Orla McCaffrey

speaker

593 appearances 13 recordings 1 series first heard Mar 2020 last heard Jun 2022

Orla McCaffrey’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Mortgage Lenders Ask Borrowers to Commit to Not Seek Forbearance · 26 Aug 2020 podcast

So he kind of just had to do his due diligence and figure out that it was only a temporary restriction. matched

From what I've heard from lenders, matched

Most borrowers aren't refusing to sign the document because at that point in the process, you've already, you know, gotten the loan, done all of the stuff you have to do to buy a house. matched

So, you know, in the lead up to closing, it's unlikely that this one thing is going to make you throw everything off the table. matched

But it has raised some eyebrows. matched

That's not what the evidence suggests. matched

So there's been an estimate by a research group that really shows just a sliver of mortgages would actually fall into this category where they ask to be placed in forbearance before they actually are federally backed. matched

And of course, it's just very unlikely that somebody who just bought a house a week or two ago or even a month ago is going to end up in a situation where they can't pay that mortgage. matched

So it's really more of just lenders trying to protect against the risk, however small it might be. matched

So forbearance makes it a lot harder for some types of lenders to do business, specifically non-bank mortgage lenders that don't have a bunch of other business lines to rely on. matched

In an environment like this, when there are high rates of forbearance like there are right now, just over 7% as of last week, it means that servicers who are also sometimes lenders have to matched

continue advancing payments on mortgages to investors, the final holder of the mortgage, even if the borrower isn't paying. matched

So they have to come up with a lot of cash in a short amount of time. matched

And it's really multiplied at a time like this when so many people are forced to skip payments on their mortgages. matched

So one of the main things lenders, all kinds of lenders, including mortgage lenders, are dealing with right now is trying to determine who is credit worthy. matched

Pre-pandemic, you would just look at someone's credit score and see whether they were current on all of their obligations. matched

But now, because of a lot of the protections included in the Stimulus Act passed in March, matched

A lot of the deferments, the payment of relief across a variety of consumer lenders, the status of those deferments isn't recorded uniformly across all credit reports. matched

So it's really hard to determine whether someone is really credit worthy right now. matched

So the natural response of lenders, the default response is just to pull back on credit by matched

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