May 2020 Edition of the Yamhill County Real Estate Guide - Bringing you HOME since 1994

MORTGAGES IN 2020:

IS THIS THE NEW NORM?

.... Did WeEver Return to the Old Norm After the Great Recession?

Written by: Ken Whiting, Branch Manager

Mann Mortgage LLC of McMinnville

Yes, people are still buying homes, realizing their dreams and finally having that dream home constructed. And rates are so good that everyone who isn’t buying a home seems to be refinancing one. This doesn’t sound like times of despair - staying at home, wearing masks everywhere you go. But it seems to be the ‘new norm’, for now.

Mortgage professionals wake up, grab a cup of coffee, get cleaned up, and off to work they go ….. typically to the dining room table, where they will spend the rest of the day talking with clients, processors, underwriters, realtors and title companies. It is the same routine as before, just a little different scenery. In my house, my wife is working from home in our spare bedroom/office, my son is finishing his senior year at Linfield College in his bedroom, and I called ‘Dibs’ on the dining room. Oops, I forgot to mention my audience - our three cats that are either constantly begging for attention, food, or both.

COVID- 19’s IMPACT ON THE MORTGAGE INDUSTRY

Yes, there’s been one. This crisis is fundamentally different than the recession in 2008, mainly because of the level of equity people have in their homes, so we shouldn’t see the type of meltdown that we did back then.

We haven’t seen any serious inflation as of yet. The stock market crash has been somewhat ’orderly‘ and not accompanied by the confusion that was created in 2008 by the bankruptcy of large corporations .

The only major layoffs we’ve seen so far are from businesses directly affected by the lock down, not from firms affected by the economic downturn.

We are seeing a tightening of guidelines, which will more than likely be temporary. Increased minimum credit score requirements and reduced Debt-to- Income ratios are a couple of changes. There is a new form titled ‘COVID-19 Initial Attestation’ that you will be required to sign. If you’ve been laid off or your hours reduced at work and you’re at the end of a mortgage application, we’ll be qualifying you based on your ‘new’ work hours, just before closing, by verifying your hours with your employer.

You may have heard the word ‘Forbearance’ in the news lately. This is a program designed for borrowers who temporarily cannot make their payments. Advertised as ‘payment relief’ and touting ‘no payments for six months’, these programs sometimes involve deceptive practices on the part of some lenders.

Before accepting one of these offers, please call your lender and find out the exact terms and details of what you are about to get yourself in to. Remember, nothing is free. Make sure that you read and understand all of the fine print.

It’s not all Doom and Gloom though. The mortgage industry has the ability to provide one of the largest economic stimulus impacts moving forward. Many in the industry are very optimistic about the economic recovery. Dave Stevens, former MBA (Mortgage Bankers Association) president, thinks we will see a “W curve” with things rebounding very sharply, temporarily dropping again (though not as far), followed by a permanent rebound.

The MBA’s Chief Economist expects rates to remain low through all of 2020 and 2021, and even into 2022. Keep in mind, however, that this is all new to us, and most Secondary Departments have said that they have no idea how to put a rate sheet together in these market conditions. We’re all just trying to figure it out.

In 2020, nationally speaking, the mortgage industry was tracking above each of the last 5 years for purchases before we fell off a cliff. What this means is there will be pent up demand for purchases when this is all over. Let’s all rise up to the challenge we’re faced with, and go wash your hands.

1015 NE Adams Street Suite 101 McMinnville, OR 97128

Ken Whiting - NMLS 299572

Mann Mtg NMLS 2550

Phone: 503-435-2087 • Fax: 503-472-0627

Email: ken.whiting@mannmortgage.com

Web Page: www.kenwhiting.mannmortgage.com