The Good Stewards Real Estate Podcast

Has the Mortgage Industry Been Impacted By Covid-19? Guest: Matt Boytz

Episode Summary

Mortgage lenders are still lending, cash-out refinances are still happening, VA loans are still going out. Eugene Brokers had their record month last month. What’s different is that loan servicers aren’t buying FHA, but they’re being subsidized to do so. If your cashflow isn’t good or look right, you’re not going to be able to get a non-QM loan. Investors are going to need 6 months of reserves at least to refinance.

Episode Notes

Market Discussion:

4:15: in terms of unemployment insurance, all rollouts are simply overwhelmed with the volume.

6:01: Stewardship Properties has tried to stick with our regional banks since they’re quicker to respond on our commercial loans. Start with those lenders.

What’s Happening In Mortgages:

9:20: Liquidity is an issue for lenders, primarily because of forbearance, but they are still accepting applications at decent rates.

14:29: When lenders are pulling the plug, these are locked loans. That’s only about 10% of what we do. Business-conforming loans are the other 90%, which are still being written.

17:00: You can’t ask people’s credit scores as an investor, buy you can cross qualify your buyers with their lender for a second set of eyes.

20:27: Ryan has never sold to people that have anything other than cash, private or hard money. But on the retail side, a 1031 Exchange came in with a cash offer 5k below list, last weekend.

23:00: What’s been interesting to see is how Indianapolis has become a cash-heavy market overnight with 20-25% down.

24:15: With COVID-19 overlays, you can still go up to 50% debt to income on a conventional loan.

26:30: You can still get up to 80% on a cash out refinance.

28:47: VA loans are still being done, lenders just don’t know right away if they have someone to service it. So rates are higher.

Title Companies:

30:36: Title companies are “modified” business as usual. Thankfully for Indianapolis and Kansas City allow scanned documents.

What Do The Next Few Months Look Like:

33:49: Eugene Brokers is gearing up for a full refinance season. Rates track the 10-year treasury note, so they think great rates will be around for awhile.

32:40: Contact Matt at 541-359-7212 or by email at matt@eugenebrokers.com.

Connect with the Good Stewards:

Episode Transcription

Amanda: (00:00) What about people that were already in the pipeline? Are you seeing things closing?

Matt: (00:04) Yeah, so we've been closing the majority. I think we only lost one in the office, but when these people are pulling the plug, these are locked loans. We had a jumbo in the office and the lenders were like we can't fund that. We're not doing that anymore. And then we started getting emails from Non-QM lenders. We can do Non-QM but we rarely do it. 90% of the business is conforming loans, but the Non-QM companies are sending emails out that say even if you have a lock, we're renegotiating that.

INTRO: (00:34) Welcome to The Good Stewards podcast, the only podcast dedicated to seasoned real estate investors who want to maximize the cashflow potential in their business. We are “buy and hold” investors with a thousand plus properties and markets across the U.S. who bring an insider's view into the nitty gritty details of real estate investing. If you're looking to develop the mindset teams and systems that can dramatically build your real estate business and network, you're in the right place.

Ryan: (01:06) Welcome to this episode of The Good Stewards podcast. I'm Ryan Dossey.

Amanda: (01:10) I’m Amanda Perkins.

Bill: (01:12) I'm Bill Syrios.

Andrew: (01:13) And I'm Andrew Syrios.

Amanda: (01:14) Hello Good Stewards. Today we've got a special mortgage industry episode with Matt Boytz, a mortgage advisor here in Eugene, Oregon. We do business with Matt and his team at Eugene Brokers and I wanted to dive in deeper to their situation and how Covid has impacting lenders. Before we dive in, we want to connect with you. Visit us at thegoodstewards.com to subscribe to the podcast and get your free copy of our eBook. Matt, welcome to the podcast.

Matt: (01:42) Thanks Amanda. I'm excited to be here.

Amanda: (01:44) Matt and I are actually family but also have been involved in a couple of different business things. We did a flip of sorts together a couple of years ago and I use him for my residential mortgage needs. So, this will be more geared toward the residential mortgage side of things. Although Matt does have clients that are real estate investors that he also does lending for, we just don't exactly qualify for some of his programs. As a business we haven't, but he's pretty tied into the ins and outs of this rapidly changing mortgage industry that has of sorts not come to a screeching halt, but lots of things have changed. It has come to a screeching halt for some people because qualifications have changed. They've put restrictions out there and so we wanted to kind of spend some time to have Matt weigh in on that since he's actively engaged in that.

