MaineStream Finance

Category: COVID-19 and Housing

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To Buy or Refi Right Now? Really?

Many would say it would be a crazy time to buy a home or refi your home with all that is going on around us right now.  However, if home buying or refinancing your mortgage has been on your mind for a while, and you have the time to explore, it may be a perfect time to do so.  In honor of NeighborWorks Week, a 240+-member organization promoting affordable housing for all, and June being Homeownership Month, Penquis and MaineStream Finance provide some general tips and questions to ask as you assess whether to move forward or not on buying or ‘refi’ing’. 

Should I Buy?

  • Positives for buying a home:
    • Home prices are slightly lower than prior to March
    • Interest rates are very low
    • Many folks have the time to think through the process, get to closing, and move in
    • There are lots of good lending programs through MaineHousing, VA, FHA to make closing and borrowing affordable.
    • Sometimes the cost of the home can actually be less than renting and you can have the home you want. 

  • Potential Pitfalls when buying:
    • The inventory for homes for sale inventory is down.  Many would-be sellers have decided to pull their home off the market and wait. 
    • The process can be logistically difficult for home showings, virtual closings, etc. Realtors and Banking are essential businesses and are open – closings are happening.  Talk through with your realtor and lender how the process will work and what to expect in terms of how much slower it may be. 
    • Some of the larger banks and mortgage companies are raising credit scores and down payment requirements. 

Should I Refi?

  • Positives for refinancing your mortgage:
    • Rates are historically low and cannot go much lower
    • Do not generally need an appraisal
    • Can lower payments with a lower interest rate and/or a longer loan period
    • Lenders are generally more open to refinancing now than financing new home purchases right now. 

  • Things to pause on:
    • If you are in deferment or forbearance with your existing mortgage, it may be more difficult to refinance, esp. with a new lender.  If you are currently unemployed or furloughed, it may be difficult in general to be refinanced at all. 
    • Be very careful of aggressive marketing tactics to refinance through phone calls, letters in the mail, and email/texts.  Look at your existing bank’s offerings first.  If you go with an online lender, go to a reputable lending hub like LendingTree or BankRate.com so that you are in the driver’s seat of the process– not being pushed into something.
    • Be careful of refinancing for cash out – much of the 2008 crisis was caused due to too much equity being removed by homeowners prior to the crisis. 

–Chris Linder

June 15, 2020

To find out more about housing issues (rental, mortgages, etc) during COVID – check out our Housing Resources page. To find out more about Personal Finances during COVID-19, go here.

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Fair Housing and Equal Housing Lending in the Time of COVID-19 and Racial Equity Protests

Constant reminders and being aware are one of the keys to making racial equity principles in housing truly work – we can all do better!

In honor of NeighborWorks, a 240+-member organization promoting affordable housing for all, and June being Homeownership Month, Penquis and MaineStream Finance are covering key affordable housing topics.  NeighborWorks Week this year has the theme, Building Strong Communities Together, and to show solidarity with our sister NeighborWorks agencies across the US dealing with both COVID and racial tensions much more than Maine, we will cover racial equity in housing. 

In this time when racial equity is in the forefront of our minds, it is important to note we have many industry standards and laws to ensure equity in housing and lending, regardless of sex, race, disability, family status, and religion – particularly the Fair Housing Act and Equal Housing Lender principles.  All REALTORS® must uphold a code of ethics and standards of practice as well.  Maine also has laws protecting citizens from discrimination for sexual orientation and gender identify. 

However, it is key for us all to recognize that we’re not perfect, and it is even more important to make sure these standards and laws are actually implemented.  Even subtle, subconscious and implicit biases can creep into how we conduct ourselves without doing it on purpose for many of us.  This is a very real problem, even today (2016): “Study: Whites treated better by Battle Creek [MI] real estate agents” with findings such as “Agents were more likely to follow up with white testers, and black testers had to try five times harder to receive correspondence.”

We must all pay more attention and do better. Overall, we as Greater Bangor and Maine need to be more welcoming to more diverse populations and perhaps do away with the term “From Away” altogether. 

