The New Abnormal

Mortgage and Lending with US Bank NMLS: 22343

The New Abnormal


We've just turned the corner from March to April, but here in the San Francisco Bay Area, we are still sheltered in place (SIP).  Everybody in our home is making adjustments to our new abnormal and it's a good lesson for today's homeowner too.  We may not be able to move around or go out, but can we hunker down and tweak our financial situation so that it better positions us to weather the next few months?


First, a little perspective.  Even if the health implications of the pandemic miraculously prove to be short-lived, my sense is that the economic ripples will reverberate well beyond that timeline.  Why?  Because in finance we tend to see credit capacity build slowly and steadily, but evaporate suddenly and even violently.  Even though we are in the early innings of dealing with COVID-19, much of the mortgage industry has seen significant pullback in loan options for the consumer.  Among them:

  1. The all-but-complete disappearance of non-QM loan product (bank statement programs, asset-depletion mortgages).
  2. The tightening of guidelines on jumbo and portfolio loans (lower loan-to-values, restrictions to cash out).
  3. Higher rates on riskier loan options.

This is the underlying market's way of saying that it feels it's time to be more conservative, trim expenses and reduce risk exposure.  As consumers, it might be beneficial to follow that lead.


So how do we accomplish our own rebalancing of risk and expense when we're homeowners?  The primary way we'll see our clients do this is through a refinance.  Of course, if you already have a low, fixed-rate loan, you may be set.  But some of our clients who may have previously not been excited by saving $150, $250 or even $350 per month are now suddenly looking at the prospect of reduced work hours or possibly unemployment of one of the working spouses.  Viewed in this light, any savings can take on new urgency.  And of course, I am never one to advocate for refinancing a loan for short-term benefit while not considering the long-term implications, but current circumstances do, we must admit, change this paradigm.  Everybody must first navigate the present's choppy waters in order to sail into the safe harbor of a better future.


Home equity lines of credit (HELOCs) are another strategy the savvy will use.  Remember, a HELOC has no payment if you don't draw against it.  Some homeowners keep a home equity loan as a safety net.  Some take a new line so they have a source of capital during a downturn and a way to make an investment that other, cash-strapped buyers cannot.  Sure, there is risk, but how many people do you know who say they wished they had bought at the bottom of the last crash?  Let me let you in on a secret.  There are two reasons they didn't; first, they didn't have the resources to do it.  Second, they were scared, like everybody else.


Make no mistake about the COVID-19 pandemic --- this is wildly unfamiliar terrain for everybody.  It's also our new, daily existence for some time.  We can hope and wish and pray it will blow over soon, and like you, I'm optimistic it will.  But in the meanwhile, I am taking financial matters into my own hands and advising my clients to do the same.  Some of the old rules don't apply here and even the ones that do must be viewed in the light of our new abnormal.


Stay weird,


Robert J. Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959


Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate's Human Resources Department.


Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 - (866) 934-7283

Comments (23)

George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Rob, yep we are all adjusting to the new norm.  FHA is no picnic these days either.

Keep the faith, we will get through this.

Apr 01, 2020 08:39 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Sometimes just talking about the abnormal "norms" helps immensely, Rob Spinosa ... your post certainly fulfills that mission and reaches the goal ...


Apr 01, 2020 09:09 AM
Kathy Streib
Cypress, TX
Home Stager/Redesign

Rob- This is going to be on everyone's minds as we enter April. The best thing people can do is talk to a professional, like you and the two gentlemen who commented before me... George Souto and Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi 

Apr 01, 2020 06:33 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Greatly appreciate your shout out, Kathy Streib ... thank you!

Apr 02, 2020 08:15 AM
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

I am way more afraid of the economic impact than I am the virus.

Apr 01, 2020 10:01 PM
Rob Spinosa

I suspect we will all share this attitude until we confront the health aspect of this pandemic, or know someone else who does.  Let's continue to follow the advice of experts until the health risks substantially subside, and ask our neighbors to do likewise.

