Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
This week I contributed to a Forbes article that asked my opinion on how real estate and mortgage professionals can best help clients during these challenging times. I commented on how impressive it has been to see how quickly Realtors have pivoted in the current climate, and adjusted to the real challenges in showing houses while in lock-down and with social distancing requirements still in force throughout the United States. From simulated open houses, to live video showings, to enhanced virtual home tours – top agents have adjusted to the realities of the limitations we are living.
In contrast, most in the mortgage sector have not altered their business practices with enhanced systems and technologies to address today’s atmosphere. So many of the one-dimensional “disruptors” in real estate and mortgages have been silenced during these times. We are thankful at Approved Funding, however, that we are in the minority of lenders that have aggressively adapted to a virtual housing and lending marketplace. I will get to more of that shortly. The adaptation of top professionals to provide preeminent guidance and vision at times like these are a testament to their skill and expertise.
The efforts of “top professionals” have helped increase the demand for both purchase and refinance mortgage activities – with purchase mortgage applications rising for the third straight week – up 6% from last week. This is coming on the heels of an ADP employment report that showed that there over 20 million job losses in April, which is the worst number on record. It is expected that we are at a 16-18% unemployment rate, which is expected to rise.
Aside from those battling health and employment tragedies – and to those we extend our continued heartfelt prayers – financial concerns seem to be on the top of most lists of anxieties. I am fielding calls daily from professionals and individuals alike who are asking my opinion about market conditions, as well as financial guidance on interest rates and mortgage repayment options. Many are worried about the equity in their homes, and if now is the right time to buy or sell real estate.
For those that are merely reading online blogs or media headlines, they are seeing that Zillow has predicted a rapid 50-60% decline in home sales, and estimated a decline in overall home prices of 2-3% this year. That’s a blessing compared to the 20-30% drop that the big Wall Street firms and megabanks are projecting. Those calamitous forecasts have caused banks such as JPMorgan Chase and Wells Fargo to curb their underwriting guidelines and restrict the types of loans they will approve to superior clients only, with layers of limitations.
Meanwhile, what we are finding is that demand for homeownership has been pent up and those living in apartments are looking for more space and suburban living. Before the pandemic, the housing market was booming, and prices were increasing, while inventory was at its lowest level in 40-years. The homeownership rate has recently risen to 65%, with the fastest-growing segment being those in their 20’s. Additionally, one of the biggest drivers of home buying is children, and many expect childbirths to increase over the next year. With demand rising and supply remaining tight, I for one believe home values should be well supported into the future.
Having navigated through the housing crises and “Great Recession” of 2008 as well as other market downturns, such as the dot-com bubble and sub-prime market meltdown, I have learned many great lessons from those experiences. One of the pillars of my beliefs, which was born out of those tumultuous times, is the principal of providing “real-time value” above all. In the same way that real estate agents are seeing success in maneuvering through the current market limitations by providing “on the ground” intelligence to home buyers, we are doing the same for our mortgage clientele.
Merely spitting out rate quotes with fee schedules is a tremendous disservice to those who need real market intelligence and value today. They need visual illustrations, they need virtual hand-holding and they need short-term and long-term financial considerations for their specific circumstances. They need someone to expound to them the realities of market depreciation, the challenges of credit risk implications, and the impact of inflation or deflation in the marketplace. What they are finding is that most banks and brokers are not equipped or capable of providing such value and insights. I am proud to say – we are, and so are those top professionals that we work with.
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