social-pug domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home4/phatmegz/public_html/blog/wp-includes/functions.php on line 6121wordpress-seo domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home4/phatmegz/public_html/blog/wp-includes/functions.php on line 6121Mortgage lenders are dealing with economic uncertainty caused by the Covid-19 economic shutdown by tightening qualifying standards. They began increasing the minimum credit scores<\/a>, demanding larger down payments, verifying your employment status multiple times, and even taking away specific loan products completely.<\/p>\n\n\n\n Job losses have gotten to astonishing levels due to the corona virus pandemic. More than 26.5 million workers have filed jobless claims in the last five weeks. Fear has taken over and lenders are extremely concerned that these high unemployment rates will equate to late payments and mortgage defaults in the future.<\/p>\n\n\n\n These changes were put in place since it has become more complicated for lenders to confirm the borrower’s ability to repay their loan as unemployment spikes and facts are changing every day because of COVID-19.<\/p>\n\n\n\n Union Home Mortgage changed its process of double-checking and other conditions. Specific types of mortgages \u2013 such as jumbo and non-QM loans<\/a> \u2013 have been canceled or suspended indefinitely as lenders have paused offering loans that are considered riskier than GSE loans<\/a>.<\/p>\n\n\n\n According to Federal Housing Finance Agency Director, Mark Calabria, some of these adjustments may be with us for quite a while.<\/p>\n\n\n\n “Certainly, we saw credit standards tightening in 2009 and 2010. In fact, we saw credit standards tighten as early as 2006. So, there was a slow tightening over that time. I think you\u2019ll see this as a reminder that credit risk is an actual thing in the mortgage market”, said Calabria.<\/p>\n\n\n\n Additional requirements lenders add are called overlays which puts in another layer of protection for certain mortgages, like increasing the minimum FICO credit score<\/a> to quality for a Federal Housing Administration loan from 580 to 640.<\/p>\n\n\n\n Caliber created a number of overlays for its conventional, jumbo and government loans, that include:Here’s a glimpse into how lenders are tightening their criteria to qualify<\/h3>\n\n\n\n
\u2022 Age of documents: The age of document requirements has been lowered from four months to two months for most income and asset documentation.
\u2022 Verbal employment follow-up confirmation: If not able to receive a traditional verbal verification of employment, the lender will allow an email sent from the employer’s website address, year-to-date pay stubs from the pay period that is just before the note date or an account statement confirming the payroll deposit from the pay period that is the most recent before the note date.<\/p>\n\n\n\nMortgage lenders need to incorporate additional assurances against borrower delinquency<\/h4>\n\n\n\n
\u2022 Age of documentation: Income and asset documents must be dated within two months (60 days). If an asset statement is provided only on a quarterly basis, the most recently issued quarterly statement must be provided.
\u2022 Verbal VOE:<\/strong> All verbal VOEs must be completed and be done within three business days of the note date, confirm the borrower is presently employed and not on leave or being furloughed, confirm that the borrower’s hours and pay have not been affected in the last 30 days and be completed by an HR representative, owner or digital vendor.
For those that are self-employed, the borrower must provide a written statement that the business is open and operational and that the COVID-19 effects will not have a material impact on the financial statement provided at time of approval.
If bank statements are not able to be provided, then the qualifying income<\/a> must be decreased by 25% and be viewed as acceptable to proceed.
\u2022 Rental income:<\/strong> Rental income may only be used if the borrower’s FICO is above 700 and the borrower can provide six months of reserves for each property that has a mortgage in which rental income is being used to qualify.
If the FICO score and reserve requirements are not able to be satisfied, then the borrower needs to qualify with the full mortgage payment, property taxes and insurance for the subject and other real estate properties they own.<\/p>\n\n\n