In the past decade or so, the work of the mortgage broker, like that in so many other business realms, has been moving more and more toward technology and internet-based services. And coronavirus-related social distancing has accelerated the trend.
“You can apply for a mortgage and do everything online now,” said Annette Tapia, loan consultant with loanDepot in Santa Fe.
In early April, she said fear surrounding the coronavirus disease COVID-19 had not impacted her business overmuch. “I’ve had borrowers who were in the pipeline when this started and they have continued to move forward to close on their loans, and I have new borrowers. I’ve heard of other lenders that have lost business because they had borrowers who did suddenly lose income, who did lose their jobs, and therefore don’t qualify any more.”
Tapia said it was interesting that 65 percent of her business involved home purchases, with only a third refinances. “When we’re headed into a recession, the rates will drop and people want to refi.”
She said loanDepot probably wouldn’t qualify for small-business aid through the stimulus package enacted by Congress. But she talked about the impact that another aspect of the Coronavirus Aid, Relief, and Economic Security (CARES) Act would have on the mortgage industry. “A lot of borrowers are being told that they can apply for a forbearance on their mortgage paymenst and they don’t even need to show hardship or mention COVID-19. And if everybody starts taking advantage of that, it will have a ripple effect on us. If we don’t have mortgage payments coming in, we can’t pay the bond holders who are actually the ones that invest in the assets and provide the liquidity that we’re going to need.”
Tapia, a native of Santa Fe, has worked in mortgages for about 15 years. She considers herself a local lender even though loanDepot is a national company based in California. “Our retail division last month funded about $1.8 billion,” she said.
She has offices at 150 Washington Avenue and at Coldwell Banker Trails West Realty, but she’s been working from home during the pandemic. She is also helping her 9-year-old son with his distance learning. “He goes to Santo Niño and they have the same guidelines as the public schools. He is in fourth grade and I have new compassion for his teacher with 26 students. We have our desks at home and I hear him engaging in his school work and he’s listening to what I’m doing. It’s been interesting.”
Over at The Mortgage Place, Jim Gay said he was still helping clients to buy homes. “Just not as much, because meeting with them has gotten to be more difficult. Part of our staff is working from home, so everything’s a little more cumbersome.”
Gay said he had a few clients who had to drop out of the loan process because of loss of jobs. “Most people are taken care of by their companies, but that does slow down your appetite to take on a mortgage.”
The Mortgage Place applied for assistance under the federal government’s stimulus package for small businesses. “Our cash flow has been interrupted and we have an awful lot of people who want to refinance, but we haven’t been able to get into the underwriting and get them done.”
Asked about the ability of borrowers to defer mortgage payments for up to six months, he said people will have to settle up after that period, or perhaps the missed payments would be tacked on at the end, prolonging the amortization.
Gay said it is fortunate for those borrowers that there is no interest involved, nor will deferrals be reflected on the borrowers’ credit scores.
“Lenders never want your property,” he emphasized. “It’s an investment and they want you to make your payments. They will be flexible.”
Gay has an optimistic outlook about the economic recovery from the pandemic. “There is a prediction that the economy could really skyrocket when this is all over, with the demand that’s been supressed.”
Ginger Sullivan, Anasazi Mortgage, was in the middle of helping people with residential construction loans, two in Albuquerque and one in Santa Fe. She said the stimulus package won’t be helping people like her. “It’s designed to help small businesses with employees, and I don’t have any. It’s just me.”
Sullivan went into some detail about how mortgage deferrals will raise costs for all. “Typically, mortgage brokers work with multiple lenders that sell the servicing rights to others, and that in turn gives them the ability to lend more money. If their loans aren’t performing, they can’t sell them.
“For instance, they used to do verifications of employment 10 days before closing. Now they do it on the day of closing. And when a lender decides to sell servicing rights to a particular lender, that lender may do a verification of employment after the loan is closed. And if that doesn’t come in, because the person has been furloughed, the potential new lender won’t buy the loan.
“That jeopardizes the first lender’s ability to sell to anybody else. You may have more origination fees or a higher interest rate, because the first lender needs to pad their process in case they end up holding onto those loans.”
While some brokers may be seeing business plunge because people don’t want to travel during the pandemic, Sullivan said most of her business has been internet-based and she rarely meets people until closing. “Now I can’t even do that,” she said, “because the title companies are closing on the front steps, handing papers to be signed in the cars and then not taking the pen back.”
“We call it a drive-through closing,” said Steven Riemann of Santa Fe Title. The way his office is handling it now is to send people their loan documents, which can be printed and signed at home.
“Then they come over and we hand them the deed and any other documents that need be notarized, then we observe them signing through the windshield. They give us the papers, we take them inside and notarize them, bring them back their copies, and it’s done.”
“People have been very cooperative and we’ve obviously in this way been able to really limit the number of people who access our building,” he said. “If there’s a big loan package with 80 signatures and 20 of them have be notarized, we’re letting them in, although some are closing at a table on the patio, and everybody is masked and gloved.
“It’s been an adventure. The worst thing part about it is that I can’t see the smiles on the faces of new buyers and sellers.”