(02:46) Before we go there though, we just wanted to talk a little bit about some of these programs that the government has sort of thrown at us and how our experience with what we're hearing people say and our own experience as far as things like the paycheck protection plan and what we're going through experiencing that. Andrew, did you kind of want to talk a little bit about your experience in Kansas City?

Andrew: (03:16) Yeah, I mean, our experience was pretty straight forward. The paycheck protection program basically gives you, you take your previous year, your previous payroll, your W-2, 1099 is not counted. And you can take that divided by 12 and then multiply by 2.5 and as long as over the next two months you hit 75% of that, I believe it was forgiven. If it's not, if you can't hit that, it turns into a very low interest and they will add 1% interest loan. The paperwork is pretty, pretty, straightforward. It's a pretty simple document. I think they want, 941s is the IRS form, that is sort of the gold standard, at least from what I'm hearing on proving how much W-2 payroll you've paid out effectively. But it's a pretty simple program that you just go through a bank.

(04:06) You had to find a bank who is interested in doing this. We have not received those funds yet. I've heard various things. I know that a lot of like unemployment insurance is completely overwhelmed right now. I'm not sure how slow it is, but I know that a lot of these government programs, a lot of these new rollouts, in terms of unemployment insurance, all rollouts are simply overwhelmed with the volume. I mean, we're talking like, I think it increased something like 11 million and then another 5 million onto the unemployment rolls over the course of just weeks. I'm sure they're getting inundated with these PPP requests. So, it probably will take some time, but the documentation itself is relatively straight forward.

Amanda: (04:54) Our experience with it too is really, I feel like all of our banks, which are a lot of our lenders are so tied up in these government loans that they're trying to get written that we were in the middle of refinancing several different properties and those are taking forever. And basically, what the bankers are telling us is we're spending all our time basically dealing with deferrals and dealing with businesses reaching out for these funds. And so, it's hard for them to keep their business as usual. And then on top of that, their regulations are sort of changing on a week to week basis.

Andrew: (05:30) Yeah, they keep getting issued new FAQs and new guidelines. As with any new rollout, particularly government rollout, there's going to be a lot of red tape and a lot of confusion and a lot of vagaries and things like that, that bogged down this process.

Ryan: (05:47) You mean signature loans aren't just popping off right now?

Bill: (05:51) If somebody hasn't applied for their PPP loan, what banks would you recommend? Which banks have we gone through collectively as Stewardship entities to apply for the…?

Amanda: (06:01) We have tried to stick with our regional banks, the ones who provide a lot of our commercial lending. And the reason for that is they seem to be quicker to respond. One of our businesses, they use US Bank for instance, as their primary bank. And that was basically a nonstarter because US Bank wasn't geared up to deal with companies that had principals that own more than one business. And so, we feel like you should hopefully have a smaller bank in your pocket that you're going to go through. That might be a quicker way to get in then the B of A's and the Chase’s and the US banks of the world.

Andrew: (06:40) If you have a relationship somewhere, that's the place to start.

Amanda: (06:43) Absolutely.

Andrew: (06:44) Particularly a local bank.

Amanda: (06:46) So I want to say it was on March 6th interest rates residential, but all interest rates dropped significantly. And 10 minutes before 5 o'clock I reached out to Matt and said, hey, what are mortgage rates right now? And I think his response was 3.125. And I said, okay, well, I think I'd like to pull the trigger on refinancing my personal residence because I was at 4 and 3.125 seems great. And basically, he was like, all right, well, we have about 10 minutes to get the trigger pulled on that and get an application in. So, we went there. And that was March 6th and then my sort of number that went off of was, I feel like March 11th is when things were ramping up to change. But March 11th is sort of what I mark is like when I mean the events that seemed big was, March 11th is when NBA suspended their season. And the University of Oregon suspended classes. Not suspended, but they moved to online classes for three weeks after spring break. And so, those were the things that I started hearing about. And since then I feel like every week something new happens. And Matt, I sort of wanted to know if you could speak to that a little bit about what has changed in your world since March 6th.

