INVESTOR MORTGAGE REPORT 3 26 2020
Investor Mortgage Report 3 26 2020.
After agreeing to purchase $200 billion in mortgage backed securities last week, the Fed has agreed to put more liquidity into the conventional loan market (this is the only market so far) and will buy up to $50 billion/day for the foreseeable future.
This will allow lenders who offer conventional mortgages in the market to continue closing loans at their current record pace.
That being said, they are still overwhelmed with the business. Plus, they now face new issues like unemployed borrowers and a slowdown in appraisal times and title availability.
The Not So Good.
With most of the buyers backing out of the market, the market for mortgage backed securities for Ginnie Mae is shrinking. These are the mortgage backed securities for FHA, VA, and USDA. This will impact some of the buyers for your homes.
What this means is all or most of the mortgage companies will either stop offering or will raise the credit and income requirements for these loans. We will see a slowdown in government backed loans until the Fed figures out a way to help.
Unlike conventional loans, the servicers (those that take your payments) are required to cover the payments to the investors when the borrower does not pay. When defaults rise, buyers stop buying loans and move towards the conventional market. Bail out please!
We will be lucky if 1% of the lenders who were lending outside the conventional box are still around (or halt operations) the next 2 to 4 weeks. This is a very big pool of loan products that rental property investors use if they are out of the conventional box. The options are gone for now!
The local banks and credit unions. Most are on hold and taking an approach of “wait and see unless you have a great deal and are a good client.” Call them and check in to see if they are lending. If not, ask them when they will be back in the market.
We will keep you informed as lenders change course and start funding loans again for investors. It’s not IF but WHEN you should be ready. Focus on deal quality, keeping your financial condition strong (keep making your payments), and develop a portfolio of your work.
A couple weeks ago, all lenders were trying to get your business. Now those who make it easy for lenders will get money.
We will be doing an Investor Mortgage Report every Monday, Wednesday, and Friday. If you want us to send you a copy, provide us with your email and we will add you to the outgoing list. That way you’ll know the moment lenders start coming back.