There are a lot of questions swirling around the Mortgage Forbearance programs that are out there. It is important to stay updated on what these programs are all about, because there are a lot of misconceptions. That is the topic of today’s chat with Glenn Davis from Benchmark Lending.
If you have any questions for him, feel free to reach out.
Glenn M Davis
Branch Manager
Benchmark Lending
110 Main Street
Flemington, New Jersey 08822
(609) 460-9100
gdavis@benchmark.us
glenndavis.benchmark.us
You can also check out his Facebook profile by clicking here.
You can watch the video above, or read the full transcript here:
- LANCE DUNN – Hi there, Glenn, how are you my friend?
- GLENN DAVIS – I am well, Lance, yourself?
- LD – I am doing well also. I just wanted to have you on a quick call here, so we can get some information out to our consumers, to everybody watching. I’m on with Glenn Davis from Benchmark Lending. He’s one of my preferred lenders. And there’s some information swirling around in the market about forbearance, and we also wanna talk about rates. So, that’s what we wanna chat about, just to clear up some of the misconceptions about what people are understanding or misunderstanding. So Glenn, just to start off what would you say? What is the forbearance program, and what does it mean for people?
- GD – So, when you think about forbearance, and if you follow my page at all, I probably got some information up there regarding that. Bear with me, Lance, as technology has it, my screen just went black. Okay, I’m back. Forbearance isn’t necessarily the road best traveled for many. We’re in the month of April, and if you wanted to go into forbearance. Now, keep in mind every servicer and/or lender has a somewhat different definition, but the mechanics are often very much the same. It’s that you basically forego three months worth of mortgage. So, the example that I’ll use is, let’s say you have $1,000 a month mortgage payment. If we forego April, May, and June, that’s $3,000, right? In month four, you’re now going to have four months worth of mortgage payment due. So, in month four, you’re going to have $4,000 due for that three month lapse. If you’re in a position where you, your partner, your husband, your wife are out of work, and you literally don’t have the cash, it’s worth a phone call. If you’re not in that dire a position, pay the mortgage. If we’ve learned anything from our history, our past, if we go back to 2008, ’09 and ’10, where everyone was under the impression that, “Oh, I can just take a break,” or, “I can stop paying my mortgage for a little bit,” or, “I spoke to someone on the phone, “and someone told me I can take three months of break.” That is not the way to go. If you’re doing anything with your servicer, if you’re doing anything with your lender that pertains to your monthly payment, make sure you get something in writing from them, an email, a letter stating, “This is what is going to happen.” Because again, the misconception in the marketplace is that I can just, “Oh, I’ll stop paying for three months, “and they’re gonna add it on to the end of the 30 years.” That’s not always the case. In many cases, that’s not the case. And this weekend alone with the holiday, in speaking with a few friends and a few family members, I had someone say to me, “Oh well, “I’m gonna stop paying it, and they’re gonna “put the three months on at the end of the loan.” It doesn’t work like that. Mechanics don’t work like that. So, make sure you get it in writing, if you have to go down that road. If there’s at all a chance that you can forego that, and actually make the payment, make the payment. It will serve you better, not only now, but in the future. Listen, this is gonna pass, right? Whether it’s two weeks, whether it’s a month, whether it’s a week, this will be gone. Your ability to buy a car, your ability to get student financing, your ability to buy another house is all dependent on what you do over this next one, two, three, or four months. So, look at the long term. Don’t look at the short game, look at the long game, because that’s what you’re going to be affecting. Does that make sense?
- LD – Yeah, it does, and that’s a good point that you just. I don’t know if you were making a specific point, or alluded to it, because another thing that I’ve heard, people wonder about, “Well, what happens to my credit score, “or what’s gonna happen to my credit, “if I decide that I do have to put off these payments “for the next couple months?” Is there any way that people know how to handle that?
- GD – Listen, I’d love to tell you that I am the knower of all when it comes to credit. I can tell you from experience, and I can tell you what my gut tells me. And my experience and my gut tells me that first of all, it will affect your credit. Secondly, if you are in forbearance, you have no ability to refinance. If you’re in month one, two, three, or four, your ability to refinance in times when rates are low is gone. So again, another reason not to do that, if you have the ability. Listen, government, regardless of what side of the fence you’re on, has done some really good things for us in this past month. If you have a 401K, you can borrow from it without penalty. There are other options out there for you. And I’m not saying that they’re easy options, but they are options that weren’t available to us. Work those options to death. Utilize what you can. Make the mortgage payment. Because like I said, we all too often just look at our feet, rather than looking straight ahead, and straight ahead, two, three, four, or five months from now, you don’t wanna have yourself in a position where you can’t do something financially for you or your families because of the decision you made today.
