PSA regarding Mortgage Forbearance, Rate Updates, and Changes in Mortgage Lending

Dear Friend & Past Client,

Normally, I will send out a mortgage lending update to my past clients, my future clients that I have been working with on pre-approvals, and local West Michigan Real Estate Agents.  However, this email is mainly for my past mortgage clients, and it is intended to be a public service announcement regarding the dangers and pitfalls of putting your mortgage in forbearance. Still, if anyone feels the information in this email will benefit someone they know, please feel free to forward it to them. 

If you are in a position where you absolutely CANNOT make a mortgage payment, car payment, credit card payment, etc., and the creditor tells you that they will not report you late over this period, please do yourself a huge favor and get that in writing!
Some mortgage lenders may agree, in writing, to not report you late, while allowing you to skip a payment(s) by adding the amount onto the balance of your mortgage. We still don’t know yet how mortgage lenders will treat those missed payments, if you are going to apply for a new mortgage within 12-24 months of forgoing those house payments.
Based on my experience from the 2008 housing bubble, I was able to see the ramifications of many people who ended up modifying their mortgage in order to lower their payments, or get caught up on their payments (or both).  Many of these homeowners were told that the modifications would not affect their credit adversely; but so often that was not the case. Even in situations where mortgage services did not report the homeowner as being late, reports were not made on the mortgage as being “modified”, preventing  thousands of homeowners from getting approved to purchase new homes after having their mortgage modified.

If it comes down to feeding your family and keeping the lights on vs. putting your mortgage in some type of forbearance program, then it becomes a no-brainer on what is the proper choice to make.  However, if you are looking to take advantage of low rates by refinancing or purchasing a new home in the next 12-24 months, you will want to reconsider taking advantage of some type of mortgage forbearance program unless it is absolutely necessary. The same may apply if you want to maintain your credit score, depending on how the modification is handled and treated. This belief is not just mine, but is shared almost unanimously throughout the mortgage lending industry.

Rate Update: Recently, the Federal Reserve has stepped in and has started buying mortgage backed securities in mass following the two most chaotic weeks in their history. As a result, mortgage rates are stabilizing and have come back down considerably from where they peaked on Friday, March 20th, 2020. In fact, rules are now within range for many people to discuss refinancing again. If your current mortgage rate is above 4.00%, or even above 3.75% but has mortgage insurance, please contact me to see if a refinance may be beneficial for you at this time, or possibly sometime in the near future if they continue to drop. I will be glad to work up a refinance loan estimate for you, combining it with a cost/benefit analysis; or I can put you on my watch list for when the market hits the target rate you are looking for. 

Furthermore, if you have been in the market for a new purchase, please make sure to freshen up your pre-approval. There have been recent changes in guidelines that may not allow you to qualify for as much home since some programs may have tightened up on the debt-to-income ratios. Likewise, some government backed mortgage programs have increased credit score requirements across the board and some lower credit score applicants may all of a sudden need to make some adjustments to improve their credit scores. 

We expect the listings to come out in droves after the quarantine is lifted. In fact, Greater Regional Alliance of Realtors ( has reported 127 new listings and 107 pending sales in Kent and Ottawa County between March 25th and April 4th!!  You don’t want to fall behind the competition by not obtaining a full pre-approval when your perfect home hits the market.

So, whether you are looking to drop your monthly payment, get cash out for debt consolidation purposes, or get yourself fully pre-approved, please contact me.  As always, I am here to help you.

Hang in there friends. We are all looking to be there and care for one another in every way possible. Life will go on and return to normalcy. Hopefully, that is sooner than later, and we will all have learned many lessons on the other side of this.

Why Mortgage Rates Will Go Back Up, And Why We Hope They Do

Dear Friends,

    If you have been tracking mortgage rates lately, you know that they have been trending on a slow, gradual decline. Buyers who were in the market just last summer, can now qualify for more home as a result of lower interest rates and many of those that have purchased a home just last year, can already stand to benefit by refinancing. However, these recent interest rate drops may reverse upward faster than they’ve fallen; and this time around, we hope that they will.

