COVID-19 social distancing may affect physical mortgage closings
COVID-19’s social distancing is shining a spotlight on yet another challenge lenders and homebuyers face, at least in some states, where the law favors in-person notary signatures of certain mortgage loan documents. Yes, that’s right. State laws that do not allow 100% e-mortgage loan closings still affect originations.
As social distancing expands, “even as mortgage application volumes climb the physical ability for those loans to close could be in question,” according to National Mortgage News. Government agencies are making policy adjustments for some mortgage processing related in-person requirements but “closings do not appear to have been addressed to date.”
“If a recording office is closed to the public, but has staff available to accept recording documents either through the mail, FedEx or electronic means, we can close the loan as long as we are also able to have access to online recording data to update our searches before closing. In some instances, we will also have to have access to tax information,” according to an Equity National Title notice to clients.”If a recording office shut down and will not accept recording documents,” it is not possible to close the loan.
The article notes that purchase transactions in particular have more people involved because buyers, sellers and their attorneys, the settlement services provider representatives, the lender’s attorney and the real estate agent are present. That can build quite a crowd, at least in terms of social distancing.
Mortgage tech firms have been touting numerous benefits of e-closings, like speed, quality, convenience and security, for a while now. Covius EVP Joe Chappell says, “We can now add ‘the ability to limit physical interaction’,” to the list of e-closing benefits.
Meanwhile, the National Notary Association (NNA) met with representatives from the mortgage finance industry, “to solidify important health and safety guidance for Signing Agents, mobile Notaries and signers/borrowers amid growing concerns over the COVID-19,” according to the association’s website.
The meeting created a recommended best practice health screening declaration the notary and the signers/borrowers may sign upon request before each transaction. The disclosure includes answers to questions about recent travel and if they have had contact with any people diagnosed with the coronavirus, Parties are expected to follow the Center for Disease Control and Prevention recommendations.
Regions grants payment and foreclosure forbearance, $2.5M small business support & consumer-focused measures
WesBanco Inc. is one of the latest banks to take initiative to mitigate the impact of COVID-19. Here are a few things WesBanco is doing: mortgage payment deferrals for healthcare workers, the suspension of new foreclosure actions across its footprint, and a $350k community relief grant.
Regions Bank has joined the list of banks that have responded to the COVID-19 crisis with mortgage-customer assistance measures.
Distressed customers will receive mortgage payment forbearance for 90 days; and suspension of new residential property foreclosures on consumer real estate loans for 30 days. The terms of any payment deferral or extension, however, “will be disclosed to the customer at the time of the request,” the bank said in a release.
Regions Foundation, a nonprofit funded primarily by Regions Bank, will deliver an initial $2.5 million to organizations that support small-business sustainability and recovery.
“Small businesses are the economic heartbeat of our communities,” said Marta Self, Executive Director of Regions Foundation. “Throughout our communities, there are dedicated organizations that work directly with businesses on their evolving needs and challenges.
The Birmingham, Alabama-based subsidiary of $126 billion-asset Regions Financial Corporation operates in the South, Midwest and Texas.
Region’s staff is communicating daily with customers and communities to assess their needs, said Scott Peters, head of Consumer Banking for Regions Bank. “Our commitment is that we will consistently identify more ways we can serve” through the duration of the current crisis and beyond.
Assistance includes penalty-free CD withdrawalsmore than seven days after the issue date or the most recent renewal date (whichever is later). Waiver of standard fees for excessive withdrawals from all Savings and Money Market accounts; deposit account fee waivers available based on customer needand company discretion. No late fees for loan payment deferrals, credit card payment extensions; Suspended new repossessions of vehicles for 30 days.
Proactive steps include enhanced facility cleaning, guidance designed to limit COVID-19 exposure, and temporary limits to in person branch-banking services.
Florida’s housing market strong in February
Data released by Florida Realtors show positive housing market trends persisted through February as closed and pending sales, median prices, and pending inventory increased compared to a year ago.
Closed sales of single-family homes statewide, (which take place 30 days to 90-plus days after the signing of sales contracts), totaled 20,693, up 9.1% from February 2019.
Florida’s condo-townhouse market closed sales totaled 8,842 in February, up 10.8% from a year ago.
New pending sales for single-family existing homes rose 12.5% and new pending sales for condo-townhouse units increased 13.9%. Median sales prices for both single-family homes and condo-townhouse properties in February rose year-over-year for 98 months-in-a-row.
The statewide median sales price, (the midpoint between half the homes sold for more and the half sold for less), for single-family existing homes was $270,000, up 8% from the previous year, according to data from the Florida Realtors Research Department in partnership with local Realtor boards and associations.
The interest rate for a 30-year fixed-rate mortgage averaged 3.47% in February 2020, down from the 4.37% a year earlier, according to Freddie Mac, serving as “the principal driver of growth in the housing market last month,” said Florida Realtors Chief Economist Dr. Brad O’Connor in a release.
But what about today? In March, with COVID-19 spreading in the US, state officials announced Florida is in a state-of-emergency to help combat the pandemic and offer aid, said 2020 Florida Realtors President Barry Grooms, a Realtor and co-owner of Florida Suncoast Real Estate Inc. in Bradenton in a release, Realtors will continue to offer homebuyers and sellers their local markets’ expertise.
Going forward, the COVID-19 pandemic “is a perfect example” of what economists call “a ‘black swan’ event, O’Connor said. It is a very rare, difficult-to-predict event that originates from outside of the economic realm but imposes a massive shock to the economy,” because most of the traditional forecasting tools “will be rather useless in the near term.”
Amilda is an experienced financial journalist and branding content strategist with a keen interest in how entrepreneurs turn brilliant ideas into products and services that help advance business acumen and improve people’s lives in unprecedented ways. She has covered the mortgage market for over 15 years.