Matt: (08:13) Yeah, Amanda. So, it actually goes hand in hand with what you're just saying. On March 6th, I believe it was a Friday. Mortgage backed security prices are like an all-time high. We're getting towards the higher the prices there, the rates are going to be. So, we sit there and then Monday they level off and they've just went up and down for the past two weeks until the Fed started buying. But they're actually buying at such a rate that is just kind of made a mess in the market. Earlier this year we thought to it before start hitting over in China and because the market's dwindling a little bit over here. And at that time, we started getting refinanced pipeline booming or rolling because rates were dropping. And then it's kind of the perfect storm. There’re so many layers to what's going on with the mortgages right now that it's really interesting.

(09:00) So right when you called me, it was at the peak where these lenders have like record application volume coming in and they start realizing that if we're not careful, they're going to pull the rug out from us. Servicers, that service these loans, they have contracts with the investors that they need to have two, three, four years to start making their money back. So, we're afraid that if we've refinanced the 11 trillion, they're eligible free financing to work with the benefit for them, it's going to short-staffed them. Then on the other hand, here we go a week later, these rates just skyrocket. The liquidity for the lenders, they realize they are going to have an issue with that too. So, they actually had your loan. So, the pipeline of locked loans, they're already hesitant to be sold in the market. They have all this liquidity tied up there. Well, then the market shift because of all this NBS pricing dropping down. So, the lenders start getting a market calls left and right. So, in 24 hours you need $100 million if you want to keep all these funds hedge. And it made it quite interesting. I was having a conversation on Wednesday, Thursday, Friday with clients that called back the following Wednesday and it's not in the same ballpark, it doesn't make sense to refinance.

(10:10) So we have that first little wave to go on. And during that time, we've been sitting here talking, I've got the taxes, applications for person investors that want to refinance everything and we're just waiting for the right time, I guess to pull the trigger and flight in there. Because they are accepting new applications for decent rates. But they're kind of opening the floodgates in waves.

(10:33) And then we hit phase two, which happened about two weeks ago where they rollout this care package really. And the problem with that is these servicers that have a contract with investors on government loans, So, FHA, USDA and VA, which is a good portion of all mortgages. They have to advance payments to the investors regardless if they’re getting paid or not. So, all of a sudden, they're looking at, okay, well, wherever the three-month forbearance is, then what are they going to do after we're going to be paying everyone's mortgage without any money coming in? And they're not as liquid as the rest of the company. So, there's advanced new payments for the first 1 to 30 days after it’s due on the first.

Amanda: (11:12) So what you're saying is the services are still responsible to make their payments to the investors, even if they're not allowed to, if they can't file a foreclosure or they can't aggressively go after homeowners to collect their payments. Even if they don't receive that money, they still have to make their obligation to the federal aid back programs. Okay.

Matt: (11:36) Yes. So, all their liquidity is going to that. They don't know. The 1st of April is interesting. They don't know what to do. They're like, are we going to sit and wait or are we going to have 50% of these people apply for forbearance because it takes no documentation. You sign, you attest that you've been impacted, but to what degree, they don't want proof if you don't have the job loss like that. People are just signing paperwork. So, they are not sure what the government does.

Bill: (12:01) So Matt has that frozen out the lenders from lending? Has that raised the interest rates? What's the result of all of this?

Matt: (12:09) That, it's still changing. The last week was changing quickly. Two weeks ago, we basically lost Non-QM programs like that everywhere.

Bill: (12:18) What's that mean?

Matt: (12:19) There's still a couple out there. So, these are non-agency loans. Like if you're an investor and maybe your cashflow doesn't look right for a Fannie or Freddie loan, but your debt servicing ratio is off on a property, you'll get a Non-QM loan. The interest rate is going to be a little higher, but it's going to allow some [12:34 Inaudible] with more properties to get something financed. Well, those were the first to go because those aren't going into traditional mortgage backed securities. And then they started phasing out jumbos last week just because they don't know if they're going to be able to get rid of them and they don't want to be sitting on billions or millions and billions of dollars of these securities that they're servicing themselves.


