seen broken out for all 3 credit bureaus.

And for those clients who need credit evaluation that loan originators can assist with, specific credit tools like the Credit Xpert Wayfinder and the Credit Xpert What If Simulator are a few of the best resources.

FHA APPRAISAL EXTENSIONS

Did you know you can extend an FHA appraisal for 30 days? I’ve had two contracts in the last month where an FHA appraisal was assigned to my buyer from the previous buyer but the 120-day appraisal expiration was occurring before my client’s closing date.

The appraisal can be extended by the Mortgagee (HUD 4000.1 Handbook, pgs 111-112) if

(1) the Mortgagee approved the Borrower or HUD issued the Firm Commitment before the expiration of the original appraisal; or

(2) the Borrower signed a valid sales contract prior to the expiration date of the appraisal.

An appraisal update must be performed before the initial appraisal, with no extension, has expired. Where the initial appraisal is subsequently updated, the updated appraisal is valid for a period of 240 days after the effective date of the initial appraisal report that is being updated.

Far too often after a tumultuous time in our country, stories are written about those who were able to take advantage of the misfortune of others for their own financial benefit. I am grateful that policy makers and agencies have already prepared to assist clients who will need our help and am confident we will be able to do so.

Stay tuned. Stay safe.

Pamela M. Marron is a senior loan originator with Innovative Mortgage Services Inc.