The following article is provided by Univest Bank and Trust Co. For additional information about Univest’s many services, please visit the web site at www.univest.net
COVID’s Impact on Mortgage Financing
By Chris Carter, NMLS# 128061, VP and Area Sales Manager; Univest Home Loans
Only a few months ago, the United States economy was chugging along at a respectable pace with low interest rates, a record-high stock market and 3% unemployment. These impressive stats supported a seemingly financially sound and stable 2020, but the arrival of COVID-19 quickly dispelled this Goldilocks story before the end of the first quarter. With businesses forced to close amid stay-at-home orders, unemployment skyrocketed which, quite obviously, impacted the normally robust spring real estate market.
With unemployment at its highest level in decades, lenders have been forced to verify and redocument income and employment status for clients up until virtually the last minute before securing funding. Borrowers with lower credit scores may find themselves unable to secure the same financing as before the onset of the pandemic. Some secondary financing, such as home equity loans and lines of credit have been eliminated altogether at several lending institutions. Government-sponsored enterprises such as Fannie Mae and Freddie Mac, along with mortgage insurance companies and other agencies (HUD, VA, etc.) have generally tightened up underwriting guidelines and credit overlays.
Simultaneously, interest rates have plummeted to incredible lows which has prompted record refinancing. For many, this phenomenon has clogged pipelines, delayed desired closing dates and, in some cases, forced lenders to indefinitely postpone transactions, disallow interest rate locks and/or make their pricing so unattractive as to discourage would-be customers until the volume subsides.
Remarkably, Univest Home Loans has maintained its 1-2 day underwriting turn-times and continued its sterling 98% customer satisfaction rating all while setting and breaking record loan production. Not a single purchase closing has been missed or postponed. Appraisal waivers and exterior inspections have allowed us to process and fund hundreds of transactions per month. And, we have only slightly adjusted our consumer lending model for potential home equity borrowers.
As a bank with our own money to lend, Univest can self-fund and rely less on wholesale arrangements than our competitors whose warehouse lines have been cut and some face margin calls. Our 100% local team has transitioned to working remotely seamlessly. Unlike other lenders, Univest Home Loans, can originate portfolio transactions as an option for alternative and specialized financing. Our expansive product line, which includes construction-to-permanent financing, lot loans, swing loans, and first-time homebuyer grants (to name a few), remains available. During these uncertain times, Univest’s experience serving local communities over the last 144 years has proven to be an asset.
Interest rates are at historic lows, despite the uncertainty, and now could be a good time to buy or refinance. However, headlines on coronavirus and its impact change daily which has created an ever-fluid situation. Contact a Univest Home Loan consultant at 877-723-5571 or firstname.lastname@example.org for the most current information and to learn more about what we can do for you in these challenging times. If you find yourself financially burdened with your existing mortgage, contact your servicer immediately for options. Be safe and stay healthy!
Univest Bank and Trust Co. is an Equal Housing Lender. NMLS #415882