 

Andrew: (12:52) Did this issue with the servicers happen in 2008 as well?

Matt: (12:56) I don't know the answer to that. It's definitely unprecedented. So, what we've been seeing is a lot of first-time home buyers utilize these programs. They're lower down payments, they're kind of subsidized and sell stuff to help them out. Well, the servicers don't want to buy those now, so the lenders are more leery to write them unless they have a service in portfolio that they can maybe hold them in for a while. But what we're seeing is a traditionally a Fannie and Freddie, there's for every 20 FICO points you have, there's a different pricing scale and the government loans is like 640 and over here's your price. 640 and under, here's your price. Those have changed, they're just charging points left and right. Bracket, it’s like a government loan. Now bracket is like a Fannie Mae loan, so they don't want the 640 scores. They're still writing FHA mortgages and they're still writing VA, but they're tiering them up way more toward…

Bill: (13:44) Matt, just this morning I was on the old elliptical listening to CNBC and somebody came on and said that US Bank had just ratchet up its criteria to 700 for credits score.

Amanda: (13:57) And I saw Chase was at 720 or something about that

Andrew: (14:02) I’ve seen it all over the place. Yeah.

Matt: (14:03) Yeah. And the Chase wants 20% down now. I think what they're trying to do is, I don't know how the private mortgage insurance companies are feeling about the full situation, but that would cut them out of the equation for a conventional loan. And I don't know if that’s the long-term hold that they're doing there or that's just something to kind of see what's going to happen in the next couple of weeks.

Amanda: (14:24) What about people that were already in the pipeline? Are you seeing things closing?

Matt: (14:29) Yes. So, we've been closing the majority. I think we only lost one in the office, but when these people are pulling the plug, these are locked loans. We had a jumbo in the office and the lenders were like we can't fund that. We're not doing that anymore. And then we started getting emails from Non-QM lenders. We can do Non-QM but we rarely do it. 90% of the business is conforming loans, but the Non-QM companies are sending emails out that say even if you have a lock, we're renegotiating that. We have to, here's your new rate. Basically, throw the old lock out the window. If you want to close the loan, this is what you have to do.

Bill: (15:02) Now Amanda, we've been able to continue to refinance loans with some of these smaller banks that we have dealt with…

Amanda: (15:07) The ones that we were already in process yet. I have pulled the trigger on one new commercial loan, but that's going to take months and I think we'll be out of this by the time that actually closes. But well, actually, we've only closed one. We have another one set to close this week in Kansas City. And we're still waiting on our Oregon stuff to close, but we've been communicating all along with our lenders and they say they're going to close and then we'll get really close and then they'll ask some more questions that we have good answers for. I think a little of it was they wanted to see what April was going to be like. That kind of probably Matt, like what you deal with. Like they want to see, did you guys collect? I mean, how much of your rents did you collect? Like where are you at with this? So, I mean, I think there's just been a little of that. Like, there's so much uncertainty right now and I can't imagine, I wonder if they're taking an extra look at what is your job, what market are you in? Like, what are you doing? Like how are we certain that you're going to be able to make these mortgage payments, that sort of thing. I feel like everyone's taking a stricter look.

Ryan: (16:27) So, Matt, if I'm a fix and flipper and I've got a property that I just put on the market and I'm wanting to make sure that this is a strong buyer, I mean kind of what I've been advising people is to go conventional or heftier down payments. Is there anything else you would say to that? Anything that like, hey, make sure they're using this or not using that.

Amanda: (16:50) Well, what we're looking for in a buyer. Like who are the buyers that can close loans right now?

Ryan: (16:54) Are we allowed to ask like, well, what is your credit score? Right?

Matt: (16:59) There's a fine line on that. That's not really a precedent in like the Eugene area market, but I know in other States and stuff they'll actually have, they'll ask the buyer to cross qualify with their lender and supply all the same info on the seller's side, just so they have a second set of eyes saying, yeah, this is okay. Another big benefit is if they're working with a brokerage versus a captive or direct lender, then at least it might hold things up. But if lender A pulls the plug and says we're not funding this FICO, this FHA, at least there's a lender B option with it. Everything they are ready to go to them.

Ryan: (17:35) That makes sense.

