Date: 2020-05-13 07:00:00
Let’s discuss the new changes to mortgage requirements, mortgage deferment, and how the issues with forbearance – Thanks! Add me on Instagram: GPStephan
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JP Morgan Chase, one of the nations LARGEST mortgage lenders, just raised its standards as to who can get a loan, and many lenders followed. Some of the new requirements include:
One, making sure you’ll still employed, and this is verified 3 days before your loan actually closes.
Two, they’re only using the most recent bank statements as possible within the last 60 days.
Three, if you’re self employed and UNABLE to show bank statements with proof of income – then your qualifying income, as in – what’s on your tax return – will be reduced by 25%, just to give a little more wiggle room if anything was to happen.
Four, and this is HUGE for real estate investors…Rental Income can ONLY be used if you have a FICO score ABOVE 700, and you can document 6 months of reserves for each financed property in which rental income is being used to quality.
Five, banks have lowered their maximum debt to income ratio – meaning, your mortgage payment can’t exceed 50% of your take home pay.
Six, Bank of America just raised it’s credit score requirement from 660…all the way up to 720 for anyone wanting to cash out of their home equity.
HOWEVER…even though lending is tightening up, here’s where we get into the NEW potential concern of the week: Home buyers NOT making their mortgage payments, and I’m calling for the “MORTGAGE FORBEARANCE TRAP.”
What many buyers must understand is that Forbearance is different than DEFERMENT…which is where you can miss a few of your payments, and apply that to the END of your loan. HOWEVER…that’s not an easy process to go through. This is done ONLY on a case by case basis, for pre-approved borrowers, when they know EXACTLY how long you’re not going to be paying for…because, while you’re not paying your mortgage, the mortgage servicer STILL needs to make your interest payments to the fund that now owns your loan. And, the mortgage servicer is unlikely to want to make these payments on your mortgage – on your behalf – without wanting to catch up on those payments upfront, and that’s where the problem lies.
So, I have a feeling – that, after this forbearance period is up – if buyers are STILL unable to pay, they’re going to be processed through a different application for either a loan modification, which allows for the buyer to add those missed payments to the end of the mortgage, or a payment plan which allows the buyer to make small, extra payments towards paying down the outstanding debt.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
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