Board Legal Counsel, Mike Shepard, addressed an issue we touched on briefly in our Wednesday Membership Webinar.  REALTORS should make sure they are communicating at every step of the way with their buyers and lenders/attorneys in a transaction regarding any change in job status. Mike says, “All lender’s do an employment verification shortly before the closing. Given that most commitment letters state you must be working at the time of mortgage, now more than ever the buyers’ broker needs to clearly communicate with the lender to find out the loan products rules and requirements for furloughed workers – ASAP.” [note: Furloughed workers are non-essential workers that cannot work during the COVID state of emergency rather than laid off workers, both of which should be discussed with your lender]

For buyers with job impacts from COVID, their mortgage loan could be impacted for conventional and government related loans (FHA, USDA) or a loan requiring PMI which may not be able to close with a furloughed employee. When a furloughed employee goes back to work, there may be a requirement as to how long the employee must be back to work full time and/or the number of paychecks required to get the process going again.  Mike went on to note that some portfolio products from the local lenders may be able to move forward, with the lender’s decision being on a case by case basis.  Mike continued, “For example, if a person has worked for the same company for 20 years and once the shelter in place order is lifted, the employer will attest to the fact that the company will hire the person back.  Again, this is a case-by-case basis and the lenders may decide that they may even want to defer these loans.”

Final advice from Counsel?  “Reflecting on the above, the COVID19 Addendum (now in Ziplogix) becomes more important in each transaction.  It has never been more important for the lender, the broker and the attorney to work as a team to get your buyers and sellers to the closing table. Your number one job – communication – is essential and able to be conducted remotely!”