Matt: (17:36) The one of the weirdest things that came out of this and luckily being a broker, we have a lot of different lenders we can go to. Some of them aren't accepting forward locks anymore. So, you put in your loan application, they underwrite it, some they want it as conditionally approved a week or two in and someone who is clear to close, they won't even lock your loan. And part of that's because once they lock, then that's getting looked at the NBS, the next package of loans they put together. That's all from their locked pipeline. So, this way they're not having to hedge so hard. It's locked and it's sold two weeks later to an investor and they're not worried about getting that margin call and stuff.

Ryan: (18:17) Interesting.

Amanda: (18:18) I mean, are you still having people reach out? Like people that are buying homes? Like are you still closing new purchases or are you mostly in refinance? Have you seen a slowing down in your market? Or are you guys keeping really busy?

Matt: (18:33) We had our record month last month. In April, we're on pace to do it again this month.

Bill: (18:37) Is that refinances? How about purchases? That's probably what we're most interested in.

Matt: (18:43) Yeah, we're fairly low on purchases right now, but it is the slow time of the year too. From the buyers we have preapproved and they're shopping I haven't seen any uncertainty. I've heard people, like Facebook groups I'm in to say they have a lot of buyers pulling out of deals because they're not sure what it's going to hold that. In our areas seems like everyone, they're a little more cautious and they're going to make sure they sell the job before they go into it. But it seems everyone seems to be moving ahead as planned. The people that wanted to buy houses are still buying.

Ryan: (19:11) I mean, I think ultimately a big part of that is like the sun is still rising and setting, job transfers are still happening. People are still getting served with divorce papers. Tenants are still not paying rent. Properties are still vacant. So, I guess as much as the world to an extent would like to pause, I know on our side, on the marketing end, we've actually had an increase in people looking to sell, people looking to make moves. We've been trying to add more buyers to our list of people looking for investment properties and our stuff sells too fast. By the time I put together a marketing piece to try to throw out there, that deal is already gone. So, I think it really is as much as like personally, I think a lot of us have had to kind of take a pause on the life and a lot of us haven't had that luxury of like, well, for instance, my wife and I found out, we've got a permanent change of station with the Navy coming up in September. Doesn't matter what's going on, we're moving in September.

Bill: (20:18) Ryan, most of your buyers are using cash or private funds, is that correct? So, they're not looking into more for a mortgage.

Ryan: (20:27) We never have sold to people that are using anything other than cash, private or hard money. But even on our retail side, Bill, I mean, we had a rental grade. Like, kind of a gross rental grade house that we listed. And in 72 hours, a 1031 Exchange came in with a cash offer 5k below list. We had a little bit of a nicer vinyl village, but still total rental, like builder grade. No new appliances hadn't really been upgraded in 10 years and we sold in 36 hours on that for 5k over ask. So I mean I think it's…

Amanda: (21:12) Right. And that was like last weekend. So that wasn't…

Ryan: (21:15) Yeah, like just happened.

Amanda: (21:16) Right. Right. That was in the middle of…

Ryan: (21:19) That it wasn’t pre-Covid. I think the other thing that's just kind of I would say interesting right now is the one thing I heard on every broker that looked at both of those deals was a lot of sellers out of uncertainty pulled their properties off the market. So, there's not much inventory respectively right now. So, the people that are looking like I had a number, I mean we had multiple offers on both properties and we kept hearing over and over again, well, they've already lost out on two houses, they'll pay your ask. And they're 20% down conventional buyers.

Bill: (21:54) Is that because… I've heard this too, that there are a lot of sellers who have pulled their inventory or pulled their properties, so people are just worried about the connection of getting into the house and how to do that.

Ryan: (22:09) And I don't think it's that, I think it's more…

Amanda: (22:13) They don't know what the price is. I mean they don't know how to price it or are we still pricing it the same as we were four weeks ago. This is unprecedented because it changed so fast. I mean it was like we were going, going, going, and then it was like, okay.