Although, the Federal Reserve has yet to comment on whether the Coronavirus will impose a threat to the United States economy, concern over the virus has already shown that it has the ability to significantly impact our markets.To date, most of the economic impact stemming from fears of the virus have been more global in nature, and we have been insulated from wide spread reported cases and economic effects here in the United States. However, being that we are part of the global economy, our bond markets have already been pricing in possible economic slowdowns that could occur for the past several weeks now; hence, the steadily falling “mortgage” rates. In fact, on Monday, February 24th we saw the Dow drop 1,032 points and another 879 points on Tuesday, February 25th for a loss of 7.5% of it’s market share. As a result, the many investors that fled stocks invested more heavily in long term bonds, and mortgage backed bonds, thereby driving interest rates downward even further.

Some feel the Corona virus is a serious international health threat, while others feel that it may be somewhat overblown? Regardless, many are prayerful, and I would think that all are hopeful that a remedy will be found soon as a way to combat the coronavirus. But, until the time comes when it is no longer considered a major health threat (here or abroad), we should continue to see a low interest rate environment. When the fears of the Corona virus spreading eases, interest rates will surely rise to their normal market levels.  And that will be a good thing this time around.

FHA Announces Long-Awaited Changes to Eligibility Requirements.

According to, The Federal Housing Administration has finally issued a long-awaited update to its condominium rules, announcing Wednesday that it will now allow individual unit approval and is taking other steps to loosen requirements that make these properties eligible for FHA financing.

Written by Jessica Guerin, 

Under the revised guidelines – which take effect Oct. 15, 2019 – an individual condo unit in a building of 10 units or more may be eligible for spot approval if no more than 10% of the units are FHA-insured. For units in buildings with fewer than 10 units, no more than two units can have FHA insurance.

The FHA is also extending the recertification deadline for approved condo projects from two to three years, and it will insure more mixed-use projects, or those with more commercial space, to be eligible, stating that approved projects can now have up to 35% of their square footage dedicated to non-residential use.

The agency also loosened restrictions on owner-occupancy rules, stating that eligible condo projects can now be just 50% owner-occupied. It also said it will insure up to 50% of units in any given project. The FHA said it expects the updated guidelines to qualify an estimated 20,000 to 60,000 more condo units per year for financing. Currently, of the more than 150,000 condo projects across the country, only 6.5% are approved for FHA financing.

This is something the FHA is aiming to change with the updated guidelines, Department of Housing and Urban Development Secretary Ben Carson said on a call with reporters Wednesday.

“FHA is publishing a new rule in the Federal Register that we believe will offer significantly more options for individuals and families to buy a home, specifically the kind of home more and more people are looking for in order to achieve homeownership, and of course that is a condominium,” Carson said, adding that the new rules “will open many doors to buyers who have been waiting on the sidelines, waiting to become homeowners, waiting to share in the American Dream.”

FHA Commissioner Brian Montgomery said the agency has been working alongside stakeholders for three years to update its condo policies.

“It had become clear for many years that we needed to update our condo project approval regulations so that, while not exposing the agency to more risk, they are more flexible and less prescriptive and more reflective of the current market than the previous condominium project approval provisions,” Montgomery said on the press call.

The National Association of Realtors was among the of the first trade associations to applaud the agency for finally making the long-awaited move.

NAR said the changes, which it has championed for more than a decade, should help alleviate affordability issues for many prospective homebuyers.

“We are thrilled that Secretary Carson has taken this much-needed step to put the American Dream within reach for thousands of additional families,” said NAR President John Smaby.

“It goes without saying that condominiums are often the most affordable option for first-time homebuyers, small families and those in urban areas,” Smaby continued. “This ruling, which culminates years of collaboration between HUD and NAR, will help reverse recent declines in condo sales and ensure the FHA is fulfilling its primary mission to the American people.”

We greatly appreciate your time and hope to hear from you again soon.
Phone: 616-292-6703
– Bob Hein, Mortgage Lender
NMLS 162989

Source:Guerin, Jessica. “FHA to Make Financing Easier for Condo Owners.”, HousingWire, 14 Aug. 2019,

Should you and could you Bypass your Appraisal?

