A report from the Washington Post. “Prospective home buyers and homeowners who want to refinance should anticipate more stringent documentation requirements, tighter credit standards and more limited choices for loans due to the quick financial downturn from the economic shutdown. Lenders now also need to help an influx of borrowers who can’t pay their mortgages. ‘We hit a perfect storm in mid-March,’ says Hope Morgan, branch manager of Mortgage Network in Salisbury, Md. ‘We all started to work from home and were worried about how to deal with low rates. Then everything changed and new rules started to come out.’”
“The Mortgage Network raised its minimum required FICO credit score for a mortgage to 660 for most loans, with a 640 score allowed on some FHA loans, says Morgan. ‘Our role is to put consumers in the best position to repay their loan and employment is critical to that,’ says Jeff McGuiness, chief sales officer of Embrace Home Loans in St. Louis. ‘A leading indicator of someone who may have trouble keeping up with loan payments is their FICO credit score. Historically, we’ve approved loans for borrowers with a FICO score as low as 580, but now because of the economic instability most lenders are adjusting their minimum to a 640 score.’”
“Some lenders are eliminating their low down-payment programs. JP Morgan Chase, for example, now requires a down payment of 20 percent — up from 3 percent — and raised its minimum credit score for new mortgages to 700. ‘Documentation standards are tightening, too, particularly for employment verification,’ says McGuiness. ‘We’re looking at income and employment the day before a closing and sometimes on the closing day. We don’t want to put our customers in a position where they can’t repay the loan.’”
“Guaranteed Rate also raised its minimum credit score slightly to 640 and added a requirement for borrowers to have at least two and sometimes four months of mortgage payments, including principal, interest, taxes and insurance, in the bank.”
“Home buyers and homeowners refinancing in high-cost housing markets may have a harder time finding a jumbo loan, which is a loan for an amount above the limits set for conventional loans backed by Fannie Mae and Freddie Mac. In a high-cost housing market such as the Washington region, the loan limit is $765,600. ‘There are 50 to 60 percent fewer jumbo loans available right now,’ says Moffitt.”
“Moffitt says lenders are also more fearful of possible forbearance on these loans, which have larger monthly payments. ‘Borrowers who need a jumbo loan will have fewer choices, so they’re likely to see higher rates and need a bigger down payment and a higher FICO score,’ says McGuiness.”
From KPTV in Oregon. “Kate Fulford, a realtor in Portland, says there’s been a shift, and she believes it’s all linked to the pandemic. ‘A buyer that seemed stable and a transaction that seemed on track could definitely shift late in the game,’ Fulford said. ‘I think you have to be careful right now, just because you have an appraisal on a home doesn’t mean that it’s necessarily worth that full value,’ Ferguson Wellman financial advisor, Mary Lago said. ‘But at the same time if you’re planning to live in that home for a while, you don’t need to worry about it as much.’”
From Sandiego.com in California. “The city of San Diego has been hit hard by the coronavirus pandemic. Landlords who still have mortgages on their rental properties are in a pickle. There are mortgage companies offering financial relief, but this barely scratches the surface for landlords who have multiple properties (not to mention, their own) to manage.”
“Many landlords who are behind on their mortgage are in a dangerous situation as property prices are going down, they are risking to go ‘underwater’ or ‘upside-down’ on their mortgage. This means that they will not be able to sell their property for enough money to pay off the debt to the lender and avoid foreclosure.”
“For those interested in investing in real estate, there are now more opportunities than ever. It’s a buyer’s market as property values drop to an all-time low. Investors could stand to get properties in some of San Diego’s hottest and most prominent neighborhoods at a very good price. For those who are looking to take advantage of the situation and acquire a duplex or triplex near the beach for a lower price than usual, this period might be a good opportunity. The prices are going down, specifically in Hillcrest, North Park, and City Heights.”
From Your Basin in Texas. “According to Connie Coots, the CEO of the Odessa Board of Realtors, we are now in a buyers market, meaning buyers have the upper hand as of right now when it comes to buying a house. ‘Buyers have a little more leverage over sellers right now as far as more demand we have around 429 homes on the market right now,’ said Coots.”
