What is happening in Colorado real estate due to the Novel Coronavirus? What you need to know.
These are tough times and we would love to know how we can support you. Aside from sharing the latest housing information with you as we receive it... What do you need? How can we help? Below we will summarize what we know about the new relief act, and encourage you to visit the NAR (National Association of REALTORS) website for more detailed information. Meanwhile, we hope you are healthy and gainfully employed. If you are struggling with your job, business, mortgage, rent, or tenants, below are some resources to help you.
Please see our @artofhometeam Facebook page for regular coronavirus housing-related updates. As of today, the biggest challenge we are facing with the real estate market here in Colorado is on the lending side. The demand for housing in Denver Metro is still strong and even in this pandemic, we are seeing multiple offers and competitive terms. We are still short about 20,000 homes in Colorado, and if home builders slow/stop, the market will stay tight.
Some transactions are in jeopardy right now, as lenders struggle to interpret rapid changes. Lenders are tightening guidelines and dropping programs such as non-conforming mortgages (this will affect the luxury market if jumbo loans don't make a comeback...). Today, we were told that Wells Fargo pulled non-conforming mortgages (ie jumbo loans) from outside mortgage brokers, and that in progress buyers had a very short time period to lock their loans (24 hours). They apparently also said that no new applications are being accepted (on non-conforming products). This is with outside originators. Jumbo loans are still available with some lenders, but rest assured, guidelines have been tightened almost overnight.
Rates have been jumping around to say the least, and lenders are scrambling to lock buyers in at the right time. For example: a range of rates last week with one particular lender (30-year fixed conventional) was anywhere from 3.5% to 4.75%. Good lenders know when to lock, but buyers need to approve their locks quickly or it could cost them a 1% difference. It is critical that buyers align themselves with a local lender who has boots on the ground in their market. We can pair you with the lenders who are getting loans closed, despite the chaos.
All we can tell you is to breathe deep, and try not to panic. Colorado is still in high demand and we will continue to update you as we have new information and statistics. Colorado made it through the last recession with fewer foreclosures than the rest of the country. We bounced back relatively fast compared to other markets. Our current challenges were not caused by bad loans. This is different. If prices drop even a little, there are plenty of cash investors waiting in the wings to swoop in. They have been waiting for better deals on fix & flips for some time. For now, keep your social distance, and look into your options below if you need help. We are here to guide you if you need to talk.
Rocky Mountain Arsenal photo by Paul Thompson, @flyingphotog
On our Art of Home listings, we have acted quickly to adapt to this new world. We are creating virtual walkthroughs, sanitizing surfaces and lockboxes, wearing gloves, offering Zoom showings, and encouraging occupied home sellers to wait out the pandemic. Even though we have been deemed essential, we are staying home unless absolutely needed in the field. We are juggling delayed trades and working with new vendor requirements (ie: no one can be present in the home at the time of service, limited vendors are available, all lights must be on already, etc.) Our agent-owned parent brokerage, eXp Realty (EXPI), was already cloud-based, so our day to day internal company workflow and connection to 28,000+ REALTORS® has not changed. We have been impressed with the collaboration from our colleagues across the globe.
We have participated in, and organized, Zoom Mastermind calls (with lenders, investors, title companies, home trades, data specialists, and colleagues) helping us obtain the right insight to guide our clients during these uncertain times. Colorado was quick to adopt curbside closings and now, e-closings. The silver lining might be that some process improvements will remain after the pandemic, and we have strengthened friendships with real estate agents in many other markets.
At a glance: Coronavirus Aid, Relief, and Economic Security Act
The good: Homeowners who have a conforming, government backed mortgage, ie: FHA, VA, conventional... you should be able to receive up to 12-months of forbearance (delayed mortgage payment) approval with no paperwork needed, on owner occupied homes. Lenders cannot report negatively regarding your mortgage payments to credit bureaus during this time.
The bad: You will owe the payments in full at the end of the term, and interest will likely still accrue during this time. Be prepared. We encourage you to stay on track with your mortgage payments, unless you have circumstances that prevent you from being able to do so.
** Homeowners be careful taking advantage of forbearance if you don't absolutely need it... because you will have to catch up at some point, and if you don't have the full amount due when needed, after forbearance, you'll probably have to modify your loan. This could have adverse credit impact (ie loan modification AFTER the forbearance term). During forbearance, you are not supposed to have any adverse credit impact regarding delayed mortgage payments. When you skip payments, this could be noted in a near future loan application, ie: if you plan to refi or buy next year, be careful, talk to good lenders for advice.**
Rental properties: It is unclear what the requirements will be for rental properties when tenants can no longer pay rent. We tested some lenders and on a rental property, some required a list of 20 documents to apply for forbearance. If you have a rental property and tenants are struggling, do your best to work with them and come up with a plan. Governor Polis has suggested allowing tenants to pay April rent on April 30th and for there to be no late fees. There is no official legislation on this at this time.
Suspends all payment due on federal student loans for 6 months.
Interest shall not accrue on these during this forbearance.
For the purpose of loan forgiveness, loans will be deemed paid during the forbearance.
Prohibits negative credit reporting or involuntary debt collection during forbearance period.
Economic Injury Disaster Loans (EIDL) and 7(a) Payroll Protection Plan
The CARES Act dramatically increased the role of the Small Business Administration (SBA) in efforts to assist U.S. businesses impacted by the COVID-19 crisis. The two main vehicles for these relief efforts are the SBA 7(b)(2) loans – Economic Injury Disaster Loans – and the SBA 7(a) loan program. Both loans are available to businesses with 500 or fewer employees that have been negatively impacted by the crisis.
We recommend you call your mortgage loan servicer AND get your options IN WRITING from them.
Questions for Your Loan Servicer:
What happens if I cannot pay my mortgage for a few months? Is there a lump sump payment due at the end of the forbearance term, or can this be tacked onto the loan to extend the loan amount/loan term?
Please confirm that I will NOT have late fees, penalties or additional interest (other then the normal accruing interest) while I am in forbearance.
If I make partial payments - how are those applied to my principal and interest?
If I want to refinance with you in the future, how will forbearance affect my qualification for that?
Need Rental Assistance? In Colorado: Dial 211
If you are not sure how you will pay for your April/May housing, or if your tenants will be able to pay their rent (and you have a mortgage due soon)... in Colorado you can dial 211 or 1-844-926-6636
Organizations that might be able to help you:
Colorado Housing Connects coloradohousingconnects.org
Brothers Redevelopment brothersredevelopment.org
Northeast Denver Housing www.nedenverhousing.org There is a program called TRU - temporary rental utility assistance.