🌞 Breathe Deep – April 10 2020

The Lead: Mortgage Servicers Are Begging

credit: giphy

A war is breaking out between mortgage companies and the government. Mortgage servicers are slammed with requests right now to delay payments from homeowners who are facing unemployment. Yet one of the industry’s top government regulators doesn’t think the mortgage companies need a bailout. That means war.

Last week, Mark Calabria, director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, said in an interview on CNBC that help might be necessary after a few months – but not now. There’s a big disconnect here. Calabria estimated there could be 2 million borrowers missing payments by the end of May. But that’s already happened. Mortgage delay requests have already topped 2 million, according to a report released Tuesday by the Mortgage Bankers Association. Servicers say they desperately need help to make those payments.

The coronavirus relief bill, signed by President Trump on March 27th, mandates that services allow up to 90 days for homeowners to delay payments. Mortgage services are begging for help. They want a Fed backed liquidity facility that will float them money during the crisis. So far, that’s not happening—your move government.

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News By The Numbers

30%. That’s the percentage air pollution dropped in the U.S. and across the world over the past few weeks. Scientists warn that pollution levels will rebound once coronavirus restrictions are lifted. People in Punjab, India, say they’re seeing parts of the Himalayas clearly for the first time in decades.

2008. Billionaire investor Ray Dalio sees similarities between the current financial crisis and 2008. Dalio believes it will be “a long time” before the economy fully recovers. Thanks for the good news Ray.

150. Up to 150 members of Saudi Arabia’s royal family have contracted the coronavirus, a person close to the family told The New York Times.

Banks Are Moooooovinggggg Slooooow.

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Let’s say that banks are not moving fast on those low-rate mortgages. Even though mortgage rates are still at record lows, borrowers have to jump through hoops to secure them.

Banks are going through a roller coaster ride with the pandemic collapse, which means securing mortgages are low on the list of priorities. Not only is the underlying market that guarantees mortgages on shaky ground, but banks are also facing personnel squeezes and uncertainty on how to qualify borrowers who may or may not have secure employment. What even is stable employment these days?

Banks are therefore proceeding cautiously to qualify borrowers, and rightly so. But for those with patience, rates do look attractive. A 30-year fixed-rate mortgage is averaging about 3.33% compared to 4.12% at this time last year.

The Billionaire’s Son

These days, billionaires are fighting the urge to be tone-deaf in their displays of wealth. One Russian heir is bucking this trend by actually living an austere life based only on what he has earned on his own.

Bloomberg this week featured the life of Alexander Fridman, son of the 11th richest person in Russia. He rents a two-room apartment in Moscow for the equivalent of $500 per month and commutes on the subway to his job at a distribution company he started on his own after graduating high school from London last year.

“I eat, live, sleep, dress in everything that I earned myself,” said the 19-year-old Fridman.

He is alone amongst his heir peers, who usually benefit from nepotism with big firm C-level jobs.

In their excellent book, “Entrusted: Building A Legacy That Lasts,” authors Andrew L Howell and David R York discuss many intelligent ways to hand down wealth to children that do not necessarily mean handing them cash. They tout the benefits of teaching children the spark that helped their parents build wealth, not the flames that resulted.

While Fridman will undoubtedly benefit from his family’s connections, he seems to have a spark of his own to build wealth.

“I lived with the understanding that I wouldn’t inherit any fortune,” he said.

The U.S.S. Good News

credit: redfin

Sometimes things don’t make sense. The U.S. is confronting what is likely to be the deadliest week so far in the coronavirus outbreak and with over 10 million new unemployment claims. Yet, somehow home-buying demand is staying constant.

According to overnight data, home-buying demand remains stable, mirroring the market from last week. For the seven days ending April 7, home-buying demand was down 26% compared to the prior year. When we reported on this number last week, it was down 33% compared to the preceding year.

“The resilience in home-buying demand may be driven by the recent rally in the stock market which gained 20% since it bottomed out on March 23, by low mortgage rates which are now back below 3.5%, or by the simple lure of getting a deal,” said Redfin lead economist Taylor Marr.

The market stability is encouraging after several weeks of free-falling home-buying demand; in January and February Redfin’s home-buying demand was up 27% compared to the prior year. We’ll leave you with that good news to start your weekend.

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