Are we over it yet?
Do you know when you feel yourself getting over a cold? It’s when you can finally get out of bed and walk around without a Kleenex in your hand. You’re not 100%, but hey, you’re active, getting in the car, playing with the kids, and suddenly you see the light of big breaths at the end of dark, mucus-filled days (I know, the irony of starting this post off with a cold analogy). As we enter the start of June, there are signs that the worst of the coronavirus shutdowns and the economic impact may be over. For example, we saw an increase in new home sales for April, well above expectations. In addition, more people applied to open new businesses. Two great things!
At LendUS, we are eagerly anticipating certain business sectors returning to normal. When the economy shut down, mortgage credit tightened. This was not our choice, but rather a result of investors to whom we sell our Mortgage-Backed Securities (MBS) to, deciding they didn’t want to buy certain loan types, such as those that carried high-dollar amounts or low FICOs, into their portfolios. This also included tougher income and down payment conditions including the dropping of some loan types altogether such as home equity lines of credit. The result was that we could no longer offer these products to our borrowers or had to charge higher rates to be able to do so. As we saw from the last recession, the housing market is a major tenet of the American economy, and these recent credit-box restrictions have created a drag on our economic recovery. With interest rates falling to the lowest level on record, this should have been a banner time for households in search of a new mortgage. It wasn’t. In terms of having a partner in the home lending game, we would like to remind you that we were well prepared for a hit to this sector, and have focused on stability ever since the last financial crisis. Here at LendUS, nobody has been laid off due to the pandemic. In fact, we have grown our workforce and we’re still recruiting. While this time certainly is not about us, as millions of people are experiencing economic hardship, we hope that you will see us as a trustworthy and valuable source for your home financing needs.