Hi, this is Sean Herndon with Beacon Group Properties here with Scott Hastings from Angel Oak. Hey Scott, how are you doing, sir?
I'm good. How's it going today, Sean?
Doing good, Friday. Just every day is a new adventure in the world of mortgage and real estate.
Well, every day is a holiday, and every meal is a feast a Marine Corps quote, I think. Not that I was a Marine.
I have no idea. So basically, you know, with everything is changing and we were the Pasa, videos, we're talking about forbearance and, and there are things, and then credit came up as, as something that's evolving right now, with, mortgages and real estate. So, one I'll definitely want to learn more about, and it's got key kind of give us a little idea what it used to be and what people were kind of used to and then what has it changed to?
Okay. Well, so up until earlier this year, for example, I was able to do an FHA mortgage down to a 500 credit score. If you had 10% down. There were changes in that, in before this episode with coven 19. But up until three or four weeks ago, we could still do a FHA mortgage, for example, and it'd be a mortgage down to a five 80 credit score. Well, a lot of things happened in the mortgage market. Basically not to get too deep into this, but when borrowers are allowed to have a deferment or forbearance on their mortgage, you know, obviously they're not going to be making mortgage payments to their servicer for three months, six months, what have you. Well, those servicers, they still have to pay the investors monthly for those, for there, you know, payments on their investment.
So that's a major cash suck and possibly just put the services out of business. So the only way that they can really avoid this as to avoid risk, as much as possible. So what they've done is they've taken the most likely, loans too default and cut off credit to them. So it basically comes down to the banks. They're called warehouse banks. So all of the mortgage banks, when they fund a loan, they have these lines of credit for millions and millions and millions of dollars. So when you go to close on your loan and the mortgage company wired you the money, they're barring that up a line of credit. And then when they sell the loan, they'll pay it back. Well, the servicers, they're very, very hesitant and have decided they, for the most part, want advance money to mainly government back loans that are under, it could be a six 40 credit score.
It couldn't be a six 60 credit score. It can be a six 80 credit score. So what I'm mainly seeing are FHA loans, VA loans, USDA loans. Anybody was under a six 60 credit score, probably not getting a loan. You know, for example, just last night, we had an update. Well, now you can get one with a six 40 credit score, but you can't have a debt to income ratio over 50%. So every day, things are changing, and the lines are changing. So, you know, another thing that's happened is jumbo loans. The jumbo loan is anything in our country over 510,000, $400. That market has kind of gone away. To tell you the truth, I think you were mentioning that you saw on the news and I saw it to chase, for example, you know, they're only offering jumbo mortgages to their current clients to have at least a 700 credit score and at least 20% down. I mean, that's kind of extreme, but you know, that's what you're seeing. So in general, everybody but the cookie-cutter w two job, great credit you know, conventional loans, yeah, could potentially have a problem getting a loan. But if you fit that mold of a borrower, this not likely to default; you can get a fantastic rate on a mortgage. Yeah. So that's the silver line.
So I mean, so if you're under a six 40 are, you just give up.
can be very, very, very, very difficult. Mainly what happens is they w, you know, FHA will still buy that loan. But you can't get a rate for it. So when an investor doesn't want it, they'll price it to where you might have to pay eight points to get it, which is not even illegal, you know, so it's impossible to get it, so. Right. Yeah. You might be totally out a lot. You might not get a mortgage.
Yeah. So I mean, I, like I said, every day it's changing. I mean, even my parameters you talked about, you know, they dropped by 10 points. Or from your credit score from six 50 to six 40. I mean, what do you, what are you seeing in your crystal ball? Are you thinking that you know, w within a couple of weeks or a month or are you seeing it going to evolve and change, consistently or,
well, I know, you know, expert and nobody knows what's going to happen in the future. I mean, what hearing and maybe what I think is that you know, eventually this will straighten out. The credit markets will not be so tight. You know, we'll get back to sort of normal lending, but I think that could be months away. And then I think if, if the government, for lack of a better word, was able to offer some, money to the servicers so they wouldn't, you know, be in danger or in jeopardy and basically going broke for advancing these payments to the investors, you know, that would definitely help as well. So I think the, probably the bigger issue is going to be people who've lost their jobs and that's going to cause some just natural bad credit events to happen, which is always a problem if you want to get a mortgage, you know, bad credit. So yeah, I think it's going to be a
challenging nine months. Yeah. So it seems like, you know, from what you're saying is okay. Yeah. I mean even if you have a good credit, you know, a high sixes, low sevens, you still may have some challenges, but you have it a little bit easier to get in there than someone that's in the mid-six is low sixes. So the best thing to do is talk to a professional and cause you might be able to do some credit things to help get your credit score higher. So I wouldn't say it's complete, like if you're like in the low sixes, like, Oh forget, I can't do it. But I mean, you definitely should talk to a professional that might be able to help get that credit up.
