Quicken Loans told customers certain parts of the loan process “can’t proceed” in areas of the country affected by shelter-in-place orders.
Specifically, they said home appraisals can’t be conducted while homeowners are sheltering in place, nor can rate lock requests be made.
They have updated their statement saying, “Even though shelter-in-place orders are in effect in many areas of the country, the mortgage process can still continue.”
Apparently, appraisers and closing agents may enter your home while under the shelter-in-place order.
But if not, they say they’ve got alternative ways to complete these tasks.
As to why you can’t lock a rate, which isn’t an in-person activity, presumably they don’t want to make commitments if the loan isn’t going to move further, especially with the current dislocations and volatility in the secondary market.
They have since clarified that there’s been “a slight adjustment” to their rate lock process where they can’t offer long rate locks because of the rapidly changing environment.
Normally they’d lock a loan before underwriting, but to accommodate shelter-in-place orders, you’ll need to lock your rate closer to closing day in affected areas.
This will likely affect both Quicken Loans and Rocket Mortgage customers.
For appraisers that are still working, Quicken has taken protective measures to ensure folks don’t get sick.
This includes making sure appraisers and signing agents aren’t working while showing signs of symptoms or based on recent travel and interactions.
And ensuring “team members and partners understand and follow all CDC guidelines and best practices.”
They have also encouraged appraisers and signing agents to take “proper sanitary measures the entire time they are at your home.”
This may include not shaking your hand, maintaining a physical distance of at least six feet, or even showing up wearing rubber gloves and/or a face mask.
Quicken added that they might even ask about your health or recent international travel, but understand the need to protect your privacy.
If you feel you are sick or visited an area with active outbreaks, they ask that you let them know so they can reschedule any appointments.
“We are eager to get your mortgage completed for you as quickly and easily as possible, but our primary commitment during this time is to keep you, our team members and our communities safe.”
Much of the Country Will Soon Be Sheltering in Place
At the moment, the 40 million-odd citizens of California are required to shelter in place, as are the residents of Illinois, New Jersey, and New York.
Major cities like Kansas City, New Orleans, Philadelphia, St. Louis are also under orders to stay put, making it tricky for non-essential work to get done.
Similar directives are rolling out basically everywhere, with Delaware, Kentucky, Louisiana, Maryland, Michigan, Ohio, Oregon, Wisconsin, and others being ordered to stay at home as well.
If this continues, we might have something like a national lockdown for an unknown period of time.
Whether home appraisers will still be allowed out to snap pictures of homes and do their work remains to be seen. Same goes for mobile notaries.
So if a solution doesn’t reveal itself soon, a whole lot of mortgage refinance applications stand to be stopped in their tracks.
FHFA Directs Fannie and Freddie to Ease Appraisal and Employment Verifications
Now the good news – there do seem to be solutions on the horizon.
Yesterday, the FHFA, which oversees Fannie Mae and Freddie Mac, said it will provide “alternative flexibilities to satisfy appraisal requirements and employment verification requirements” from now until May 17th, 2020.
To ensure homes can continue to be bought and sold, and existing mortgages refinanced, appraisal alternatives will be leveraged to avoid the need for appraisers to enter homes.
This might involve the use of an automated valuation model (AVM) that relies on data and analytics to assign a property value.
A private company is also set to launch an appraisal tool that lets homeowners take interior photos.
Additionally, Fannie and Freddie will make it easier to obtain a verification of employment (VOE), without requiring a verbal one before closing.
Instead, lenders will be permitted to obtain verification from the employer via email, a recent year-to-date paystub from the borrower, or a bank statement that shows a recent payroll deposit.
The FHFA cautioned lenders to continue utilizing “sound underwriting judgment to ensure these alternatives are appropriate to the borrower’s circumstances.”
It’s not yet known if similar allowances will be made for other types of home loans, including FHA loans, USDA loans, and VA loans.
If not, it’s going to be increasingly difficult for lenders to close loans as more restrictive measures are implemented due to the coronavirus pandemic.