“My 90 day trial period for 2020 is up and I want to return it.
It didn’t do what it was supposed to do.”
(from an escrow peep, actual author lost in the flurry of re-postings)
May 15th! May 15th! May 15th!
I am in Southern California and May 15, 2020 is supposedly (at this time) the day they set us free!!! I should not complain, being an essential service, unlike others, I have been leaving home daily to “Shelter At Office”. But not being able to get my hair styled, manicures/ pedicures done, dropping by Target, going to a restaurant for a sit down meal….. It has been ugly. On the other hand, the news for Los Angeles County is not good. Over 27,815 positive cases and 1,313 deaths as of May 5 means we have a long way to go before we can lift the Order.
So it’s all COVID-19 news now. How depressing. Let me just give you a few stories of how my industry is being affected and we will do some more cheery stuff.
HOME BUYING – Definitely a severe decline. People just are not used to purchasing a home virtually when you can’t trek in dirt and virus, touch counters and bathrooms, open up closets and check out pantries. Buyers want to get the whole touchy feely experience! Although some enterprising real estate professionals are doing the video thing, not everyone has caught on. Here is my thought – remember how “staging the home for purchase” became a MUST and staging companies stepped into that market niche? Now, videographers, if you are smart and entrepreneurial, you should position yourselves to sell your services to real estate professionals still working the market. To you real estate professionals, John C. Maxwell, author and speaker said very motivationally that, “When people are quitting all around you, you get a bigger piece of the pie.”
The National Association of Realtors (NAR) in their limited survey across the nation shows a drop in sales of 8.5% from February to March, but home prices themselves have not dropped. What does this mean? It means that Sellers, hang in there. Once the country opens up, people find jobs again, income starts coming in, then those Buyers and lookie-loos will come trooping in. Unfortunately, that could be next year..
HOME SELLING – If there is a severe decline in home buying, then there is a corresponding severe decline in home selling. “De-Listing”– a new word out of the trauma of COVID-19. Instead of saying “ I am listing my home for sale” they are now saying “I am de-listing my home for sale”. Nationwide there was a 148% increase in de-listing from one year ago.
Don’t be fooled, the sales that escrows are handling right now are those negotiated in February and March before COVID-19 and are now struggling to close given the limitations of the mortgage market and other issues, like repairs not getting done. CAR agrees, that things are worse in April which means that those April showers are not going to be bringing any May opening flowers.
APPRAISALS – Have you thought about how difficult it is for the appraisers (and the property owner) to do appraisals when everyone is supposed to be STAYING AT HOME? I didn’t, but I guess the Fed, FDIC, and OCC did. Now they are trying to help by allowing appraisals to be done 120 days (that’s 4 months, my friend) AFTER the loan is funded and closed. Okay, so this would apply only to those loans that are kept in the bank/financial institution (portfolio loans) and not sold to investors. Here is the brief intro to this news. Seriously, 4 months is more than enough time for some “enterprising” people to start defaulting on that loan. This latest government attempt to help caught the mortgage industry by surprise and the appraisal industry is not too happy. When I read this news, my expression was O-O (my mask hid the bottom of my face).
MORTGAGE LENDING – I picked this news alert up on April 13th from Flagstar Bank, one of the big financial institutions, which announced that they were pulling back on placing their correspondent loans: “Flagstar will …. honor loans which have already been submitted to underwriting and are locked on or before Friday, April 17. Lock extensions and re-locks will not be permitted after April 17; please manage your pipeline accordingly. No new submissions to underwriting will be accepted.” Well, there goes that source. No wonder so many of my refinance transactions that opened in early March are now dead in the water.
FORBEARANCE – Everybody has been throwing this word around and I was not quite sure of the meaning, so I looked it up on Merriam Websters. It says “refraining from enforcement of something, like a debt or obligation; being patient; being lenient”. Okay, so my understanding is that during this time Lenders are allowing a Borrower to hold off on mortgage payments and husbands and wives can be patient, lenient and refrain from enforcing laundry duties. Forbearance, however, IS NOT forgiveness (unless I missed something in the dictionary); it means extending the bitter pill to be swallowed further down the line. Here is a “Forbearance Report” https://forbearancereport.com/ for those who are thinking.