- LD – Yeah. Is there a difference between forbearance and deferment, or are they the same?
- GD – Again, depending on who you speak to, I wish I could tell you there is. So, deferment is basically, you’re doing the same thing as you’re doing with the forbearance, but my understanding is the mechanics are the same. The outcome could be different. Again, it really comes down to the servicer. Forbearance is the word that’s in the marketplace right now, and I think that’s the term that most people are familiar with. And that’s the term that we’re working with today.
- LD – Yup, yeah, so, if you were to sum it all up, it seems like people who are considering this option really need to think about it, talk to their servicer, and find out if it’s real. And maybe even their accountant as well.
- GD – Yeah, absolutely, absolutely.
- LD – Yeah, and figure out whether or not that’s the best option for them, and know the repercussions, in the event that they do take that option that’s available.
- GD – Yeah, absolutely, you definitely should do that. So, like I said, the pain that we’re experiencing now, we’re not going to be, this stuff doesn’t last. Every downturn we’ve had, whether it’s financially or personally, we’ve gotten through it, right? We all do. We’ve all had bad times, that’s part of being a human. Life isn’t fair, and that’s just the way it is. But when you come out the other side, you don’t wanna have the baggage of a forbearance on you. You really don’t. And again, unless it’s a dire situation where you need to do it, but if you can avoid not doing it, don’t do it.
- LD – Yeah, because month by month, if you can pay it is one pill to swallow. If you got to do all four months at once, that’s a whole different looking pill.
- GD – It’s a big pill. That’s a big pill, and I used the example of $1,000. Listen, most people’s mortgages are typically $2,000, $3,000, $2,500. You start to add that up. That’s a lot of money.
- LD – Yeah, especially where we are in New Jersey.
- GD – Yeah.
- LD – Yup.
- GD – To be doing in one shot, so, I guess my message is, if you can not go into forbearance, don’t. And listen, if you have a question out there, if you have something that you’ve received that you’re unsure what it is, you can call Lance, you can call myself. I’m happy to take a look at it for you, and tell you whether it’s real, it’s not real, or at least we’ll figure out what it’s saying, and what the repercussions are from it.
- LD – Yeah, all right. So, shifting gears a little bit, one of the things that I’m seeing as a real estate agent, I look at the data, so I see the data anecdotally, too, but people are wondering whether or not real estate is even happening. And from what I’m seeing, transactions are still happening. And when transactions are still happening, I’m sure people still getting mortgages.
- GD – So, going back to what I believe I said in the beginning which is, maybe I didn’t. We were talking about this earlier, probably before you hit the recording button. But, I believe in my heart of hearts, we are going to come out of this thing like a roaring tiger, lion, whatever you wanna call it. I had someone call me yesterday on Easter for a preapproval. I wanna say we probably had nine or 10 last Wednesday, Thursday, Friday. So, people are still interested in buying homes. I think there’s a lot of pent up buyers out there, and when this does break, I think we’re gonna have our spring market probably in summertime. And I shouldn’t even say probably. It’s gonna be in the summertime, depending on how all this timeline works out. But there’s a pent up amount of buyers out there that want to buy. And I also believe there’s a pent up amount of people who want to sell, but are afraid to have people into their homes, and that’s probably something you deal with a little bit more than I do. So, once the dust settles, and we’re back out on the streets, and being friendly, and within more than six feet of each other, I think you’re gonna see a really healthy market, and I believe it is a truly great time to buy, especially with rates being where they’re at. Listen, the marketplace, when I say the marketplace, the rate market, and the lending world, if you look back to, again, the great meltdown of 2008, ’09, and ’10, that contraction, if you will, was about a two-year, maybe a three-year contraction in the world of lending. If you look at what we just experienced in the last month, month and a half, we had that same contraction with the increase of, or the tightening of the belt, and the increase of credit scores. That happened in about a week and a half. So, we’ve gone through a lot of changes. And not to veer us in a different direction, but in the world of lending, we’ve gone through a lot of changes, but a lot of good changes. Listen, we’re back to common sense underwriting. We’re back to credit scores that are above their 580s. And it’s gonna be that way. Listen, it’s gonna be that way for the short term, but that’s who will change. And as rates continue to be in that 3% range, 2% on a good day, depending on what you’re looking at, that money doesn’t come around that cheap, that often. I haven’t seen it in 22 years, so 23 years.
- LD – No, yeah.
- GD – So and I believe that will be here for the foreseeable future. So, the time to be is absolutely is now, but will continue, I believe, through the summer, and through the third and fourth quarter of the year.
- LD – Yeah, so you kind of hit on another thing that I wanted to talk about. It’s another thing that’s on buyer’s minds. What are rates doing? Or where are rates right now? Today is, what is today, April 13th? Yeah, the 13th of April.
