The local multiple listing service has eliminated the ability to note an open house in the system. This is in reaction to guidance from the California Association of Realtors to meet the “Stay at Home” order.
Property showings should be done using technology, avoiding personal physical interaction.
We’re still waiting for legal guidance on fulfilling contractual elements like inspections, appraisals, walk-throughs and meet the SAH orders. According to the SAH order, real estate sales is not an excluded business in order.
Many lenders are under financial liquidity stress. Non-QM (not Freddie, Fannie, Ginnie Mae) loan programs like jumbo, non-agency reverse mortgages, are realizing higher rates, tighter underwriting guidelines, or being eliminated. Some approved and locked loans are running into funding issues.
Freddie, Fannie, Ginnie loans are in good shape, and rates are good. The Federal Reserve is buying the mortgage backed securities like they did during the recession in 2008-2012.
Support services, like sign maintenance companies are shut down, so simple acts like getting signs installed or removed are difficult.
There has been a Coronavirus Addendum/Amendment released by C.A.R. to be incorporated in real estate sales transactions. It approaches the risk of contractual nonperformance due to the impact of the virus, gov’t restrictions, and economic issues.
This is a moving target, and changing hourly. Freddie and Fannie released some temporary guidance on how they will give relief on areas of the loan process that has become difficult because of the limitations and economic issues created by the virus and gov’t actions.
Fannie Mae & Freddie Mac Temporary Guideline Relief
Fannie Mae and Freddie Mac, with guidance from the FHFA, have issued a joint Lender Letter laying out temporary
seller guide relief, in an attempt, to assist customers located in areas impacted by COVID-19. This is effective immediately and will remain in effect through May 17, 2020.
Verbal Verification of Employment (VVOE)
Lenders must attempt to obtain the VVOE in accordance with Fannie Mae& Freddie Mac requirements. However, we will
now allow the following documentation in lieu of obtaining a VVOE.
Alternative Sources of Validation
• Written Verification – email from current employer
o Must Include the following:
▪ Email must originate directly from the employer’s work email address
▪ Identifies the name and title of individual verifying the borrower’s current employment status
Note: Verifications received from a general email domain (gmail.com) are ineligible.
• Current Paystub (YTD)
o Must Include the following:
▪ Obtain a year-to-date pay stub from the pay period immediately preceding Note Date
• Bank Statement/Asset Account Statement -with payroll direct deposit
o Must Include the following:
▪ Direct deposit must be from the pay period immediately preceding Note Date
Note: If employment has been validated by the Desktop Underwriter (DU) validation service, the validation will
remain eligible for representation and warranty relief on employment provided the transactions complies with the
“close by” date in the DU message. Otherwise, the guidance provided above applies.
Continuity of Income
Given the current economic climate associated with COVID-19 and its impact on employment and income, lenders can
apply additional due diligence to ensure the most recent information is obtained. Lenders must ensure that any disruption
to borrowers’ employment (or self-employment) and/or income due to COVID-19 is not expected to negatively impact
their ability to repay the loan.
As an example of additional due diligence for a self-employed borrower, lenders will have to attempt to verify that the
borrower’s business is operational closer to the note date rather than rely on current Selling Guide requirements (e.g.,
within 15 days instead of 120 days).
Temporary Appraisal Requirement Flexibilities
Effective immediately, Fannie Mae and Freddie Mac are allowing temporary flexibilities to their appraisal inspection
and reporting requirements. If a traditional appraisal is not obtained and there is insufficient information about the
property for an appraiser to be able to complete an appraisal assignment with a desktop or exterior-only inspection
appraisal, the loan will not be eligible.
If you are in the Los Angeles area, have any questions or real estate sales or financing needs, feel free in contacting me
Ron Henderson GRI, RECS, CIAS
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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