VOE Requirements and Guidance to Minimize Loan Purchase Disruptions
Mar 20, 2020 | Broker
Many of our partners have asked how to minimize closing disruptions as the situation with COVID-19 evolves. Looking ahead to the next few weeks, and possibly months, several things could impact closings, so we are working to identify ways to help keep closings on track.
Many local governments and businesses are shutting down or have limited hours of operation and this could impact some of the services relied upon.Many borrowers will be financially impacted and there is a need to respond to these changes proactively.
Based on the current situation, we have updated our VOE requirements and are sharing additional guidance for our broker and correspondent partners.
I. Update to VOE Requirements
We anticipate the coronavirus will impact numerous industries, particularly small businesses and self-employed individuals. As this continues to evolve, we recommend you stay in communication with your borrowers to obtain their most current financial information.
Given this unprecedented time, for our broker partners, we are re-validating employment within 72 hours of signing closing documents. If we are unable to validate employment, there may be delays in funding.
For our non-delegated correspondent partners, we will require employment verification be done within 72 hours prior to signing closing documents on any loan intended for sale to Home Point. This is effective for closing packages signed on or after 03/23/2020. Re-verification must be done for any borrower whose income was used for loan qualification. Prior approved loan submissions will have this condition added as a requirement to clear prior to purchase. If we do not see evidence that employment was validated within 72 hours, we will not be obligated to purchase the loan.
II. Additional efforts to consider
Use settlement agents with e-recording capabilities and validate they will disburse if recording is delayed
If the property is located in a county that supports e-recording, it may be critical that the settlement agent selected can e-record. If the settlement agent is not set up to e-record, it increases the chances of there being a delay in loan funding if the county recorder’s office is closed.If you operate in an escrow dry state, validate that the settlement agent selected is willing to disburse funds if the county recorder is closed and recordings might be delayed. Given the current environment, there may be instances where a settlement agent is unwilling to disburse when recording is delayed due to concern over gap in title insurance. However, many title insurance providers are now willing to insure over the gap period between disbursement and recording.
Advise borrowers on loan locks
As mortgage rates fluctuate during the COVID-19 pandemic, it is more important than ever for borrowers to ensure that the rate they secured is the rate they keep through closing. While we are still closing loans within standard turn times, we believe that there could be unexpected delays due to the COVID-19 disruptions.
One potential delay we are monitoring is the ability to complete appraisals on time. With businesses temporarily shutting down and some areas requiring Shelter in Place, we recommend close monitoring of appraisal orders.
If one of your borrowers is personally impacted by COVID-19 we will exhaust every effort to help you support them during this trying time. This includes extending locks to accommodate quarantine periods or delays that may be caused by circumstances that are not within the borrower’s control.
We recommend additional awareness for borrowers during this unprecedented time
It’s important to let borrowers know that we are planning to proceed as normal, but given the current environment, there is a likelihood of unforeseen events. We are focused on collaborating with our partners throughout the industry to minimize these disruptions.
We’re here for you
During this difficult time, we are offering our support, flexibility, and understanding to help all of our partners manage both their personal well-being and their businesses. We anticipate that there will continue to be challenges that arise, and we will be in touch with updates and proactive guidance for our partners