Yeah. I mean I've been, I do that fairly often actually. I have a client that hopefully will be closing next week. They were going to be okay. They were getting an FHA loan. They actually had under a six 20 credit score. I was [inaudible] I, I help them was just say get a secure credit card with a $200 credit limit that would report to the credit bureaus within two weeks just by doing that. Got their credit score up at six 42, which was enough to sweep them into a FHA loan. So yeah. Sometimes it's like landing an airplane on a pinhead, but you know, somebody who's got a lot of experience and knows what they're doing, you know, don't just take no for an answer from a, from a lender. Now the answer might be no, but at least get a second opinion.
Yeah. So I guess I'm, I'm just thinking about the, you know, some individuals that just might be a little bit on hard times that might be in a high fives and you know, I mean a mom two months ago you still could get a loan, and now it's like, yeah, we're talking about sixes, I'm in a fives, you know. I would still recommend those people to talk to a professional because everyday things can be changing too. Yeah. I mean, a lot of times I do what's called mortgage planning. You know, if you have a credit score in the PAs, you're probably not ready to get a mortgage right now. But if you start working on it now, he might be ready in six, nine months a year.
Yeah. Today is the day to start planning. Yeah. Well, I mean like today, just this morning, you know, you, you had some positive talk, you know, from the president, from the governors, everybody's really pushing to get us back to work, safely. Of course, they made sure that we are not going to reignite this virus. But I mean there is a lot of talk about us getting, getting back going maybe not back to normal. That may take a long time if ever get back to normal, but you know, but at least we're talking about it and getting that, that Druid positive feeling about us getting back to work. Yeah, definitely. I mean, I think that you know, before we got on the call, I said, I got two contracts in this morning, so there's still activity going on out there. People are still going to buy houses.
Is there still going to be mortgages? We live in a great area of the country. People keep moving here. So, yeah, I think we're blessed. I think we're all going to be okay. Yup. Yeah. So keeping those positive vibes going out there. And I mean, and we still need people to sell their homes. I mean we, there's buyers, we're definitely got, buyers. We got people moving all the time is getting the sellers. We are still on very low inventory, which kinda is helping keep in the market from crashing. You know, because we have low inventory like unlike Oh eight and Oh nine, we had tons at event inventory. Right. And you know, everywhere I'm reading it and just supplying the man, you know, there might be this a little bit of a down on prices just because the way things are. But from if w if we are able to get back to work or able to get back out there to buyers and to come right back in and low inventory, does that send to mean the prices and there stay where they are? If not, eventually, if we inventory stays the same, it may push them to go higher. Yeah. Oh absolutely. No. Everything. Everything's going to be all right. Hopefully, that we know are not stuck in, in this situation for the next couple months. Now that's a whole nother different conversation. Yeah. So w I mean, we do need to get our economy going back again if if we're prolonged and we're still stolen our economy, that that is a whole different nother.
we'll cross that bridge when we come to it. Yes. Yes. I like to stay on the positive vibes that we're going to get back to work in the next couple of weeks. That's right. And, and, and have a really good starting may into June and as and, and see how we eventually able to get. I just feel, I, I feel like the restaurants or bars are and get slammed.
Yeah, I would imagine so. I'll be right here. I haven't; my life hasn't changed much. I'm a homebody man. This is awesome. So the light's killing me.
Shockingly. I just had to talk to, with my, with windy, my business partner of us moving our stuff back from the office into the home office again. So once you kind of change your routine, now I'm in this routine. I don't want to get away from it. Now
I know really this is a very short commute upstairs. I'm telling you, I'm saving gas like crazy.
Yup. Yup. Wendy was making the comment; she goes, I have not driven my car in a month.
My daughter just turned 16, and we got her car like in February. And I was like, well, away at it. But anyway, it's not get any models put on it.
Nope. Nope. Hey, it's keeping his value.
That's right. Absolutely.
All right. Well Scott, I again, I appreciate you doing these videos with me and keeping, you know, the audience and everyone to understand what's going on. Is there any last words or any last advice before we, move on
now? I would say just, you know, if you were pre-approved in the last month, you might want to get a second opinion and make sure you're still approved and, yeah, I hope everybody gets through this, with as little pain as possible. Everything's going to be alright.
Awesome. Well, again, thanks a lot, Scott and everyone out there. Thank you for watching these videos. If you have any questions for Scott, just leave them in the comments below, and we'll definitely get those answered for you. Also, keep watching the videos. We're going to keep on bringing out updates about what's going on in the real estate and mortgage area. So we can, if you are looking to buy, sell, or invest in property, let us know, and we can lead you through these hard times and challenging times we're having right now. Again, as we were talking about, real estate is still moving forward. And we're not showing a lot of slow down in there. So, just let us know if there's any way we can help you. All right, so guys, have a good one. We'll see you on the next one.
All right. Bye. Bye. Bye.