Is it safe to get back in the water?
Non-agency investors are questioning about jumping back into the jumbo loan market. The private loan securitization non-agency market has dried up leaving borrowers little to no options. Borrowers are pretty much left with big banks such as Chase and Wells for jumbo loans. But on a positive note, we believe that when it’s safe to go back in the water, these non-agency investors will come back fairly rapidly.
But the coast is not clear quite yet. Direct lenders in the jumbo & non-QM market have been announced suspending all lending activity for two weeks to four weeks. Some have even cancelled existing loans not knowing when and if their non-agency investors will be back. They are experience liquidity constraints, de-risking mandates are being initiated, and waiting to see how the Fed’s actions will pan out during the two-week period. Monday, April 13 will be a telling day that gives us some insight into how direct lenders are feeling about their liquidity constraints and Fed progress.
We continue to see notices from lenders communicating overlays that raise minimum FICO scores 40 to 100 points higher than FHA minimums. But we also receive emails from other lenders sharing that their organizations have no overlays. This may be a rarity in the market but expect the pricing at a premium to mitigate the risk.
But for those that do qualify for FHA and VA products (and find the pricing acceptable), there is some good news. On Monday, the FHA and VA relaxed their appraisal standards to allow for drive-by appraisals.
Focus Capital is a source of expertise for borrowers and real estate professionals. Speak to a loan specialist about refinancing a jumbo or non-QM loan in today’s challenging market.