Ryan: (22:29) I think you had a lot of people that thought, oh, I'll cash out at the top. So, they listed. And then they no longer feel like they're at the top. So, they're pulling it back off and saying, hey, I'm just going to sit on this. That would be my guess. But I think the interesting thing that I've seen in Indianapolis. Indianapolis normally is not a super cash heavy market from what I've seen on the real estate side. Like pretty much every flip I've ever done has been sold to an FHA buyer with three and a half percent down or Indiana department of housing assistance thing where they're putting a percent down or something. So, it's been pretty interesting to see kind of these folks like come out of the woodwork with 20% - 25% down. And it could just be that now they're having to do that. But I know on our retail side, that is, I mean, some of the stuff we've been asking of how much are they putting down? Is this conventional or FHA? And we've only been taking conventional at this point.

Amanda: (23:22) What do you guys think? Like Matt, what do you expect? Like your May and your June and your July to look like? I mean, maybe you haven't had a chance to gauge that because I do think a lot of tightening happened crazily over the weekend, so you guys are probably going to have to reassess that.

Matt: (23:38) Yeah. For the foreseeable future, I see us, we're going to be refinanced heavy. They're projecting this to go into 2021 with good rates. They're really volatile right now, so we're hoping that settles out soon and that'll allow us just to consistently get these refinances in there and help people out. On the purchase side, I'm not really sure what we're going to see.

Bill: (23:59) Quick question about the refinances, Matt. I have banks up their criteria regarding refinances as well in terms of… Yeah, tell us about that.

Matt: (24:12) It's really interesting. I've got a list of a Covid-19 overlays that one lender put out by the 31st of the end of month, effective April 1st. You can go up to 50% DTI generally, debt to income on a conventional loan. There are other factors that go into that, but 50 is like where it's a hard stop for perfect credit and stuff.

Amanda: (24:32) Seems like a high debt to income ratio. So, I'm surprised they haven't tamped that down.

Matt: (24:37) That's another thing I think it's going to happen is right now we have just a GSE patch which says…

Bill: (24:37) We need your abbreviations of GSE.

Matt: (24:46) The GSE’s are Freddie and Fannie

Andrew: (24:50) Government supported entities.

Bill: (24:51) Thank you Andrew.

Matt: (24:54) We’ll have a GSE patch on there. And what that says is they can go up to 50% DTI and that's been there for years and years and years.

Bill: (24:59) DTI…

Amanda: (25:02) Debt to income. He just did that…

Ryan: (25:04) That’s a pretty basic one.

Bill: (25:06) We got to define our term guys.

Ryan: (25:07) ARV is after repair value.

Andrew: (25:10) Thank you. I appreciate that on the ARV of the DSCR.

Ryan: (25:16) What is this DSCR used to be a gov.

Bill: (25:19) Thank you Matt for interpreting.

Matt: (25:21) Okay. So, their captain debt to income to absolute max is in 50% in the last few years. And that's what the patch they've been voting through. They're supposed to be capped at 43% and the next extension date comes up in 2021 and I wouldn't be surprised if that goes away at this point just because everything was gravy. People were performing on their loans and actually the best performing loans were the higher debt to income because they think that they were prioritizing housing over other expenses because it wasn't just a small monthly expense. That's our roof over our head. I wouldn't use the present fact goes away, but these lenders have been staying over 40% DTI. Now they want three months reserves. A month reserves just being one month of your payment. This leftover sits in your bank.

(26:10) Investors, they want six months of reserves on your rental property to qualify that income. So, if you have someone that, main job doesn't show a large amount of income and the rentals are over scheduled, you kind of keep them afloat. Now that they're coming to a spot or when they tack on all these reserve requirements, they're going to have to have a substantial amount of assets in order to refinance on those investment properties.

Ryan: (26:33) Interesting. That's good to know. Have you seen any of the cash out side of things? Have they lowered from say 75% down to 70% or 65%?

Matt: (26:45) They're all staying at… They'll go up to 80%. The pricing is not, 80 is terrible, but there are keeping them at 75% pretty consistently across the board.

Ryan: (26:54) Okay, so they haven't throttled down on cash out refi percentages?

Matt: (26:58) No, not particularly. I do think that's coming though at some point or that they're going to add on that they want more reserves with the cash out not counting. So, if you have a higher DTI, that's the income ratio as it is. If you're both 45 and you're going to do a cash out, they want to see that you have a couple months to sitting there and that you're not going to pull that out. So, you have the financial responsibility.