Apr 05, 2020 08:34 AM
Kathy Streib
Cypress, TX
Home Stager/Redesign

Apr 04, 2020 07:20 PM
Barbara Todaro
RE/MAX Executive Realty - Happily Retired - Franklin, MA
Previously Affiliated with The Todaro Team

Good morning, Rob Spinosa the new normal..... so frightening.... stay safe....stay healthy.... stay strong....

Apr 05, 2020 05:59 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Rob:

Thanks for some wise advice. It's certainly been a wild ride so far and I think the economic issues are going to impact ys all for quite some time. Let's hope the virus doesn't.


Apr 05, 2020 05:26 PM
Mimi Foster
Falcon Property Company - Colorado Springs, CO
Voted Colorado Springs Best Realtor

At the very beginning of this, people jumped on the refinance band wagon, only to find out a few days later that the lenders wouldn't honor those early applications. It will be interesting to see how it balances out. I am ready for the next phase.

Apr 05, 2020 06:08 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

We seem to be sheltered in place in at least 40 states. Hey and we’ll get through this. :)

Apr 05, 2020 11:13 PM
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
Retired New Hampshire Home Stager

I'm so happy that I don't have a mortgage to worry about. At least I have that going for me. Plenty of other things to be concerned about though. 

Looking forward to being on the other side of this nightmare.

Apr 06, 2020 07:40 AM
Richard V. Foster, Esq.
Law Office of Richard V. Foster - Henderson, NV
Broker (58356) - ABR/M, CREN, CRS, GRI, RRG, SFR

Not to be Chicken Little, but I think this turn in the economy will make 2007 look like a tame dress rehearsal. If we don't see catastrophic price reductions over the next year, we will see a minimum of 25%, but plan on over 50% as a more realistic level. The great news is that the interest rates will hit the floor too, so be ready to buy in about a year, and score in the long run.

Apr 07, 2020 07:02 PM
Lynn B. Friedman CRS Atlanta, GA 404-939-2727
Atlanta Homes ODAT Realty - Love our Great City - Love our Clients! Buckhead - Midtown - Westside - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

Rob Spinosa 
One of the best parts of your posts is your calm manner when discussing the hard facts. Softens the impact for sure! Thanks - Lynn

Apr 07, 2020 07:09 PM
Greg Mona
West USA Realty - Scottsdale, AZ
Professional Real Estate Representation for YOU!

 Hi Rob Spinosa. I, like pretty much everybody else, am not a fan of this "New Abnormal", but alas, it is what we are now faced with, thus we have to confront it and get on with our lives. Most everything being predicted is pure speculation at this point, so where we finally land with the mortality totals and the economic hit to our economy is still anybody's guess. Stay healthy, everyone, and we'll get through this. 

Apr 07, 2020 07:31 PM
M.C. Dwyer
Melody Russell Team at eXp Realty of California, Inc. - Felton, CA
MC Dwyer-Santa Cruz Mountains Property Specialist

Great post Rob Spinosa ; glad to see it was featured.    Happy to "stay weird."

I could be wrong, but I think the "keep xx weird" slogan may have started down here in Santa Cruz?

Apr 08, 2020 09:13 AM
Rob Spinosa

Santa Cruz it is!

Apr 08, 2020 12:59 PM
Carolyn Roland- In Delaware and S. Chester County PA
Independent architectural histor'n - Wilmington, DE
Carolyn Roland, GRI, CRS

You are right. We will definitely see long term changes when this is over.

Apr 08, 2020 09:21 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

You've written some important food for thought. Thanks for sharing your expertise.

Apr 08, 2020 11:18 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

The new abnormal ... hmmm ... whatever normal is or was. Great post. Lots to think about.

Apr 08, 2020 03:27 PM
Stu Dye
Mortgage Network, Inc. NMLS #2668 - Portland, ME
Senior Loan Officer

“The New Abnormal”.... BRILLIANT.
In the spirit of full disclosure, I might be ‘borrowing’ your perfect catchphrase.
Hope you and your family are surviving, and Happy Friday!
-Stu Dye
Falmouth, MAINE

Apr 10, 2020 05:01 AM
Jan Green - Scottsdale, AZ
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Really good points to ponder as we watch for the downhill slope of this crazy pandemic!

Apr 13, 2020 12:21 PM