Here is what real estate and lending professionals, like MaineStream Finance, must do as a minimum and ALL renting and home-buying clients have a right to:

  • Do not steer clients away from certain homes, neighborhoods, or loan products with your advertising, flyers/forms, or when speaking to clients. Best approach is to offer all home choices and loan products available and let the client choose how to narrow the list down (i.e. don’t pre-screen homes or loan products for the clients or anticipate their needs.) Avoid using code words like “safe” or “exclusive”. 
  • Use the exact same, consistent script and process in terms of how a home is presented and how a loan product and eligibility criteria are described.  Do not offer one term to one client and a different term to another for the same home or loan product, e.g. different price, lower down payment, higher rates, etc. 
  • Use the exact same criteria for assessing a homeowner’s ability to purchase a home using objective, easily verifiable criteria like income, existing debt, and credit scores. 
  • Really pay attention/be hyper-aware of how you address each and every client –particularly prospective clients. We can all fall back into auto-mode and not realize how we are treating people.  

Here are some sadly very real examples of home-buyer discrimination (from Consumer Action.org):

  • not telling a prospective minority buyer who can afford a $200,000 property about a property listed for $195,000 in a predominantly white neighborhood.
  • rescheduling the appointment to show a minority family a particular home in a predominantly white neighborhood because the real estate agent knows that a white buyer will be making an offer on the house within a week or so.
  • showing a minority buyer only homes in a particular, segregated neighborhood rather than showing homes in all neighborhoods that fit the buyer’s budget and criteria, or telling the buyer that you don’t think s/he should view properties in a certain area because s/he wouldn’t “feel at home” there (in other words, s/he does not fit in with the current population).
  • “blockbusting” to scare homeowners into selling their homes or getting tenants to vacate their rentals by telling them that members of a protected class are moving into the area.
  • requiring three years of tax returns for one borrower and only two for another, or judging work history with current employer as being insufficient even though it may only be one or two months shorter than another applicant’s work history.
  • a mortgage lender reviews two home loan applications. One is from a Hispanic couple purchasing a home in a neighborhood that has a large Hispanic population. The other is from a white couple purchasing a home in a predominantly white neighborhood. Both couples have approximately the same average credit scores, have similar incomes, are equally creditworthy, are borrowing roughly the same amount and are applying for the same type of 30-year fixed-rate mortgage. Both couples are approved for their loans. However, the Hispanic couple is quoted a rate of 5.75%, while the white couple is quoted 5%.
  • an African American couple inquires in person to buy a single-family home. The real estate agent tells them the unit is not available anymore, but the couple continues to see new ads for the home for six more weeks.
  • a woman with a Chinese accent calls regarding a home for sale in a predominantly white neighborhood. She leaves three messages but her call is never returned. Her niece, who was born in the U.S. and has no accent, calls and hears back from the real estate agent within 24 hours.
  • a Native American family puts in a full-price bid on a home in a predominantly white neighborhood. The real estate agent reveals that the seller is motivated, and there are no other bids on the property. The next day, the real estate agent informs the buyers that the seller has rejected their offer. The seller provides no reason and does not make a counter-offer.
  • an African American couple visits an insurance agent’s office to request a premium quote for homeowners insurance. The agent tells the applicants that she cannot provide a quote until she inspects the home, and that she needs the mortgage lender’s name and phone number so she can call and get information on the property. White neighbors, who referred the couple to the agent, said they were not required to have a home inspection and received a quote while still in the agent’s office.

We can all do better to ensure Equity in Housing – we’re happy to have the conversation with our partners on how we can all do better. If you or someone you know feels that they have not been fairly treated, you can call us at Penquis (973-3500), Pine Tree Legal (942-8241), or US Housing and Urban Development Department (HUD) Complaints Office in Boston (617-994-8300).

-Chris Linder

To find out more about housing issues (rental, mortgages, etc) during COVID – check out our Housing Resources page. To find out more about Personal Finances during COVID-19, go here.