How will this crisis affect prices on loans for sale?
My experience is the prices we’re paying for loans now have nothing to do with the current situation. It’s not like there’s a shortage of loans and like toilet paper, we’re willing to pay more for this commodity. The loans we’re bidding on now are loans that were originated back in the early 2000’s and later. It’s as if we’re going back in time and bidding on those loans. The prices we’re paying now for these older loans has to do with supply and demand.
The situation we’re experiencing now may influence us five or ten years from now when we see the default rate at that time. But, for now it’s business as usual.
How will the current economy affect my borrowers ability to make payments?
We’re starting to see borrowers, who have lost their jobs or have been sidelined from work call us to ask for a temporary reprieve. We want to be as sensitive as possible as well as follow new guidelines that have been set into place by the Government.
Our first response to our borrowers is empathy. We ask them questions about their situation, whether they were laid off or suspended, how long their employers think they’ll be out and lastly, what the borrowers are looking for.
Most of the borrowers ask if they can stop paying their mortgage for a few months. Here are our responses to our borrowers:
1. We ask if they can pay a portion of their monthly mortgage.
2. If not, we request a letter from them explaining why they’re unable to make their payment, whether the problem is temporary or permanent, details about their income, expenses and other assets and whether they are a Service Member.
3. We tell them there won’t be any late charges or other penalties for the next three months and will be reviewed after that period.**
4. They won’t have delinquencies reported to the credit reporting companies.
We tell them there is a foreclosure moratorium and we will suspend all foreclosing for sixty days as suggested by the CARES Act.
** Because our mortgages aren’t backed by Fannie Mae or Freddie Mac, we don’t have to follow their 180-day forbearance or extension request guidelines.
Are there any new guidelines or laws covering borrower’s rights during this time?
We’re all in this together and it’s extremely important to show empathy and patience during this devastating time. While at the same time you must remember that you’re a business and if money stops coming in, you’ll find yourself in a tough position where you won’t be able to help anyone. We must be able to find a happy medium during this crisis.
Here are some interesting articles I’ve found regarding what the guidelines and laws are doing about borrowers and payments on their mortgages: