What Agents Need to Know Now About Mortgage Availability BY MICHELE LERNER
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ealtors® who have been in business for more than a decade know mortgage credit availability has been on a rollercoaster, with extremely easy credit guidelines followed by hyper-tightened credit. In recent years, mortgage credit has gradually become more available, but several factors in 2020 have led lenders to pull back the reins and tighten credit a bit again.
“If an agent has been shopping with a client prior to April, it would be a good idea for them to have their client update their preapproval or speak with their mortgage advisor to see if anything has changed,” says Corinne Wallace, vice president of mortgage lending for Guaranteed Rate Affinity in Madison.
Extremely low mortgage rates drove refinancing applications to new heights, but when the pandemic hit, businesses closed and more than 40 million Americans filed for unemployment—mortgage forbearance programs were needed. Lenders, already overwhelmed with applications, were hit with the need to help borrowers in financial distress. Naturally, lenders wanted to reduce their exposure to risk, but not every lender reacted the same way.
If your clients have been furloughed or placed their mortgage in a forbearance program, they may need to go through some additional steps before they can qualify for a loan. Generally, if someone is furloughed and their income is required to repay the loan, the clients will have to wait until they are fully working again, says Scott Lindner, National Sales Director at TD Bank Mortgage in Mount Laurel, but there are nuances.
“Changes to loan program requirements depend on the individual lender. Some lenders have placed additional restrictions, known as loan overlays, on programs such as increasing the minimum FICO score or requiring post-closing cash reserves,” says Michael Borodinsky, branch manager of Caliber Home Loans in Edison. Lenders with these stipulations want “borrowers [to] have additional funds available to cover potential financial impacts such as a job loss, compensation reduction or a furlough. Borrowers would be wise to not only shop for the best terms but also to make sure they meet the lender’s specific guidelines.” Realtors® need to have relationships with reliable lenders who can offer guidance to their clients. Keep in mind that loan guidelines and programs change frequently, so specifics mentioned in this article may have changed by publication time. 20 | NEW JERSEY REALTOR® | July/August 2020
Furloughs, Forbearance and Loan Applications
