• Matt Joy

What will be the new normal?



December 7, 1941… 353 Imperial Japanese aircrafts attacked the United States Pacific Fleet at the Pearl Harbor Naval Base in Honolulu, Hawaii. The attack killed 2,335 people and thrust the U.S. into war the very next day thus beginning our involvement in World War 2. What came next was a call to arms for every American. Our nation's women became steel workers, American Industry transformed their manufacturing plants to make war materials and of course we became the most powerful country on the planet when we commissioned The Manhattan Project… which lead to the bombings of Hiroshima and Nagasaki.

September 11, 2001… Four U.S. passenger airliners were hijacked by Al-Qaeda terrorists. Two of the planes crashed into the World Trade Center’s North and South Towers respectively, with the third plane crashing into the Pentagon and fourth into a field just outside of Shanksville, Pennsylvania. The attacks killed 2,996 people and began the United States’ War on Terrorism (which we’re still fighting today), forever changing the way U.S. passengers commute through the air and to this day claim the lives of those who were exposed to the toxic debris that spread across Manhattan.

April 10, 2020… As the United States became the leader in confirmed COVID-19 cases, 2,056 people lost their lives in a single day from complications to the virus. The outbreak has thrust (I had to use it again sorry) the U.S. & global economies into turmoil, citizens all across the world have been quarantined in their homes, millions have lost their jobs, U.S. auto-makers have begun to manufacture protective masks and with no cure available at this time, uncertainty continues to be the only answer available to the question of… “What’s next?”

Now, am I being a bit dramatic… yes, of course I am. If you know me at all… you know I have a thing for the theatrics, but you must admit these are unprecedented times. We have no clue what May or June are going to look like, let alone the rest of 2020. All that is certain is that things are certainly going to change. Working from home will probably be the new norm. It was heading in that direction anyway. Remote education will probably be more commonplace. Sorry kids, but kiss snow days good-bye (so glad I got to experience those). We could see max capacity at restaurants and bars shrink substantially. Movie theaters… who needs em?! I could go on and on, but my point is that this situation we’re all going through will reshape the world and create a new normal.

Specifically relating to the housing and mortgage industry, the next chapter is going to be very interesting… and it’s not all doom and gloom either. Undoubtedly, we’re going to see technology become more and more prevalent in our transactions (which let’s be honest, we’ve needed). Virtual tours for purchase transactions, virtual Appraisals, eClosings and the use of digital platforms for storing title records… all will likely be the catalysts for “digitizing” our industry much sooner than anyone previously expected.

But… there will probably be doom and gloom first… even before technology settles in. Forbearance numbers are rising at a staggering clip. According to HousingWire, mortgages in forbearance rose to 3.74% (already higher than 3.5% FHFA Head, Mark Calabria predicted). That’s just a small 1,396% increase and still no liquidity centers for these servicers. The impact of this will be seen in the coming months… and I’m worried about the capital depletion this will cause. Jamie Dimon over at Chase saw his Q1 profits tumble 69%. This dude is two weeks in from heart surgery… it’s no wonder he said 700 FICO and 80% LTV or bust! As we all know, Jumbo and Non-QM markets are gone (for now) and apart from a few lenders, FHA lending has become exponentially more difficult to originate. With aggregators laying down the law with forbearance requests I would expect we see this trend continue. Nobody wants to take on unnecessary risk at this time… and for good reason.

So… what will be the new norm? I don’t know… we’re still kicking around the rubble and sifting through the ashes from March. Things will be different for sure, but I think it’s too early for us to predict.

What do you think?

Stay safe. Stay healthy.

Talk to you soon,

MJ

Photo by Edwin Hooper on Unsplash

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