Ryan: (27:21) That's smart for BRRRR investors to keep in mind, especially those just getting started.

Matt: (27:25) And that's what I'm seeing right now. I have one investor I was working with and he's just kind of stuck because a good deal comes on, he gets hard money. He buys it, well when he goes refinance his rental properties you're holding and you've got four hard money notes out on these properties that you're flipping right now and remodeling…

Ryan: (27:43) Ouch.

Matt: (27:45) Yeah, you can't do anything. And then with Non-QM pointed out, now you could have got some DSCR loan there, where okay, your rents looked great compared to the mortgage payment. We'll go ahead and extend you that credit. Those are gone now.

Amanda: (27:58) And just to break it down, what does Non-QM stand for?

Matt: (28:02) It's a non qualified mortgage. It's not agencies though. It's not a Fanny, it's not a Freddie and it's not a government loan.

Ryan: (28:10) Because it's more like a portfolio or like a local community bank loan or something like that.

Matt: (28:12) Exactly.

Ryan: (28:13) Got it. So, one question I've got for you. So, on the VA side, because we're getting ready to use a VA mortgage here in the next couple months or I should say that's the plan. How is that working with, to my understanding, typically on the VA side they can be nothing down and they are government backed. Now I understand the jumbo, non-jumbo piece but are you guys still seeing VA mortgages get done or are they now…?

Matt: (28:47) Oh yest, we’re seeing them to get done. The biggest is they're not, not using them right now. It's just that lenders that don't necessarily know if they can sell that to a servicer right away are inflating the rates on the government products.

Amanda: (28:59) Especially because… Is there still a… For a while it was like you couldn't foreclose against a VA or a veteran… I mean I don't remember what that was but there was something there that obviously if you're in the armed services there was going to be a… Especially if you were active duty and it was getting…

Matt: (29:17) There’s a lot of laws.

Ryan: (29:19) Yeah, there's like some interest rate cap stuff that like you can't be charged more than certain rates but I don’t know anything about being foreclosed on. But that's good to know.

Bill: (29:30) Andrew, I'm curious, in Kansas City you've talked to a lot of lenders. What do you pick up from them?

Andrew: (29:35) I mean most of them are still lending. I think that a lot of them were kind of taking a bit of a “wait and see” approach. But I mean we're getting blown though. We're supposed to close probably Wednesday this week. And from the others I've talked to, they're still lending. And so, I do think their criteria has gone up and I think a lot of them are inundated with these PPPs and other types of things. But it doesn't seem… It certainly hasn't shut down, that's for sure.

Amanda: (30:03) Slowed. I would say it's slowed down everything. It always took a long time for all the pieces to come together.

Bill: (30:09) We are working with a bank in the Portland area, right Amanda? That they're working for… Many of them, most of them are working from home and they've got these PPPs that are just inundating them. They're just slammed.

Amanda: (30:20) Right. And they're not set up to work from home. And then title companies are, I think operating at bare bones right now. And I don't know Matt, you might know a little bit more because you've actually closed some loans. Are title companies business as usual or are they…?

Matt: (30:36) They're modified business as usual right now. They are requesting lenders don't come in. One in town actually won't even let you drop an earnest money check off. They want everything mailed and they do have the procedures in place where if they need to shut down further that they're going to hand off packages and actually do like Zoom signings and stuff where they can go through the paperwork with you. But for now, luckily they're letting people in.

Bill: (30:59) When a title company officer told me that they lost all their roving notaries, I'm wondering if this is really going to change. I mean, obviously so many things are going to change as a result of this pandemic in our economy and our technology. And one of these I think will be in the way that people, like are we going to even need notaries? Are we going to have signing things? Are we ever going to need to do that in person anymore?

Amanda: (31:32) Right. I mean in other States outside of Oregon, they do allow scanned documents. And Andrew doesn't have to be to buy a house. Andrew doesn’t have to go to the title company and sign stuff. He can just sign it and scan it and send it in and they got it taken care of. And so…

Ryan: (31:47) It's the same in Indy.

Amanda: (31:48) Yeah. It's not that way in Oregon, they want you there in front of them signing.