- GD – It’s funny, about a week and a half ago, I’ll use slang and say, my spiel has changed daily, because the market has changed daily. So, about three weeks ago, we had rates that were changing hourly. We were going from 3 1/8 to 4 1/2 within 55 minutes. That started to level off. So, it’s not that volatile, if you will. But rates are still healthy. They’re still in that low mid threes, depending on what you’re looking to do. And what most people, and I shouldn’t say most, but what all of us need to realize is when you look at some of the rate sites out there, and what they’re quoting, they’re oftentimes quoting those rates to make phones ring, not necessarily to inform you of the correct information, and I can’t stress that enough. I keep going back to 2008, ’09, and ’10. When Fannie and Freddie got through that, they came out with basically what they call loan level adjustments, and there are 30 of them. So Lance, if you were buying a house, and I were buying a house, our financial fingerprint is probably a little bit different. Whether it’s good, bad or indifferent, it’s gonna be different. And one of those 30 factors are gonna play into what our rate’s gonna be. So, not everyone is getting the same exact rate, but I guess to sum it up, rates are good. Money isn’t expensive, and if you are working, if you’re furloughed right now, we’ve got several people that in the process of refinancing, and they’re furloughed, because of what’s going on, we’re working with them, to make sure that as soon as they go back to work, we’re gonna be able to, boom, knock out the re-fi for them, and get it done. So, I don’t know whether that was a long gestured way of getting to where are rates at? But it’s a healthy time. It’s a healthy time in the market as far as borrowing money.
- LD – Yeah, it seems like along with a lot of other stuff, we’re, I don’t know even know, what is it, a month now into the quarantine? I’ve haven’t even looked at the dates. But, it seems we’re at a point where we’ve pretty much settled in.
- GD – Yes.
- LD – And it’s a way of life for the time being. It will all pass, and then interest rates have kind of followed in line with that trend of being settled in, a little bit more than they were three weeks ago.
- GD – Three weeks ago, absolutely. I would agree with you whole heartedly. But by the way, no one wants to settle into the quarantine.
- LD – No, no.
- GD – I think we’re all a little itchy, and we’d all would like to get out and socialize. And I’m actually dreaming of the day I can have a good steak and a good glass of red wine not in my house.
- LD – There you go.
- GD – And have a talk with people. But this too will pass. We’re moving, everyone in the office has been working remotely for about five weeks now. We’re all healthy, and that’s the most important thing. Things are moving slower. Appraisers are, in some cases, in many cases having the ability not to go into a house. Really, it’s a case-by-case situation. Title is moving a little slower. So, our message to our clients, and we speak to them pretty regularly, is things will happen, but we all need to be a little bit more patient, and little bit more understanding during this time.
- LD – Yeah, yeah, we’re finding ways to get things done. It’s just that they’re all new and temporary ways of getting the things done, so, yup.
- GD – Yup, we’ve had drive-thru closings. We’ve had people signed in at park benches. So, we’re figuring it out. But I guess outside of the, if you can not do forbearance, don’t do it. Rates are great, but let’s all be a little bit more understanding, and a little more patient. Because listen, we’re all scared, and fear has a funny way of sticking its head out for each individual person. Some people get angry, some people get quiet. Some people laugh. Let’s just be patient with one another, and this too shall pass, and life will go back to normal, as normal as we can get it. But that would be the end of my message there, which is, this is gonna pass, and we’re all gonna get through it.
- LD – I totally agree. So, unless you had anything else that you wanted to just add on that we didn’t already cover, I think we hit all the points that we wanted to.
- GD – Yeah, I’m good. I would say, outside of that, if you have any questions, feel free to reach out to me, I’m here. If you’re working with another lender, and you don’t understand something, I’m happy to talk to you. Lance, as you know, I’m not a sales guy. I’m here to help you, and if we can, great. And if we can shake hands and leave as friends, that’s fine too. Outside of that, stay safe and be healthy, that’s about it.
- LD – Yeah, how can people get in touch with you, if they wanted to chat?
- GD – The best way is just, you can reach me here in the office, 460-9100. You can Google me. We’ve got a page, a pretty heavily populated page that’s got all my contact information on it as well.
- LD – All right, perfect. So anybody watching who didn’t get that number, I’ll post it in the video description as well, so you can get it easily right there. But great talking, Glenn. Thanks for coming on and clarifying some of the information that’s swirling around in the markets. And I appreciate it.
- GD – Lance, as always, appreciate it. Good seeing you. Next time, I’ll see you face to face, maybe? Stay healthy.
- LD – Next time, face to face. All right.
- GD – Have a good, bye bye.
- LD – Take care, now, bye bye.
