As thousands of borrowers potentially face job interruption resulting from the government shutdown that's disrupted some loans, the housing finance industry is working to identify the right messaging and resources to keep payments and originations on track.
With a Congressional Budget Office report pegging
"We will check the guidelines for them. We will walk them through the options," said LaQuanda Sain, executive vice president of servicing at Rocket Mortgage. "What we recommend is to reach out."
Rocket is encouraging customers to call or review online information such as
Two pieces of information Rocket has found important to clarify are that interest does accrue in forbearance, and those who qualify for and afford a rate-lowering refinance can alternately use that to reduce their balance and monthly obligations.
"We're not saying a refinance is a better solution, but it's something they should consider, because it could potentially lower their monthly payments for the long term," Sain said.
While there is more job uncertainty than in previous shutdowns due to
'Steady as she goes' for some lenders, at least for now
New loans at mortgage firms in areas with many federal workers or that are prone to risks covered by
But some companies that make more mainstream loans outside those categories say they've been able to cope so far and have generally seen aggregators and other secondary market partners react quickly with clear guidance.
"We're not a big government lender. We're very heavy conforming/conventional, so it has just been kind of 'steady as she goes,'" said Jim Collier, a senior vice president responsible for fulfillment, operations and strategy at Key Mortgage Services.
While typical home loans, like those purchased by government-sponsored enterprises that aren't directly affected by the shutdown, are moving forward, mortgage-related work for them is piling up, which furloughed workers in the public sector will have to handle upon their return.
That means certain lenders can keep new loans on track for now, but the longer the shutdown goes on, the more of a chance delays or other issues could surface, Collier said.
"We are going to go through the queue when the government reopens. So the longer this goes on, that's going to start to be problematic."
For lending divisions with government-worker exposures, the potential for furloughs becoming layoffs could become a concern for new loans that haven't closed yet as well as for existing borrowers, he said.
"If you are not employed, that could stop the train immediately on those loans, because now you have an income problem. It isn't that you can't get verification, it's you don't have a job," Collier said.
More cap markets uncertainty, but also less to move rates
The shutdown deprives the capital markets of public data they typically rely on to gauge Federal Reserve policy direction and move rates. That uncertainty can lead to fluctuation, but it also gives them less to react to, which has made rate changes less choppy during this shutdown.
"Without those indicators coming out, actually it's been relatively calm," said Dave Mueller, senior vice president of capital markets at Key. The next one of note is a delayed inflation report that the government has prioritized and set for Friday.
At the time of this writing, market participants appeared to generally be of the mind that the Fed would cut its key short-term rate, exerting mild downward pressure as lenders have adjusted their pricing in anticipation of this development.
"I think that the market has already decided that they are going to cut rates this month, and possibly in December, given previous public or private sector data," Mueller said.
