Manual Underwriting During Coronavirus Mortgage Crisis
BREAKING NEWS: Manual Underwriting During Coronavirus Mortgage Crisis
The coronavirus pandemic has turned the mortgage markets upside down.
Never in the history in the United States has the mortgage industry been in chaos due to the coronavirus pandemic. The pandemic shut the U.S. economy. The economy was stronger than ever prior to the pandemic. In just a period of six weeks, the U.S. economy came to an abrupting halt. The Dow Jones Industrial Average hit an all time high at 29,000 in February 2020.
The pandemic sent the Dow Jones and other equity markets tumbling 30%. The 2020 housing market forecast was stronger than ever. Mortgage companies were enjoying record loan applications and revenues. Then the unexpected happened. The COVID-10 Pandemic crushed the U.S. economy. Millions of businesses were ordered closed until the economy reopened.
Millions of businesses will not be able to reopen as the stay at home order by state governors are in effect. As time passes, the economic damage to businesses were beyond devastating.
The GREAT NEWS is Gustan Cho Associates still process and fund manual underwriting during the coronavirus pandemic mortgage crisis.
How The COVID-19 Pandemic Crushed The U.S. Economy
The global coronavirus pandemic hit the United States destroying the U.S. economy overnight.
In a period of weeks, the unemployment claims skyrocketed to a whopping 33 million Americans. The lowest unemployment rate of 3.5% is now expected to go north of 20%.
Although the Central Bank lowered interest rates to zero percent, mortgage rates for non-prime borrowers skyrockets. The reason being is because the secondary mortgage bond market was in chaos. Investors in the secondary mortgage bond market had no appetite for borrowers with under 700 credit scores. Many lenders completely revamped their loan programs.
Manual underwriting on VA and FHA loans were completely halted. Other loan programs such as 203k loans, down payment assistance loan programs, reverse mortgages, one-time construction financing and others were suspended until further notice. Non-QM lenders have completely shut down non-QM and alternative portfolio financing until further notice. Many non-QM lenders have gone out of business. Many analysts and real estate economists are worried about another housing and mortgage crisis that may be worse than the 2008 financial crisis.
Most mortgage companies have halted Manual Underwriting During Coronavirus Mortgage Crisis until further notice.
Importance Of Manual Underwriting
All residential mortgage loan programs need to go through either Fannie Mae’s and/or Freddie Mac’s automated underwriting system (AUS).
If the borrower meets all of the agency mortgage guidelines on the particular loan program, the AUS will render an approve/eligible per AUS findings. If the automated underwriting system determines the borrower is eligible but the system cannot render a decision, then a refer/eligible per AUS findings will rendered. Refer/eligible per automated underwriting system means the borrower may be eligible for the particular loan program if it is manually underwritten by a human mortgage underwriter. FHA and VA loans are the only two loan programs that allow manual underwriting. Manual Underwriting has been suspended by many mortgage companies during the coronavirus pandemic mortgage crisis. An approve/eligible per automated underwriting system finding file may be downgraded to a manual underwrite if the lender deems it. However, the great news is Gustan Cho Associates is business as usual with manual underwriting on VA and FHA loans.
Lenders Suspending Manual Underwriting During Coronavirus Mortgage Crisis
The coronavirus pandemic has created a national mortgage crisis in the United States. Due to liquidity issues on the secondary mortgage bond markets, many changes were made by lenders to protect their interests. Lenders made drastic changes to the mortgage loan programs they were offering. Non-QM lenders have completely ceased doing business until further notice. Most lenders implemented countless lender overlays.
Some lender overlays that lenders imposed were the following:
- Higher credit scores on government and conforming loans.
- Lower debt to income ratio requirements.
- Higher down payment and/or lower loan to value overlays.
- Higher loan level pricing adjustments.
- No manual underwriting on FHA and VA loans.
- No FHA 203k Loans.
- No Reverse Mortgages.
- Suspended down payment assistance mortgage programs until further notice.
- No Jumbo loans until further notice.
- No Non-QM loans until further notice.
Qualifying For Manual Underwriting During Coronavirus Mortgage Crisis With A Lender With No Lender Overlays
The great news is Gustan Cho Associates Mortgage Group is still offering and funding manual underwriting during coronavirus mortgage crisis. Gustan Cho Associates is also offering most other loan programs during the COVID-19 mortgage crisis. This includes FHA 203k loans, non-QM loans, and Jumbo Mortgages. Gustan Cho Associates is one of the very few national mortgage lenders who still originate and fund borrowers with under 620 credit scores during the COVID-19 pandemic mortgage crisis. If you have any questions or want to qualify for a mortgage with a lender with no overlays, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The Team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
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