Your Monthly Real Estate Update - May, 2020
May, 2020 IN THIS ISSUE

Market Update, May 2020

What Are 'Coronavirus Clauses?'

Avoiding Identity Theft

Market Update, May 2020

This month’s market Primary Mortgage Market Survey® from Freddie Mac showed that the 30-year fixed-rate mortgage (FRM) averaged 3.26 percent.

“Mortgage rates stayed at or near record lows for the fifth straight week and homeowners are taking advantage with refinance activity remaining high,” said Sam Khater, Freddie Mac’s Chief Economist. “Although purchase demand declined thirty-five percent year-over-year in mid-April, demand has improved modestly over the last three weeks.” In addition:

  • 30-year fixed-rate mortgage averaged 3.26 percent with an average 0.7 point for the week ending May 7, 2020, up from last week when it averaged 3.23 percent. A year ago at this time, the 30-year FRM averaged 4.10 percent.
  • 15-year fixed-rate mortgage averaged 2.73 percent with an average 0.7 point, down from last week when it averaged 2.77 percent. A year ago at this time, the 15-year FRM averaged 3.57 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.17 percent with an average 0.3 point, up from last week when it averaged 3.14 percent. A year ago at this time, the 5-year ARM averaged 3.63 percent.

Freddie Mac. ©2020. All rights reserved.

What Are 'Coronavirus Clauses?'

The coronavirus has caused businesses across the United States and around the world to close and has made it difficult or impossible for many financial transactions to be completed. Real estate closings are complex and some of the parties involved may be unable to perform their duties on schedule or at all due to COVID-19. Agents are therefore including coronavirus clauses in contracts.

How can a coronavirus clause protect buyers and sellers?

A force majeure clause is a provision in a contract that excuses one or both parties’ failure to meet their obligations if they were unable to do so because of circumstances beyond their control. It allows the parties to delay a transaction or to cancel it without facing a penalty. Force majeure clauses may apply to acts of God (earthquakes, floods, hurricanes, etc.), war, epidemics, government actions and other circumstances.

The wording in force majeure clauses varies. It may not apply to COVID-19, or standard language may be open to interpretation. To prevent legal challenges later, real estate agents are adding language specifically addressing the coronavirus to purchase contracts.

Different states have drafted their own coronavirus clauses to include in real estate contracts. Though the specific language differs, the clauses generally allow the parties to delay the closing or to cancel a purchase contract without a penalty.

How Could COVID-19 Affect a Real Estate Closing?

A buyer who has been laid off or furloughed may not be able to return to work anytime soon, or at all, and therefore, may be unable to get a mortgage. That uncertainty can make both buyers and sellers nervous. Coronavirus clauses allow the parties to delay the closing or to cancel the contract if a job loss or reduction in income has left the buyer unable to obtain financing.

Some parts of the home-buying process, such as an inspection and appraisal, require a worker to physically go to a house. Many inspectors and appraisers are reluctant to do so due to fear of contracting the coronavirus, especially if the house is still occupied.

Government and business offices across the country have closed or cut their hours. That means that title searches, mortgage applications and other critical parts of the process may be delayed.

Although some jurisdictions allow virtual closings, others do not. Due to travel restrictions and social distancing, it may be impossible to get the parties together to close as they typically would in the past.

Discuss a coronavirus clause with your real estate agent

COVID-19 has created widespread uncertainty and anxiety. If you were planning to close on a house, the process may be held up for weeks or longer. You may be concerned about your job security and income, leaving you unsure about whether you can or should proceed. Talk to your real estate agent about any concerns you have and how a coronavirus clause could protect you.

Source: RIS Media

Avoiding Identity Theft

On May 12th, PenFed Wealth Management hosted a webinar with best-selling author and security expert Robert Siciliano in ways to protect yourself against identity theft. With the issuance of stimulus checks, unemployment filings and payment forgiveness requests with lenders, attempted identity theft and phishing scams are on the rise, according to Siciliano. During the webinar, he gave real-world examples and tips on how to avoid them.

Using a twist on the phrase, “failing to plan is planning to fail,” Siciliano stressed the importance of being proactive in protecting yourself against falling victim to one or more of these scams. He listed the most effective measures, including password protection software, credit guard subscriptions and good, old-fashioned staying alert. He also emphasized the often overlooked, but very simple and effective practice of keeping your computers and devices updated with the newest release of their operating systems. Older versions of operating software may have holes or weak spots that have been fixed with the latest update.

You can access the entire free 60-minute webinar here.

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