[I am away from the computer on a daily basis, and I cannot respond to e-mails until September 11th. In my place are daily commentaries from a series of very knowledgeable mortgage industry people with different backgrounds, and they have been given very little direction about what to write about – the latest is below. Our views may or may not coincide, but I thank them for their time in volunteering and helping out.]
Good night Irene….. Not so fast
Being in the Northeast, I can honestly say that Hurricane Irene left her mark in more ways than one. Due to her sheer strength she left a trail of destruction that went up the coast from the Carolinas through to Vermont. I mention not to repeat the obvious but more to let you know that her effects will be felt in the mortgage industry for months to come. Residential Appraisers and Appraisal Companies were finally getting busy with the recent refi surge and now they will be over whelmed with recertification requests on the same properties. The already busy pipeline is going to be slowed by the after effects of the appraisal requests due to the hurricane. If you add the accessibility challenges due to downed trees, power lines, and inability to get in contact with homeowners, you have to be looking at delays that will weigh on your pipelene.
If you have any properties in the affected states, you should pull them and be creating a separate process for these properties as the collateral conditions and expected timeframes will be delayed. This will have an effect on your turn times and will definitely have an impact on your locked pipelines. Any property in an affected area that has a lock expiration date in the next two weeks should be pulled for collateral review. If the appraisal is not in, you should be making rate lock extension provisions as the timeline for these loans is yet to be determined. It will also be hard to gauge because most appraisal companies will not be able to provide confident feedback. It is not their fault as the ability to get to properties is not within their control. Be in contact with your clients and get updates on the status of the property. If cell phone is the only contact available, make sure the appraisal company has this information to assist in their contact.
In regard to your closed pipeline, as has happened in the past, investors will create their own set of collateral provisions for affected properties which will delay purchase turn times. Reach out to your investors now and see what will satisfy those conditions now rather than wait for them issue conditions. It will only delay their purchase and keep loans on the lines longer. Speaking of warehouse lines, they may also be issuing collateral requirements as well for any affected properties that are on their line. Locked pipelines grew over the past few weeks and the concerns about internal efficiency crept up. You could have the best operation around but the effects of Irene could still wreak havoc on your pipeline. Do not wait and let this become an issue. Get ahead of it and create a separate process for these deals as they will be delayed which leads to secondary exposure and profitability erosion. Get ahead of it and be prepared. That is what I head all weekend so I am passing onto you as a public service announcement.