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.
One night this week, after a long and exhausting day, I received a notification about an Instagram “live” from a Realtor that I follow. She had a panel of guests, talking about the current state of real estate, which also included a mortgage loan officer. They were trying to give some guidance and predictions on where they see the market heading, which is always a daunting task. When it came time for the mortgage loan officer to talk about what’s going on in the mortgage world, he began by sayings that “It’s pretty much business as usual.”
Something didn’t sit well with me as I wrote down those words, “business as usual.” I began thinking about why those words were weighing on me so much. Yes, we are doing business. Yes, interest rates are at historical lows. Yes, much of the mortgage market turbulence and volatility has calmed. Yes, this is the fourth consecutive week of increase in mortgage applications for people purchasing homes. But, no, it is truly anything but “business as usual.”
Out of curiosity, I went to do some research on the loan officer who was on the panel and I realized that he has only been in the business for about 2 years. Granted, I don’t think you need to be a mortgage veteran with ten-years experience to know that things are not the same as they were 60 days ago in the mortgage world. Over the past few weeks, to say that the industry has dodged many crippling bullets would be an understatement. There were real risks in the marketplace and many banks and lenders were working under dire conditions without knowing what the next day would bring.
I attended many conference calls and webinars were bank executives were paying six-figure checks daily because of the market volatility, and their inability to manage interest rates normally. There were emergency late-night discussions about how mortgage servicers were going to survive with all the mortgage forbearances that the government forced upon banks. There were also banks who provided mortgages to borrowers and found themselves with no outlets of where to sell them in the secondary market. A direct lender cannot survive if they cannot continuously replenish its funds on a monthly basis.
The effects onto the market place were quite evident as the frequency of “effective immediately” emails began flooding our inboxes. Effective immediately – Bank ‘XYZ’ stopped taking on new loan business. Effective immediately – alternative income documentation loans were suspended. Effective immediately – the limits on maximum financing was reduced. Effective immediately – FHA loans increased their minimum credit score requirements. Effective immediately – there was a 5% haircut for all cash-out mortgages. Effective immediately – construction loans were halted. Effective immediately – home equity loans were curtailed.
Granted, there is plenty of business going on, but, as with pretty much everything else in the world right now – it is “different.” The one thing that social media has given us is instant access to news, information, and perspectives. The lines begin to blur as it pertains to the dissemination of this information, as more often than not, the person delivering the news will add their own opinions on the topic. To say it was “business as usual” was the understatement of the year
That said, conventional loans are happening consistently, and orderly, with some modifications to the normal mortgage process. For example, employment is now something that is being heavily scrutinized, and rightfully so. The unemployment rates are spiking, and job status is changing on a daily basis, including reductions of pay and hours worked. It is because of that, that banks are cautiously reverifying income and employment in real-time until a loan goes to closing. There are other such changes that one might experience in the marketplace. Only working with a true experienced professional, will one be able to avoid a lot of the frustration and heartache in this new “unusual” mortgage environment.
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