100°F
weather icon Partly Cloudy

The mortgage industry in the age of COVID-19

I don’t need to tell you that these are trying times. Times that almost none of us have ever experienced before. All of the things that we have taken for granted — going to a movie, eating at our favorite restaurant or even taking a walk in the neighborhood park — are now prized. If things as commonplace as these are now gone, how do you run a business during so much turmoil? Let’s take a look at the mortgage business.

A mortgage loan by definition is used either by purchasers of real property to buy real estate, or alternatively by existing property owners to raise funds for any purpose by placing a lien on their home. The loan is secured on the borrower’s property putting into place a legal mechanism that allows the lender to take possession and to sell the property in the event that the borrower defaults.

The word “mortgage” is derived from an old French law word meaning “death pledge.” Meaning that the obligation is fulfilled by the loan being paid off, or by the property being taken in a foreclosure action and subsequently sold.

If you analyze the above paragraph, it’s pretty easy to see that lenders are looking for repayment through one of two sources – from you or from your house, which is their collateral. When a lender looks at you for repayment, it analyzes your income, assets and credit. Is your income stable? Is your income increasing or decreasing — and why? What is the probability of your income continuing at its present amount? And what is your probability of continued employment?

Lenders look at your liquid assets in your bank accounts and your retirement assets in 401(k)s and IRAs. And they look at the all important credit report, because in today’s digital age it is used as an accurate predictor of your intent to repay your mortgage with timely payments. When a lender looks at your house as a source of recovering their loan, it obtains an appraisal that defines the current value of your home.

Fast forward to today — and imagine operating a mortgage company in these uncertain times. How do you determine probability of continued employment? Is your income going to stay the same? And, if your home’s current value is set as of today, what is that value going to be in three months from now, or six months, or in a year? It’s pretty easy to see that these are tough times for underwriters at mortgage companies.

If you’re considering purchasing a home or refinancing, all of this probably sounds all too familiar to you. But my advice is: Do not give the past the power to define your future. This too shall pass.

It is more difficult to get a home loan during this crisis — but it’s not impossible. The mortgage industry is one that is incredibly well-adapted to the social distancing era. Virtually, your entire loan process can be done electronically. And the escrow and title companies also have adapted with electronic signatures and mobile notaries.

If you’re considering purchasing a home, I would recommend to do that. Supply and demand will determine future values. If you have thought about refinancing — do it now! Interest rates are at historic lows, and you can either reduce your monthly payment or pull out some cash for needed expenses.

My advice is to contact a reputable and well-known lender. Then determine the loan officer that’s the right fit for you. He or she will walk you through the maze of issues that you will need to navigate and when the pandemic passes, which it will, you will be set to embrace the world of tomorrow.

Rick Piette is the regional sales manager for All Western Mortgage. He has been a Las Vegas resident and mortgage expert for many years. Contact him at rickp@allwestern.com.

Don't miss the big stories. Like us on Facebook.
THE LATEST
Follow the rules on parking and pools

Community pools are still closed. Still, getting questions on parking. Here are some rules and guide lines.

Many HOA boards are holding virtual annual meetings because of COVID-19

Many readers are asking about how we conduct our board election meetings that require the written secret ballots to be opened and counted at the election meeting. My guest writers this week are Joyce Winward and Katherine Rader, who are community managers. I asked them to give us some information on this topic:

As we head into summer HOA pools remain closed

As of May 1, the restrictions set by Gov. Steve Sisolak to keep the pools closed have not been released. Your association as others are waiting for the green light from the governor. I suggest that you may want to contact his office.

Construction industry steps up for Southern Nevadans

First and foremost, we are making sure our workers are protected. We are working with the Nevada Construction Assembly — a group assembled by Gov. Steve Sisolak to ensure construction worker safety. As a participating member, NCA has helped develop policies and procedures to keep workers out of harm’s way. In order to do this, we are educating our workforce. T

Homeowner says builder has not provided guard-gated community as promised

Also, the gates to the community are left open during the day. HOA board said it is for convenience for potential buyers to access the community. With the current pandemic, the sales office is by appointment-only. Yet the gates are still left open during the day.

Designer launches virtual home staging program

Nicknamed the residential illusionist, Gayle Novak works her magic staging occupied and vacant residential homes going on the market. As the CEO/design director of Enhance Your Home LLC, Novak and her team help homeowners and listing agents present properties in the best possible fashion, or what Novak terms “showcase ready.” In response to the current COVID-19 crisis, Novak is helping her clients stage their homes via Virtual Home Staging Consultations, a program she launched April 1.

People want some of their HOA money back

I have seen a few letters to the editor, asking the same question or even where the writer was demanding a credit on their assessments. I would ask my readers to review their 2020 budget. Regardless of the amenities not being used, associations still have operating expenses.

Homeowners can display political signs with some conditions

Under Nevada Revised Statute 116.325, neither the board nor the governing documents of an association can prohibit a unit’s owner or an occupant of a unit from exhibiting one or more political signs within the physical portion of the association that the owner or the occupant has a right to occupy and use exclusively subject to the following conditions.