FHA is NOT Dead; Forbearance is NOT Forgiveness, and this Market of the Moment is all about Liquidity
After spending hours reading the 880-page Stimulus Package that rolled out on Friday; as well as the Ginnie Mae Letter proposing a Pass-Through Assistance Program (PTAP) I have come to a few conclusions. Let's start with FHA. FHA is NOT Dead! I have heard too many rumors around this from lenders and Realtors alike. Just as many other loan products, FHA has to change in this environment but it is not going away. FHA loans with FICO scores under 660 have historically high default rates. Add to that our current mortgage forbearance environment with homeowners out of work; Servicers are not able to continue paying investors (as they are required to do by Ginnie Mae) when they have no money coming in (i.e. no mortgage payment revenue). This servicer crunch is the essence of the Ginnie Mae letter setting up a PTAP. The relief this provides is to be determined. So in the meantime, lenders and servicers have to protect themselves by shrinking the credit box.. i.e. higher credit scores and lower debt to income ratios. Second, Forbearance is NOT Forgiveness; it also isn't deferment.
Today Servicers are doing the best they can to answer all of the inquiries. Remember, we just came off of historically low foreclosure rates. Many Servicers were not staffed for times such as these. New information keeps coming out, especially as the 880-page bill is rolled out.
If you can, you are best served to make your mortgage payment. it will keep you on the road to wealth building. If you can't, contact your Servicer. For the most part, they are offering 90-day forbearance options, which simply means delaying your payments until the end of that window (with all past due amounts owed at that time). At the end of 90 days, borrowers and Servicers will reassess their options based on agency and investor guidelines. Those options include:
pay the back amount owed in full
start another 90 day forbearance period
go into deferment, i.e. moving the amount owed to the end of the term
do a loan modification
start the foreclosure process
Lastly, Every Market has its Moment
This moment calls for liquidity!!First for opportunities. Second for protection. This market is unlike any other in the past and our hot spring market could be delayed. Think about your funnel.. anyone in it is closing.. so March and April are still great months. May and June however, are dependent on the top of the funnel, which right now is mostly on hold.
Agents, protect yourself now by reassessing your budget and save your commissions. Because as much as May and June might be slow.. there will be opportunities on the other side! The housing market was strong going into this and will be strong coming out! Stay tuned as I send out more regular updates. And give us a call if you want to know what this means to you! Our team is ready to not only keep you informed but support you!
Nicole Rueth The Rueth Team of Fairway Independent Mortgage Corporation 750 W Hampden Avenue, Suite 500 Englewood, CO 80110 303-214-6393 www.TheRuethTeam.com