Mortgage Application During COVID-19: The Need for Information and Documentation is Amplified

By
Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI
https://activerain.com/droplet/5nH5
 
Mortgage Application During COVID-19:
The Need for Information and 
Documentation is Amplified
 
 
The weekend is often our family's opportunity to tackle errands.  That was true again this weekend.

My wife had to stop at a store to pick up just one item.  The task was supposed to be a short one, so I opted to wait it out in the car.  I found a bit of shade, parked the car, and rolled down the window.

The car parked next to mine also had their windows rolled down.  There was a man and woman inside.  The woman was on her cell conversing with someone fairly loudly. 


At first, her conversation was just background noise for me.  But then she mentioned the word "mortgage".  

As you would suspect, that word caught my attention and caused my mortgage lender ears to perk up.  

Evidently, this couple was hoping to buy a home and were in the hunt for a mortgage.  Whomever they were speaking to was hearing a rundown on their finances and financial situation.  I suspected it was a realtor.

The information they were sharing was quite personal in nature and pretty detailed.  I marveled that they felt no compunction sharing the info in such a public place as a parking lot where they could so easily be overheard.  

It was obvious from the info shared that the couple was presently facing some real financial troubles.  Late payments, high credit card bills, poor credit scores were all mentioned during the overheard conversation.  

Over and over I heard the woman attempt to dismiss and explain all the financial issues away with one phrase, "COVID-19".  According to her telling, the virus was to blame for everything bad that had happened.

Now, before we move forward ... that may be true.  I have no way of knowing whether this couple's financial troubles and challenges started pre-COVID or were a result of COVID.  

But I did know one thing for sure.  Any mortgage lender hoping to assist them was going to request and require an in-depth review and analysis be conducted of their finances prior to providing a Pre-Approval Letter to them. 

Pre-Approval Letters have become pretty much a mandatory requirement and standard for those wanting to view and bid on homes these days.  Realtors assisting buyers in transactions typically want to know if they've been pre-approved (and to what amount they've been approved) prior to showing homes.  

And Sellers want to know that anyone viewing, entering, or bidding on their home has verifiably proven their ability to buy it.  Again, a buyer proves that to a Seller via a Pre-Approval Letter.

The couple in the car next to mine was hoping to view homes right away.  With all the credit "dings", "challenges", and financial damages they were referring to during their conversation, I'm doubting that was going to happen. 

However, one thing was obvious when hearing this conversation.  This couple thought that mentioning "COVID-19" was some sort of magical code.  

It was a code that would somehow provide them a "pass" regarding their ailing financial status and aid them greatly come application time.  

To them, it was like holding a "Get Out of Jail Free Card" in a Monopoly game.  


No harm ... no foul.  Just mention the word COVID and you aren't accountable for anything.  

The need to explain their significant debt and bad credit would instantly disappear.  They would be held blameless.  

Voila'!

This isn't the first time I've heard this sentiment.  I've had to dispel this misperception quite a few times over the last few weeks.  Unfortunately, it's just not that simple.  It doesn't work that way.   

Mortgage lenders will certainly require explanation and proof of what an applicant's financial status was prior to any COVID-related challenges occurring.  They'll also need a thorough explanation and understanding of what lead to their current financial woes.  

A lender will also need to know the applicant's current employment status:  
 
  • Did COVID alter their employment status?  
  • If so, how?  
  • If they lost a job or were put on hiatus or reduced hours, do they remain that way currently?
  • If the applicant has returned to work, the lender will need to know if it is a return to their prior position/type of employment or if a new position is held?  
  • The lender will also need to know just how stable that employment is, both in the short and long term?  
  1. Lenders will definitely request thorough information and supporting documentation outlining your finances  
  2. Mortgage lenders will need proof of what your financial challenges are 
  3. A lender will need to know how your financial challenges were/are being addressed
  4. They'll need proof that the challenges faced are behind you 
  5. A mortgage lender's need for information is only  amplified during this crucial and challenging time  
  6. There is no free "pass" or "Get Out Of Jail Free Card" awarded based upon COVID-related issues  
  7. Verification and documentation still rules and determines the outcome of any application  
 
