Regina Uhl on COVID-19’s Impact on the Mortgage Industry

By Regina Uhl, Partner, May 18, 2020

In this Q&A, Regina Uhl, Partner with Sandler Law Group (SLG), discusses the current impacts of coronavirus on the mortgage industry and what we can expect for the future. In addition, she elaborates on how SLG is adapting to the “new normal.”

Question: What immediate changes or responses have taken place within the mortgage industry since the beginning of the COVID-19 pandemic?

Answer: Clearly everyone has made a rapid switch to a work-from-home environment. Even for essential businesses, companies made the prudent decision to send as many employees as possible to work from home for the health, safety and well-being of not only their own employees, but also that of the public. With the rapid shift to home, cybersecurity and data privacy just became a preeminent issue as well. As a law firm, we have always taken strict measures to ensure the security of any data we receive. When we look back at this time, I think we’ll see it is almost as if a switch was flipped, and the former long term planning for solid and flexible technology solutions are now permanent foundational requirements to do business in the industry going forward.

Question: What other permanent changes, if any, do you foresee happening to the industry in the future?

Answer: In terms of procedural changes, remote work was already the norm in several areas of the industry. Recall that many underwriters have been remote for several years now; and it is clear that there are many other areas that are capable of having employees either permanently working from home or some combination of work from home and in-office on a regular basis.

Regarding policy and regulations, electronic signature, electronic notary, remote online notary (RON) and the smart eNote are all changes that will likely follow this pandemic in short order. Many states had passed regulations to allow some or all of it, but adoption was slow until the pandemic forced the issue. Although the pandemic is seeing many short term solutions, I have no doubt that many states will take up legislation to enact more permanent solutions within the next couple of years.

Question: How is the pandemic different from the housing crisis of 2008? Are there similarities?

Answer: The biggest difference is that the forces at work in the current pandemic are worldwide and are not to be blamed on the housing industry at all. The housing crisis of 2008 largely originated from the financial and housing industry and branched out from there; the 2020 pandemic started outside the U.S. and spread worldwide - hitting retail, entertainment, and hospitality industries extremely hard. Yes, there are also similarities. There is a liquidity crunch now like there was in 2008. There are record unemployment and prolonged furloughs now like there were in 2008. But notable in the 2020 crisis are the local, state and federal governments’ responses to assist the consumers impacted.

Question: How long after the pandemic do you think the housing market will take to return to “normal?”

Answer: Although it will last longer than the defunct Hollywood series of the same name, “The New Normal,” that is what we are facing. I don’t think we see a return to the normal that we previously knew before March, 2020, for quite some time. What is our new normal, and when do we start that? That will probably be determined when the unemployment numbers fall under 8 percent. Unemployment numbers are at 15%, expected to go to at least 25%. Remember that right before the pandemic hit the U.S. we were at unemployment numbers of 3.5%. Some economists predict it will be years before we see unemployment numbers close to pre-COVID-19 numbers.

Question: How has the pandemic affected clients in terms of forbearance requests, new home purchases, refinances and/or closings?

Answer: Right now, clients are fielding forbearance requests that are mandated under the CARES Act and those that do not fall under the ACT. New home purchases have declined a bit, but so has supply as cautious homeowners take their properties off the market waiting for the outcome of the pandemic, whether that caution is based on health or economic reasons. Refinances are still booming as rates are staying low, but as homeowners face unemployment or prolonged forbearance, the refinances are likely to fall off, either gradually or over a cliff depending on the economic conditions in the markets a given client is lending.

Read more about loan modifications in light of COVID, here.

Question: What actions has SLG taken in response to COVID-19?

Answer: We sent all employees to work from home indefinitely in early to mid March. When employees return to their offices, it will be a measured return based on thoughtful conversation between its commercial spaces, the company and the employees. SLG is fully operational from home and will continue to be so for as long as needed.

Question: How has SLG adapted and been able to serve clients effectively and efficiently during this time?

Answer: The switch to work from home was a seamless transition for our clients; our unsurpassed customer service and attention to detail have continued during this time. SLG applauds its technology team for their tireless work that allowed us to flip a switch from a brick and mortar operation to a work from home one. SLG also applauds its employees who have suddenly, like many Americans, been thrown into full time work from home, while juggling children and students at home, significant others working from home and the challenges that accompany that.