Pandemic Changes to the Mortgage Process
Humans are incredibly adaptable creatures. No matter the circumstance, we find a way to adapt, survive and thrive. This adaptability has been on full display since the onset of the coronavirus pandemic. At first, many of us had problems remembering to take a mask with us whenever we left our homes. Now, we almost feel naked without one. Making sure we have our mask is a part of our normal ritual along with making sure you have your keys and wallet. The mortgage process has had to adapt to the pandemic, too. The ways in which mortgages are applied for, serviced and even terminated have been updated to accommodate the needs of the pandemic. In fact, things are still changing. The team at Peoples Choice Mortgage is here to look at how the mortgage process has adapted to the pandemic.
How Has the Pandemic Changed the Mortgage Process?
The pandemic has changed how lenders provide mortgages and how consumers apply for a home loan. Most of the changes have been made to either accommodate the pandemic’s impact on finances or to accommodate social distancing. Let’s take a look at some of the biggest ways applying for a home loan has changed since March of last year …
Historically Low Mortgage Rates
Many feared that the coronavirus pandemic would cause a crash in the housing market similar to 2008. Those who feared a real estate crash imagined a world where many people lost their jobs. This in turn would cause them to fall behind on their mortgage, resulting in foreclosures, which would flood the market with homes to buy. Clearly, this did not happen. Instead, the Federal Reserve slashed interest rates, which caused mortgage rates to drop to historic lows. Rock-bottom mortgage rates caused a housing boom and anyone who was able to, did would they could to buy a home. This housing boom is still happening and many people who want to buy a loan can still get a fantastic deal on a home loan.
Foreclosure Moratoriums
Historically low mortgage rates helped encourage people to become homeowners or to buy new homes, which helped fuel the real estate boom. Other adaptations to the pandemic helped make sure that the inventory of available homes did not suddenly expand, causing prices to drop. Instead, the prices and values of homes increased dramatically over 2020 and are expected to continue their rise in 2021. A lot of credit for this phenomenon is owed to foreclosure moratoriums.
Those who predicted the coronavirus would have a disastrous impact on the housing market were not completely off-base. They predicted that the pandemic would leave many Americans unemployed and struggling to pay their rent. Tragically, that part did happen. Unemployment has been and remains very high. This will remain the case as long as many industries are entirely shut down or not operating at full capacity. These predictions were also correct in the sense that people also fell behind on their mortgages. Over 2.7 million Americnas are currently in forbearance. For many, their forbearance ends in March. In normal circumstances, once the forbearance has ended, if the homeowner is not able to catch up on payments, then foreclosure processes would begin. However, that is not happening.
To prevent millions of Americans from losing their homes due to economic hardship as a result of the pandemic, the government has passed a series of evictions moratoriums. The first moratoriums were a part of the CARES Act. As the pandemic has continued, these eviction moratoriums have been extended. Same thing just happened recently. One of the first actions of the Biden administration was to extend the eviction moratorium and extend forbearances for USDA loans. They also extended moratoriums and forbearances for FHA loans, too. It seems like there is the political will to extend these moratoriums indefinitely as long as the pandemic continues.
Social Distancing for Singing and Servicing Mortgages
Another big change to how people apply for a mortgage and have their home loans service is how these activities are conducted while social distancing. Mortgages require a lot of paperwork and a lot of signatures by a lot of parties, and most need to be in the presence of official witnesses. Throughout the pandemic, lenders, independent mortgage brokers and mortgage applicants have found creative ways to maintain social distance. One workaround that the mortgage process has used has been parking lot signatures. Mortgage brokers, mortgage applicants and necessary witnesses all meet up in a parking lot and pass paperwork between cars. This allows individuals to stay in their own cars with masks and use their own pens.
The Federal Housing Authority has recently passed new waivers that allow mortgage interviews and signatures to be conducted not in-person. A few of these waivers exist explicitly for older mortgage applicants who are most vulnerable to the coronavirus. Several of these waivers apply specifically to reverse mortgages, as well. The point is that the government is uniquely aware of the importance of social distancing to prevent the spread of the virus. As such, they are looking for ways to amend the traditional mortgage application process to allow for greater social distancing and keep mortgage applicants safe.
Final Thoughts
Although the coronavirus has disrupted much of the normal routines of our lives, it has not disrupted the real estate market. Countless Americans have taken advantage of historically low mortgage rates and found ways to buy a new house in a safe manner. Independent mortgage brokers care deeply about our clients, which includes their physical health and financial wealth. That has led us to get creative and do everything in our power to help our clients through the mortgage process in a safe and thorough manner. If you are interested in taking advantage of today’s low mortgage rates and have a dream of buying a new house, contact us! The team at Peoples Choice Mortgage is here to help you make that dream a reality in a safe and efficient manner.