That’s right, you read the subject line correctly!
It is possible in some cases to finance a home without an appraisal.  Here are some of the pros and cons in doing so.

Although it has been known by mortgage lenders, Realtors, and fellow professionals in the industry, the average home buyer is starting to learn that on some occasions, mortgage financing can be completed without the lender requiring an appraisal. After the housing crisis occurred a little more than a decade ago, most would think it is prudent for lenders and buyers to ensure a completed appraisal for the financing of real estate. In most cases, this is true, but there are some occasions where a buyer may feel secure with the value of their purchase, and a lender feels secure enough with their collateral without needing an appraisal. Surprisingly, there are times when forgoing an appraisal may even be beneficial to a buyer.

Before you might consider an appraisal waiver, here are some things you should know:
  • When can appraisal’s be waived?
  • What determines whether an appraisal can be waived?
  • What are the pro’s of waiving an appraisal? 
  • What are the con’s of waiving an appraisal?
(Remember, appraisals are different than home inspections.)
When can an an appraisal be waived?
As of now, FHA, VA & USDA-RD loans only allow appraisal waivers for some Streamlined Refinance programs, but not for purchase loans.  At this point in time, only Conventional purchase loans backed by Fannie Mae & Freddie Mac may on occasion allow for an appraisal waiver. In fact, Freddie Mac estimates that eventually 15% of new loans will be closed without an appraisal (1). 

What determines whether an appraisal can be waived?

The computer of course….The mortgage lender will enter in all of the data into their automated underwriting system (AUS) regarding the amount of the buyer’s down payment, credit, property address, etc. The AUS response from Fannie Mae or Freddie Mac determines whether an appraisal waiver may be permitted. Surprisingly, the approval of the appraisal waiver really doesn’t have much, if anything, to do with the credit quality of the borrower. Instead, in the issuing of an appraisal waiver, Fannie Mae and Freddie Mac are relying on their proprietary analytics based on their inventory data, and their online databases. “If [Fannie and Freddie] have a good basic inventory of information about the house, its value, and what it sold for, you’re more apt to get a property inspection waiver,” Don Frommeyer, a mortgage originator at Marine Bank in Indianapolis.

 What elements should a credible appraisal include?

  • A clear, accurate description of the subject property.
  • The homes location, amenities, and features.
  • Sales that are the most recent and most comparable.
  • Comments that explain important issues in the appraisal.
  • An opinion of value supported by the analysis of the comparable sales.
  • Interior and exterior photos of the subject property.
  • Exterior photos of the comparable sales used and maps indicating the location of the subject property in relation to the comparable sales. 
  • An appraisal waiver can shorten the financing process by eliminating the wait time for an appraisal to come in.
  • Reduced financing costs by eliminating the cost of the appraisal which can cost between $450-$550.
  • Agreeing to an appraisal waiver might make a buyer’s offer look more attractive to a seller which can sometimes make the difference in getting their offer accepted when competing against multiple offers.


  • In my experience, as a mortgage lender, most home buyers prefer to pay for an appraisal. They like to see the photos, the comparisons, the girds, the maps. They want something tangible showing their very important purchase was a good investment.
  • Although many buyers prefer the option of being granted an appraisal waiver, not all are convinced that no-appraisal loans are a wise decision, and could result in over paying for the property.
“Fannie and Freddie’s computer programs cannot keep cannot smell 20 cats living at the property,” says Ryan Lundquist, an appraiser based in Sacramento, California “They won’t be able to identify problems that could potentially lower the value of the home.” (1).  I guess he does make a good point there. 
Fannie Mae and Freddie Mac have created this option in response to market drivers, allowing lenders to offer their borrowers a choice for efficiency and cost savings by foregoing an appraisal on some refinance as well as purchase transactions. Whether you are considering an appraisal or an appraisal waiver with a new home purchase, I will be right there by your side, along with your Realtor, advising you towards the best options possible