Corona virus has been lurking in America for almost ten months
now, Pfizer announced they have a vaccine that is ninety percent effective with
is quite wonderful good news, but we still have not gone through final FDA
approval, figured out how to safely deliver the thing in sub eighty below zero and
manufacture enough for everyone in the United States. My guess is some vaccine
will be in your CVS and Right Aid by July 2020. Meanwhile millions of employees
in this country remain out of work. Millions of students who graduated college
in June have not found gainful employment. Hundreds of thousands of people who
owned a restaurant, a motel, a personal service or businesses considered human
touching and not essential are file bankruptcy.
As the coronavirus continues to march on our lives many states
issued shut-down orders for businesses. Forty million people filed for
unemployment in May 2020 On March 27, Congress passed the CARES Act to offer economic relief.
Unemployment benefits were increased to cover these devastating losses.
Mortgage forbearance was offered to homeowners with mortgages backed or insured
by the federal government, including Freddie Mac, Fannie
Mae, VA and FHA.
Courts were closed to evictions and foreclosures. Now that courts have mostly
re-opened and the CARES Act funds shriveled up in Congress and the Senate stalemates,
homeowners are not back to their normal income but no longer have the safety
net of unemployment $2600 monthly income and forbearances may soon end.
FHFA has instituted a half a point pricing addition to all
refinances in America after December first to try and cover the losses they
expect Fannie Mae and Freddie Mac to suffer holding loans that made minimal or
no payment for a year.
The
CARES Act offered homeowners the opportunity to ask for forbearance from their
mortgage servicer and suspend payments for up to twelve months. Approximately five
million homeowners asked for forbearance since the program began. In September 2020,
the number of households whose mortgage was in an active forbearance decreased.
To request mortgage
relief under the CARES Act there are two options:
1. You call your loan
servicer directly. Your servicer is the company that you send your mortgage
payments to each month and the number should is on your payment coupon or search
for them online, you know google it or ask siri.
2. You write and mail a hardship
letter affirming that you are enduring financial distress caused by
COVID-19. This creates a written record that you are pursuing forbearance
protection. Letters may be emailed, faxed, or physically mailed to your
mortgage servicer.
Yes, if you have
experienced job loss, reduced income, illness or other issues related to
COVID-19 you could be eligible for forbearance. You will need to mention
the actual hardship.
Yes, under the CARES
Act, if you have a federally backed mortgage, you can request an extension of
the forbearance for up to an additional 180 days after the twelve-month period.
Your servicer contacts the owner/trustee of the note and comes up with a plan.
Your monthly income is compared to the monthly mortgage payment to find a
temporary solution until you get back to work or your health improves or the
situation returns to “normal.”
If
your servicer approves your request, you will be provided a forbearance
agreement outlining the terms. During the forbearance period, the servicer cannot
begin or continue with foreclosure proceedings. Default is put on hold
during the twelve-month period. Every lender has different unique
interpretations of the CARES Act. Your neighbor’s forbearance may not be at all
like what you are offered.
Around
month ten your servicer contacts you prior to the end of your forbearance plan
to discuss options for bringing the mortgage current. However, you can contact
them sooner to start this discussion and plan for the best option for you,
based on your individual circumstances.
If
you have returned to “normal” -say are back to the same job and have the
financial capacity, the best option is to do a reinstatement or repayment plan.
Reinstatement is the act of restoring a delinquent mortgage to current status.
A reinstatement is when the borrower pays the regular monthly payments plus an
additional agreed upon amount in repayment of the delinquency for a period of
time. For example: make the old payment plus twenty percent until you get
caught up. However, there might be additional options, including deferring
missed payments until the end of the loan (payment deferral), payment relief
options if needed (loan modification) or other alternatives such as short sale.
Home
retention options may include payment deferral or a loan modification. If you
recall in the crash of 2007-2008 it was not easy to get a modification. Proof
of income to demonstrate you can make the payment and have “healed” the
problems. If you have no income, or too low of an income to make some
payment ongoing and you have equity, it may be most prudent to consider selling
while markets in most of the United States have appreciated and held value.
While
in forbearance you will not be able to close on another government loan. If you
want to refinance most lenders will require you to bring the loan current and
or certify you don’t plan to go into forbearance on the new lower rate mortgage.
Forbearances
peaked the week ending April 4th 2020. Those that stay the course on
forbearances for twelve months, come off in April 2021, pending any additional
government intervention. We do not know what corona virus has in store coming
this winter. We might face further shut down. No one knows what the future brings. Find ways
to increase income, sell the boat and luxury items, don’t get divorced it adds
double the expenses, and be kind to your neighbors who may be quietly suffering
the burden of financial worry.
I will
keep you all close to my heart.
Caroline
Gerardo Barbeau
https://carolineg.swmcretail.com/
(949) 784-9699
C
G NMLS 324982
Step 1: Income
In most respects, this is the most critical
aspect of your financial profile. The lender will be looking to verify the
stability of your income, in addition to how much you earn.
We need to review, but
maybe won’t use everything, send in the following documentation:
With this information we might likely average
your business income for the past two years (total net income divided by 24
months), but we might only need the most recent year. I won’t send in the whole
novel, I wait to verify what Underwriting must have…
Income evaluation is the major criteria that
makes qualifying for a mortgage as a self-employed borrower more difficult than
it is for employed borrowers.
Step 2: Credit
A
credit score over 720 will be a big advantage, but there are methods to raise
the score such as paying down high balance cards to less than sixty percent of
the line. DO NOT close any accounts, this will hurt the score.
.
Step 3: Assets and down payment
The amount of cash for down payment is
also a more important factor with the self-employed. While salaried borrowers
might be able get by with a down payment of three or five percent, lenders
typically look for larger down payments from the self-employed.
Step 4: Debt-to-income ratio (DTI)
This is a mortgage industry term that
describes the formula used to determine that your income is sufficient for the
loan you’re applying for.
There are actually two ratios:
Housing ratio
That’s your new monthly house payment, divided
by your stable monthly income.
If your stable monthly income is $6,000, in
the new house payment will be $1,500, your housing DTI will be 25 percent
($1,500 divided by $6,000).
Your new monthly housing payment includes the
new mortgage payment, plus monthly allocations for property taxes, homeowner’s
insurance, mortgage insurance, flood or earthquake insurance, or homeowner’s
association dues. It does not include utility payments.
Total debt DTI
If your income on the taxes is net zero or negative we may be
able to use the deposits in ONE bank account over the past twelve or twenty
four months.
Let’s talk about the options to get you the best home loan with
the lowest monthly payment!
C G
(949) 784-9699
NMLS 324982