Ryan: (31:53) I think there'll definitely be some deregulation and more push for convenience even if it's under the guise of safety, right? I know even like California is pretty, pretty regulated. Local bars will like, hey, do you want a Mason jar full of beer with your food right now? Like it's become so, so deregulated that I think you are going to see some of that like closings. Do you really need to go or can that just be done over Zoom?

Bill: (32:24) You've kicked your bar habit for a while, haven't you Ryan?

Ryan: (32:27) No, I've got a lot of Mason jars.

Bill: (32:29) Oh, okay. I was just wondering.

Amanda: (32:32) You can get them togo.

Ryan: (32:33) Now, they actually… Fortunately, weed is considered agriculture, so it's all good there.

Bill: (32:39) Oh, thankfully. And essential service.

Ryan: (32:43) I know that is one thing we've done that's different. That's never a question I thought I would ever ask somebody is like, are you in an essential business or not? As we're taking… As we're getting offers on stuff. I know our title company just to speak to that they're doing like drive-up closings. Like they will walk the paperwork out to you, to your car and like hand you the things you need to sign and then you hand it back. Like, I don't know, somehow that's safer than you going inside. But yeah, it's interesting.

Amanda: (33:11) Matt, what would you say? Say we get to the summer and we've socially distanced ourselves into flattening the curve to the point that we can kind of start to open up. I don't know what business as usual is at this point. I wish it meant just everything went back to normal, but I don't know if I see that. But what do you see happening in the summer and moving into… we're heading into the election in November and that sort of thing? Like what are you guys projecting in your business and what are you kind of gearing up for?

Matt: (33:49) We're gearing up for just a full on refinance boom for a year. But at the same time, I think that could stimulate the purchase market a lot as well. Even right before this happened a couple months ago, I saw people willing to spend a lot more on homes that they're looking at the interest rates compared to what they were a year ago. And they're like 50,000 more, but my payments are the same. I'm fine with that. I've budgeted this out, I think it was for… Rates generally track the 10-year treasury note and we're so far away from any correlation. In the last couple of weeks, it's like that's no longer a factor in anything that if this goes back to normal, we're going to have really good rates for a long time and I think that's going to stimulate it substantially. You know what I'm saying? I'm hoping these first-time home buyers are looking at that stuff.

Bill: (34:33) So, Matt, right now, middle of April, what as a home buyer could I expect to get for a rate depending on how much I'm putting down?

Matt: (34:41) I can't really do that without doing all the APR and all that stuff.

Bill: (34:45) What's the APR?

Ryan: (34:50) An annual percentage rate.

Bill: (34:53) Did you Googled that Ryan? And I know you did.

Matt: (34:58) Let's just say, the week before the fall or the week of this, the great pricing ended, Freddie Mac reported that as the lowest interest rates ever. So, they officially beat 2016 or 2013, I think was the previous lowest ever and we hit that.

Ryan: (35:13) Is that when you got your mortgage done, Amanda?

Bill: (35:16) Pretty much.

Matt: (35:17) In the two day window there. Yeah.

Amanda: (35:21) I think I did. Yeah. I haven't closed yet. It's supposed to close this week, but…

Ryan: (35:26) Dolla, dolla bills y'all.

Bill: (35:28) Ding, ding, ding, ding, ding.

Matt: (35:30) The worst part is that the mortgage report comes out next week. Freddie’s its best rates ever and the phones are ringing off the hook. And we're like, well, that was…

Ryan: (35:38) That was last week.

Matt: (35:40) Now, here we are every five hours. Everything is changing.

Amanda: (35:44) I'd be just probably in closing, Matt, thank you for jumping on. And can you let us know how people could get in touch with you if they were in the Oregon area and were looking for a qualified mortgage lender?

Matt: (35:57) Absolutely. They can call me anytime. It's (541) 359-7212 or send me an email at matt@eugenebrokers.com

Bill: (36:06) Are you going to send out a glossary with all the initials that we've used here today?

Matt: (36:10) Yes, sir.

Bill: (36:12) Thank you.

Amanda: (36:14) Thank you everyone for joining us today tuning in. If you like what you heard, make sure you subscribe to us. Follow us at thegoodstewards.com. Download our free copy of our eBook and we will catch you next time.