Independent borrowers still struggle to qualify for government guaranteed loans – Press Telegram


Fannie Mae last week launched a new program called RefiNow to help heavily indebted and low-income borrowers qualify for mortgages.

The standard for qualified borrowers is that their debt should not exceed 50% of their income. Under Refi Now, the eligible debt-to-income ratio reaches an astronomical rate of 65%.

OKAY. fair enough. But what about profitability for self-employed borrowers riddled with debt?

Their answer appears to be Refi Never.

Fannie Mae (and Freddie Mac) draconian self-employed underwriting restrictions COVID-19, which went into effect just over a year ago, are still ongoing.

COVID has put stress on all businesses then and today.

In addition to filing a business income tax return for at least a year, the borrower was required to file interim financial statements.

The year-to-date income statement was to keep pace with last year’s income. The underwriters speculated that the decline in income since the start of the year would indicate that the borrower’s business is hovering around the drain. Decline credits now. abort.

The new rules have killed the prospect of getting a cheap mortgage for too many people.

For example, my store refused because about half of independent borrowers were unable to qualify for a loan. Yes, it is half.

The income statement since the start of the year has become an obsession with underwriting. Some lenders did not tolerate a drop in income. Others have said that no die has a die greater than 10%. And at least one lender I know of allows up to 25% drop as long as the borrower is still eligible for drop in income.

It was worth buying and refinancing borrowers who wanted lower interest rates on Fannie Mae and Freddie May also had to explain the details of the bank statement of the company that linked P&L to the initiator of the ‘mortgage. What’s a better confession agent for Fannie Mae and Freddie May than those adjacent to a forensic audit?

Independent candidates were angry at the scrutiny. It was like a body search. But they wanted the lowest mortgage rates in modern history, so they took it.

Others just said no. Some have expressed their anger in words that are unacceptable to offer to you.

How else can a lender decipher a financially strong candidate from a weak candidate? It is safer in the eyes of F&F than regret.

Yes, many businesses have collapsed, burned down and closed. However, many people have survived and thrived on luck and government support like the PPP program.

Bankruptcy attorneys Richard Golubow of Winthrop, Golubow and Hollander pointed out that reduced travel during the COVID period, reduced office overhead and no entertainment costs could increase profits even with more gross income. low.

“People worked harder,” Gorbow said.

Corporate bankruptcy filings are on the decline. According to bankruptcy reporting service Epiq AACER, in 2020, Chapter 11 and 13 bankruptcy filings declined about 19% year-on-year in the United States. Each year, 2021 applications are reduced by more than 30%.

According to figures from Epiq AACER, the number of corporate BKs in California has declined by around 40% in 2020 and an additional 10% this year.

As of this week, mortgage grace has fallen to 4.16%, according to the Mortgage Bankers Association. The tolerance was 8.55% a year ago.

According to mortgage data firm Black Knight, more than 14 million borrowers can save an average of $ 283 per month by refinancing. There are roughly 1.9 million applicants in California who can save an average of $ 386 per month. There are 952,000 borrowers ready to refinance in Los Angeles, Orange, Riverside and San Bernardino counties.

How many independent borrowers can Fannie Mae and Freddie May support?

It was not possible to ask officials of the Federal Home Finance Office of mortgage regulators to comment on whether Fan and Fred would revert to the pre-COVID self-employed underwriting rules.

Freddie Mac Rate News: The 30-year fixed rate averaged 2.96%, 3 basis points lower than last week. The 15-year fixed rate averaged 2.23%, down 4 basis points from last week.

The Mortgage Bankers Association said mortgage application volumes fell 3.1% from the previous week.

Conclusion: Assuming the borrower gets a 30-year average fixed rate on an adjusted loan of $ 548,250, last year’s payments were $ 74 more than this week’s $ 2,300 payments.

What I see: Locally, qualified borrowers can get the next fixed rate mortgage at a cost of 1 point: 30 year FHA 2.25%, 15 year conventional 1.99%, 30 year conventional 2.625%, The traditional top 15 year balance ($ 548,251 – $ 822,375) is set at 2.125%, the traditional 30-year high balance is set at 2.75%, and the 30-year jumbo is set at 2.75%.

This week’s eye-catcher loan: 30 years fixed at 3% free of charge.

Jeff Lazerson is a mortgage broker. He can be contacted at 949-334-2424 or [email protected] His website

Independent borrowers still struggle to qualify for government guaranteed loans – Press Telegram Source link Independent borrowers still struggle to qualify for government guaranteed loans – Press Telegram

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