Brian and David provide some options for financial relief in these uncertain times, talk about outside-the-box appraisals, and warn buyers to never fib on a binding document!
This week’s highlights:
- Mortgage rates are down even lower due to the volatile stock market.
- GSE’s are getting crafty with the appraisal process in this new world.
- Brian wants to keep you honest when it comes to your employment verification.
Funds in a volatile world
Due to the COVID-19 pandemic, it has been an uncertain few weeks for everyone, and the mortgage world is no exception. 3.5% of workers filed for unemployment this week in the Wisconsin workforce alone, but there is some relief:
- Last Friday, Wisconsin Governor Tony Evers banned foreclosures and evictions for the next 60 days.
- Fannie Mae and Freddie Mac are offering mortgage forbearance programs which delay mortgage payments for a temporary period, wherein:
- No late fees are incurred
- No delinquencies reported
- Foreclosure and legal proceedings suspended
- For those under 59 years of age, the government stimulus/CARES act allows penalty-free withdrawals up to $100,000 from a 401K or IRA, and the income tax payments on withdrawals can now be spread out over a 3-year period
- Mortgage rates are back down due to the changing stock market!
Another complication of COVID-19 is that people are wary of an appraiser coming into their home.
Fannie Mae and Freddie Mac, the FHA, and the VA came out with similar guidelines easing their appraisal standards and are offering two appraisal options:
The “desktop” appraisal
In a desktop appraisal, the appraiser considers multiple listing service information, public records, and other third-party data sources to identify the property’s qualities, and the property is not physically inspected.
The “drive-by”, or exterior inspection
In an exterior appraisal, MLS listings are considered, and an appraiser may only walk around the outside of the property to make his or her considerations.
However, jumbo loans and cash-out refinances do still require a full, traditional appraisal.
Verity in Verification
In addition to getting creative with appraisals, government-sponsored enterprises are accepting alternative forms of employment verification (such as recent paystubs) acknowledging the current volatility in the job market.
Brian told a cautionary tale of a client who, prior to the Coronavirus pandemic, tried to play the system in terms of verifying his employment.
Typically, within ten days of closing, the banks and mortgage lenders conduct a verbal verification of a buyer’s employment, call their employer, and verify with HR that they still work at their said job.
This particular buyer decided to quit his $100,000/year, salaried position as an accountant right before closing to pursue self-employment, but signed his application at the end of the process saying he was still a CPA.
Brian warns that it is a felony punishable by hefty fines and up to 30 years in prison. Lying on a mortgage document in this manner is grounds for immediate foreclosure.
Of course, Fannie and Freddie do quality control checks and conduct a post-closure verification as well. Your mortgage lender is on the hook if you lie, and it’s imperative that you tell your mortgage lender immediately if changes in employment to prevent yourself from falling into criminal territory.
Accunet offers plenty of online resources to help you make smarter financial decisions for an honest and secure transition to becoming a homeowner.
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