What mortgage applicants need to know and understand at this time regarding COVID-related financial challenges:   

  1. Lenders will definitely request thorough information and supporting documentation outlining your finances  
  2. Mortgage lenders will need proof of what your financial challenges are 
  3. A lender will need to know how your financial challenges were/are being addressed
  4. They'll need proof that the challenges faced are behind you 
  5. A mortgage lender's need for information is only  amplified during this crucial and challenging time  
  6. There is no free "pass" or "Get Out Of Jail Free Card" awarded based upon COVID-related issues  
  7. Verification and documentation still rules and determines the outcome of any application  

I suspect, the couple in the car next to me was about to find that out ...  


I do not relate this to discourage hopeful buyers (or those refinancing) from their goals.  I share it to shed a light on the great importance and need for having a conversation with a mortgage lender.

Only through that conversation will you discover what options and opportunities you have for buying and financing a home now ... or at some point in the future.  That conversation will also reveal and help you layout the best (and quickest) path to successfully do so.  Your future mortgage application will go much more smoothly too.

So if home buying is something you ever hope to do ... reach out now.  Get the facts as they pertain to YOU, your finances, your goals, your desires.  
 
Contact me today ...

* Are you dreaming of buying or refinancing a home or Investment Property in New Lenox - Will County - Chicagoland ... IL or WI?

Contact me today! I'll put my 40 years of mortgage experience and expertise to work on your behalf. I'm easily found at:
 
  
Gene Mundt
 
Mortgage Originator - NMLS #216987 - IL Lic. 031.0006220 - WI #216987
 
American Portfolio Mortgage Corp
NMLS #175656
 
 
Direct: 815.524.2280
Cell: 708.921.6331
eFax: 815.524.2281
 
 
 
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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Ginger Harper 08/11/2020 08:05 AM
Topic:
Lending / Financial
Location:
Illinois Will County New Lenox
Groups:
Mortgages
Home & Credit Savvy
Chicago Area Real Estate BUZZ!
Bananatude
WillCounty
Tags:
credit
credit scores
monopoly
preapproval letters
mortgage payments
mortgage application
bill payment
covid19
employment status

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Show All Comments
Rainmaker
455,415
JoAnn Moore
The Mortgage Market of Delaware - Georgetown, DE
Home Loans in Delaware

You are telling it like it is, Gene. No sugar coating the hard facts. I like the analogy of the Monopoly game. 

Aug 10, 2020 01:57 PM #1
Ambassador
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Anna Banana Kruchten Arizona's Top Banana!
HomeSmart Real Estate BR030809000 - Phoenix, AZ
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Just the facts - just the facts sir!  Great post Gene!

Aug 10, 2020 04:40 PM #2
Rainmaker
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Chris Ivy
Ivy Vine Investments - Memphis, TN
Sell Your House Fast For Cash In Memphis Tennessee

Great post Gene!

Aug 10, 2020 06:15 PM #3
Rainer
269,085
Richard V. Foster, Esq.
Nevada Perfect Homes - Henderson, NV
Broker (58356) - ABR/M, CREN, CRS, GRI, RRG, SFR

If the Dems get into office, it would not shock me to see some legislation that bans negative effects caused by CV19... Including negative credit scoring. Now, this is not a political comment, just an observation. Short of legislative action, millions of people's credit will be trashed because of an out of control virus. The depths of those effects will be far reaching for years to come.

Aug 10, 2020 07:45 PM #4
Rainmaker
2,869,277
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I have to say that I’m glad all of the precautions are being taken in general. Stay safe out there, Gene!

Aug 10, 2020 08:49 PM #5
Rainmaker
2,869,277
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I’m not sure I agree with that last comment but I don’t think that’ll happen in any kind of Illogical way, no matter who’s in office.

