While many industries have either slowed down or come to a complete standstill due to the coronavirus pandemic, the lending industry has been busier than ever with a flood of refinances driven by low interest rates.
But despite having their hands full, mortgage bankers should “dig deep and do the extra work” for clients now more than ever, according to Tim Brigham, branch manager at Union Home Mortgage.
“We need to remind ourselves that we are all in this together,” he said. “We’re in a bad spot as a country, and we need to get through this together.”
He advises brokers to keep an open line of communication with lenders, too. “I try to coach Realtors on what’s going on so when a client asks, we have the same synergy and the same story,” he said.
Aside from maintaining open lines of communication, Brigham said real estate professionals should go the extra mile to keep themselves up to date with the ever-changing government regulations and programs and requirements from different financial institutions — especially for first-time buyers. “Lending is changing every single day, and I don’t expect that to let up,” he said.
As an example, Brigham noted the recent relaxing of restrictions on appraisal waivers that he’s seen in the industry lately from Fannie Mae and Freddie Mac. The increase in waivers, which appears to be in response to social distancing guidelines stemming from the COVID-19 pandemic, can save buyers hundreds of dollars. Historically, appraisal waivers have been granted for properties with a realistic purchase price and a substantial amount of data, Brigham said.
“[Appraisal waivers have] been around for years, but it was rare to get one,” he said, noting that they typically were limited to refinancing loans prior to COVID-19. “I personally never saw one on a purchase, but with the relaxed restrictions, they’re on the sale side as well.”
Although the 2008 financial crash is a common point of comparison with the coronavirus crisis, Brigham said the two recessions are very different and the federal government is getting more involved this time around than it did a decade ago.
“As the data comes out, we’re in uncharted waters,” he said. “We’ve never seen this before, but what’s important to remember in this current environment is, it’s not 2008. We’re not going to see the foreclosures we saw in 2008. Now we’re seeing the government step up and giving access to allowances to give some people relief.”
This has helped the real estate industry to keep chugging along, and Brigham said he’s seeing it in his own business. “I’m having clients who are even going over the asking price, and still seeing multiple-offer situations where they’re battling it out for homes. That’s telling us that, of the people out shopping, they’re fighting for real estate.”
Irrespective of the pandemic, Brigham said there are some go-to programs he often recommends for first-time homebuyers, such as the down payment assistance programs offered through the Illinois Housing Development Authority.
First-time buyers often misunderstand down payment requirements, he said, sometimes believing they must save 20% of the value of the home for the down payment. Brigham also said he regularly finds himself advising first-timers to not spend all of their reserves on the down payment, but to set some aside for other home-purchase-related expenses.
He added that lenders, as well as agents, should always keep in mind that this is likely the largest purchase their clients will ever make. “It’s the place where their children sleep at night,” he said, emphasizing what a personal decision it is to buy a home. “You’ve got some scared people out there right now. They don’t know what to do. Put yourself in their shoes. Learn the data.”