Remember that there is no such thing as a “free lunch”, and there could be costs to forbearance in impacts to credit histories and the like. Here is an article from Experian, the credit company, to explain and I am most happy to share this with you. Again, nothing is free and think hard and wisely before you take that step.
It isn’t just mortgage payments; credit card payments are on the line as the first to go (or last to be paid depending if you are a glass half full or empty person) and those credit card companies are bracing for the impact.
SCAMMERS’ HEAVEN – The FTC has sent out repeated notifications that with the stimulus money and unemployment payments, scammers are working overtime taking advantage of consumers. One scam claims that the homeowners can stop payment of their mortgages and they will help with a loan modification. Others claim that a homeowner can transfer property ownership and will no longer be responsible for mortgage payments. They have no shame, preying on consumers during these terrible times.
GAS PRICES – I can’t remember the last time I went to gas up my car. But if I had to do that today, I would find the prices at an all time low. If I were to go to Vegas to fill up my tank, I would find it at $1.93 or lower, but in SoCal it is around $2.70. We should take advantage of this new and improved price and up. Next, decide what we could do with a full tank. Repeat after me, May 15th, May 15th.
THE ESCROW CLOSING PROCESS – Also titled “I am so glad I am in a dry state and not a wet state)”. This is not about booze. Escrow transactions in dry states (Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon and Washington) are processed by sending out paperwork for signing during the course of the transaction.
Escrows in the wet states (the rest of the 41 states) are done differently. Closings are conducted by having all parties meet at the Attorney’s office around a table (that’s why they are called “Round Table closings”) where all documents are signed and all funds are transferred at one time. So, you wonder, how in the world do they do this during Shelter At Home times? Come to find out these “Round Table” closings have become “Curbside” closings. Here is the article. Heaven forbid that it should be raining, hailing or snowing. Goodness I love California.
THE JOB MARKET TODAY – There is always a silver lining to this dark, dark cloud, thin though it may be. Yes, 26+ million (at last count) are collecting unemployment but on the weird and crazy spectrum, some state governments are so overwhelmed by all the unemployment filings that they need to upgrade their outdated computer systems. If you are an out of work computer programmer who can work in COBOL, here is your chance. Check out this article. So yes, besides ventilators, face masks, hand sanitizers, PPE’s, go ahead and add COBOL programmers to the list. Hey, I bet Millennials have no idea what I am talking about.
THE IRS – Granted the filing of the 2019 income tax returns has been extended, but that does not mean that work at the IRS should come to a standstill while dealing with Shelter At Home. The IRS is now realizing that having most of their workforce out for about a month is a huge issue for the rest of the country. Not that getting in touch with them pre-pandemic was that easy, but now it is totally out of control. The IRS is paying people to go back in to work and giving wage increases. What’s another $100 million deducted from the stimulus package to pay these government employees to work instead of giving it to the businesses which need it to survive? The irony of it boggles the mind. Now I know where that Request for Reduction of foreign withholding on my file is: it is in a trailer where all the other millions of unopened, undelivered IRS mail is.
THE FUN STUFF – Now that we got all the disturbing news out of the way, it is time to take out our sense of humour and shake it a little. Here is what my shaking found:
- A parody on Adele’s “Hello” for those of you stuck behind the window looking out at the dead street (speakers on, definitely)
- Too energetic for you? How about watching the Log video (no speakers needed but definitely need a monitor)
- Here’s one where these boys have nothing to do, really (speakers on ‘cuz you don’t want to miss the sound effects)
Finally, out of these desperate times, the most serious thought for this month:
You think it’s bad now? In 20 years our country will be run by people homeschooled by day drinkers.
See, it’s all about perspective.
Me: Alexa what’s the weather this weekend?
Alexa: It doesn’t matter. You’re not going anywhere.
You Have Questions? We Have Answers!
Juliana Tu, CSEO, CEO, CBSS, CEI, SASIP
“Escrow is my FOREMOST language!”
The opinions expressed in this blog are solely the author’s.