Aug 10, 2020 08:52 PM #6
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Lynn B. Friedman
Atlanta Homes ODAT Realty Call/Text 404-939-2727 Buckhead - Midtown - Westside -- and more ... - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi 
So true! Just like trying to get a mortgage without substantiating personal income, better be able to document those COVID-19 claims!
All the best, Lynn

Aug 10, 2020 09:40 PM #7
Rainer
504,951
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

What's best for a consumer mortgage loan depends on their personal financial information, circumstances, assets and income, so, getting a loan is an easy process if the consumer is qualified to get a loan. 

Aug 10, 2020 11:46 PM #8
Rainmaker
385,062
Brenda J. Andrew
ULTIMA REAL ESTATE - Corpus Christi, TX
Professional Realtor in Corpus Christi, TX

This is great information for Buyers out there Gene.  It seems as though if anything, Covid has made it a little more difficult to get a loan.  I have had a few buyers seem to jump through more hoops than usual with everything going on.  I like the way you get right to the point!

Aug 11, 2020 01:47 AM #9
Rainmaker
684,483
Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

As Always  a Spot On Informative Post! Buying a home is a team effort Buyers need a good Realtor and a good lender! Lenders pave the way early on with the pre qualification process  to ensure a succesful transaction. 

Thank you Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi 

 

Aug 11, 2020 01:57 AM #10
Rainmaker
2,004,962
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

Preapproved not just prequalified was always important prior to traipsing through folks homes and tying up sellers, agents, themselves. Wanting to buy a home and being ready, willing and able is a timing issue. Or time to look under the hood without blaming COVID19 for financial problems deep seeded long before the virus saturated the news and changed life as we knew it. COVID19 mandates from state REALTOR and licensing boards to make sure the buyer is preapproved makes our job easier. We suggested it, the state demanded it. Great thorough post... glad you eavesdropped Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi !

Aug 11, 2020 03:14 AM #11
Rainmaker
1,917,466
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Thanks for the update concerning the affects of Covid-19 in today’s Mortgage Market !!!!!

Aug 11, 2020 04:31 AM #12
Rainer
75,802
Cathy Starkweather
La Rosa Realty, LLC. - Celebration, FL

I'm so very tired of hearing people lay blame for anything and everything on Covid-19! My patience has become very thin when I hear those words and it's typcially met with a quick response whether they want to hear it or not.

Aug 11, 2020 06:36 AM #13
Rainmaker
2,957,629
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

There is no better lender in the Chicago area than Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi!  It seems like the gremlins might have messed up your profile photo.

Aug 11, 2020 07:57 AM #14
Rainmaker
1,401,701
Sheri Sperry - MCNE®
Coldwell Banker Realty - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi , Many do not realize that the pandemic has made getting a mortgage more challenging, not less.  Great post!

Aug 11, 2020 09:10 AM #15
Ambassador
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Gene difficult to try to put all the blame on COVID-19 when dates on the credit report show late payments for time periods prior to the virus.  Lenders will listen to all the excuses, but it is the facts that will prevail in making the lending decision.

Aug 11, 2020 02:40 PM #16
Rainmaker
436,687
Matt Brady
Finance Of America - Del Mar, CA
The Mortgage Answer Man

Great post Gene! People need to understand that these lockdowns present more stringent controls on verifying their ability to repay, not more understanding, or a free pass. People should also recognize the increased volume all lenders are dealing with and be diligent in providing all of the documentation as quickly as possible (prior to pre-approval),

Aug 12, 2020 06:53 AM #17
Ambassador
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Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Gene:

Great education here for anyone who might mistakenly believe there are no challenges in gettinga  mortgage during the pandemic or that any issues that may have resulted from it - with unemployment and other matters there are many - will not be important. If anything it's far more difficult, as you pointed out.

And with the market being what it is with resales and refinancing things are more delayed it seems.

Jeff

Aug 13, 2020 02:22 PM #18
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