“However, just because there are more homes on the market for potential buyers doesn’t mean sellers are willing to bring down their prices just yet and it’s all going to depend on the economy in the upcoming weeks. ‘When I say it’s a buyers market I just mean that they have a larger pool to pull from not that their values have started to come down because we have not started to see appraisals coming in low yet. It’s a volatile market, we’re waiting to see just like everyone else is. We’re not really sure what’s going to happen we’re waiting to see what the oil prices are going to do,’ said the realtor.”
“She said buyers who are interested should talk to a lender, have a realtor in Odessa and a realtor in Midland because the markets are different, and make sure your credit score is between 640 and 740. ‘There is a lot of opportunity as far as homes being on the market but but you have to make sure you have your finances in order because the credit has tightened up a little bit.’”
From CBS 5 in Arizona. “Owners of short-term rental properties are suffering unprecedented losses, as the flood of tourists that normally descends upon the Phoenix area every spring dried up almost overnight. ‘I am actually surprised that this is happening so quickly,’ said Greg Hague, a real estate broker and attorney, who owns Hague Partners and 72Sold. Hague says his company has listed many former short-term rentals in the past month, representing sellers who need to unload homes that are no longer producing income.”
“‘The damage is done because they missed the season by having these bookings cancel immediately. And it’s very tough to rent Airbnbs in the summer in Arizona for obvious reasons,’ said Hague.”
“Hundreds of homeowners and investors poured millions of dollars into expensive mortgages across the Phoenix area, banking on the idea that these rentals would pay the bills and then some – every month. But according to the website, airdna.co, 90% of the global short-term rental units that had been reserved for this week, were canceled.”
“The turn of events has affected investors like Kory Wenzel, who owns three rental properties in the Phoenix area. Two of them are short-term rentals. The third is a traditional long-term rental. ‘It should be survivable just being supplemental income. But for those who are doing it as a business, it might not be survivable,’ said Wenzel.”
From Short Term Rentalz on New York. “A year to the day after acquiring ten floors at 75 Rockefeller Plaza in New York to operate ‘high-end apartment-style suites with a diverse mix of amenities,’ Airbnb is cancelling its agreement with landlords RXR Realty at the proposed development. Owing to to fallout of the Covid-19 pandemic, plans to create 200 luxury hotel rooms and suites have been shelved at the 33-storey skyscraper in the centre of New York City, due to dwindling hotel revenues and rising availability rates, according to Business Insider.”
The Wall Street Journal. “SoftBank Group Corp. said steeper-than-expected losses on office-share firm WeWork pushed its expected net loss for the latest fiscal year to around ¥900 billion ($8.4 billion)—$1.4 billion more than it announced just two weeks ago. The Japanese tech conglomerate, best known for its $100 billion Vision Fund, revised the estimate as it scrambles to calculate the hit to its bottom line from souring investments before it releases earnings on May 18 for the year ended March 31.”
“The deeper loss comes from SoftBank’s multibillion-dollar rescue of We Co., the parent of WeWork, whose value cratered last year after investors turned wary of the company’s highflying chief executive and heavy-spending business model. SoftBank earlier this month canceled another part of that bailout—an offer to buy up to $3 billion of WeWork shares from early investors and employees including the company’s former chief executive, Adam Neumann—saying the company hadn’t met conditions needed for the sale. That also left WeWork without a further $1.1 billion in debt financing that was contingent upon the share sale.”
“The added loss from the WeWork rescue is pushing the total loss from investments on SoftBank’s books to more than $9.4 billion during the year ended March 31, versus the $7.5 billion SoftBank had announced earlier this month, the company said.”
“That loss is on top of a previously announced fiscal-year investment loss of $16.6 billion at the Vision Fund—the world’s biggest tech-investment vehicle—as the economic downturn sparked by the coronavirus pandemic pummels money-losing startups that were already under pressure to bolster results.”