Are NYC, NJ, and FL mortgage brokers seeing a large uptick in refinances with interest rates at all time lows?
Yes, BFR seeing more inquiries for refinancing than any time during our firm's 12 year history. Fortunately, our technology and proper staffing have allowed us to work at the same speeds as always.
For New Yorkers, New Jersians, and Floridians who want to buy a home now, or soon, what advice do mortgage brokers have? What is BFR’s advice for how to refinance as well?
For a purchase, we recommend applying for a prequalification letter sooner than later. While we are accepting applications for prequalifications, we are told that some of our competitors are simply too inundated with refinance business to do so.
In many cases, mortgage companies are simply not accepting loan applications that do not already have a fully executed contract. This can make it quite challenging to buy when you're not quite sure how much you qualify for. I recommend starting your search for a mortgage broker or lender sooner than you normally would. Try to anticipate your housing needs ahead of time.
I would give the same advice for refinances. We encourage borrowers to get their applications in early on refinances so we’re in a position to lock their rate when it’s a good time to do so. If you call us and like a rate one of our lenders is offering, it can be hard to execute a ratelock on time. By the time we take your application, interest rates may have already moved due the volatility in the market. This has happened on several occasions in the past 3-4 week, and is frustrating for all.
Are virtual closings (remote closing costs) taking place?
Virtual closings absolutely do exist with the temporary remote notary law that went into effect. The key is having a settlement agents (bank attorney/ title company) who are who are on board with doing the closing remotely. BFR is finding some of the bigger settlement agents in New York City are less amenable to doing the remote closing as they seem hesitant to change their policies and procedures on a mass scale. We are finding that boutique settlement agents are easier to work with on virtual closings.
When doing a remote closing, everything is being done via Zoom and FaceTime. The parties show their photo IDs and the settlement agent watches everyone sign. The parties are given a return shipping label and then overnight the documents back to the settlement agent. The settlement agent applies their notary stamp. It’s quite straightforward.
The virtual closing can also be done in a similar fashion where the settlement agent foregoes the overnight and notarizes copies of the signed documents. I would advise against using this method. There is a risk of these documents being rejected by the county clerk at some point in the future as they might not like the fact that these are copies and not originals.
How is refinance volume playing a role in the mortgage market right now?
Banks are seeing a huge amount of volume for refinances. They are also losing money temporarily due to the numbers of forbearances taking place. While we don’t know what their volumes are (this is not disclosed to us), it seems that once a bank reaches their capacity, they are increasing their rates to discourage new business. Our assumption is that they are doing this to play catch up and to not overwhelm their systems.
One of the benefits of working with BFR is that we have 35 banks that we work with and we use a pricing engine to see who is offering the best rate each day. Therefore when one lenders rates go up, we see which lender emerges as having the best rates for that day. The volatility in the interest rate market has been extreme though so we are sometimes seeing the best lender for a given scenario change multiple times in a given day.
Our suggestion for those interested in refinancing is to get your loan applications in early. This will allow a broker, like myself, to lock in your rate at the most opportune time.
Have credit standards tightened?
Some banks are adding overlays (additions to conventional Fannie Mae/Freddie Mac and FHA guidelines), some banks are keeping their guidelines unchanged, and some banks are actually expanding their guidelines in an effort to be opportunistic. As a broker we have the benefit of surveying the market to see where our clients fit in best.
What else has changed in your world around COVID-19, and what advice do they have for New York, New Jersians, and Floridians who are looking to buy their first home or refinance?
We are seeing our technology on our website, blocklending.com, help during times of increased demand. We have a free rate quote tool that helps clients evaluate rates 24/7. Our online application and borrower portal have been helpful in expediting our review of loan applications. During these unprecedented times, we are seeing some lenders take a more borrower-friendly approach to the COVID pandemic than others. Some are allowing for exterior-only appraisals and remote closings.
Our advice is to not only ask your loans consultant at BFR about the loan terms being offered but to also ask how will they be accommodated in light of COVID-19. Will the lender offer remote closings and exterior appraisals? We’re giving our clients all of their options but we’re encouraging borrowers to put their person health ahead of the terms of their loan.
Are cash-out refinances being offered?
Yes, while some lenders have decreased their appetite for cash-out refinances, we have several lenders offering aggressive terms of cash-out refinances. Some lenders have forbearance concerns, however, this is likely a temporary blip in the radar for cash-out refinance borrowing our opinion.
How has the jumbo mortgage land-scape changed?
The secondary market for jumbo mortgages dried up pretty quickly as the markets tanked in early March. We have community banks and local NYC banks still offering jumbo loan products but there are a lot of large banks not accepting jumbo loan applications at this time.
Are Non-QM loans still being offered?
These loans are still available but the box has gotten much smaller for those that qualify. The general feeling is that these will slowly come back as the market searches for stability.