By Lysa Catlin, Senior Loan Consultant | Caliber Home Loans, Inc.
As we all adapt to a new and unchartered environment, it seems that ‘he who adapts first wins.’ As we saw in the last economic cycle, the people and companies who can remain nimble and adapt quickly to a new and changing environment come out strongest in the end.
First and foremost, Caliber Home Loans is here to support you, your clients and your business. While several of our local competitors have pulled loan programs, stopped accepting refinances and in some cases closed their doors altogether, Caliber is very well positioned to withstand the current economic climate and to continue to fund loans. We are well capitalized with $200m in liquid cash and the backing of LoanStar, a $50B hedge fund with deep pockets. We have been mindful of the quality of the loans we issue and with our hedging of rate locks on the secondary market to help ensure we are well funded and open for business.
As some companies struggle, we are receiving “save me” calls when loans in process at other companies suddenly cannot be funded. We are here to help and will do our best to pick up the transaction and close as quickly as possible. We have not experienced any disruption in our conventional jumbo product offerings.
As the market changes, lending guidelines will tighten across the industry. We are already seeing non-QM and subprime lending programs have pulled back or been eliminated. It is my expectation that jumbo guidelines may tighten in the future as they did in 2008/2009.
With the current Shelter in Place orders, people are wondering what that means for their home purchase. Loans are still closing, they are just taking a little bit longer. We are kindly asking for 35 days or sooner for closing and will do our best to close as soon as possible. Here is what you need to know:
Appraisals
The good news is that we are getting updated and more lenient appraisal requirements on conforming loans. More loans will allow for one of the following instead of a traditional appraisal:
- Appraisal waivers which we call PIW (property inspection waivers).
- Desktop appraisals where the appraiser writes the appraisal report based on the information they have online and does not actually visit the property.
- Drive by appraisals.
For loans that do not qualify for one of the above and or a jumbo loan, appraisals are still required. Appraisals are considered essential services and are still occurring in Shelter In Place areas. Appraisers are willing to do appraisals. We are placing orders and have expanded our appraiser list to include additional appraisers. Appraisals are taking longer so we are asking for additional time on closings.
E-recording and E-notarization
For conforming loans and government loans, Caliber allows for E-recording and E-notarization if title will insure it and if title provides Gap insurance and if county allows e-recording. King, Pierce and Snohomish do allow e-recording. Many of our local title companies insure e-recordings/e-notarization and we are able to close smoothly.
For jumbo mortgages, a “wet” notary is required. Escrow functions are considered essential services and notaries are still notarizing. Jumbo loans are still closing.
Potential Slowdowns
Tax Transcripts are taking longer. The IRS is taking longer to process them. We are ordering them as early as possible in the process but we have seen a few hold-ups on tax transcripts.
Verification of Employment. With many companies working remote or temporarily shut down, verifications of employment can take longer and add time to closings.
The Bottom Line
Loans are still closing in shelter in place areas. Caliber is well funded and still funding jumbo mortgages and refinances. We are here to help you put deals together and save deals that appear to be falling apart elsewhere as smaller companies run into liquidity issues.
Housing is at its strongest levels in 13 years and will be resilient. Following a potential temporary downturn, most experts expect housing to rebound. And keep in mind, the current environment has helped affordability and has been an opportunity for many.