🌞 DENIED – April 13 2020



Good Monday. We hope you had a wonderful weekend. Our kids did a virtual Easter egg hunt with family around the world. My wife cut my hair with some dull scissors. What about you?

Reality Check. It’s April 13th and that means most of us have been under lockdown for exactly one month.

In Case You Missed It. Tenor Andrea Bocelli brought the world together during a stunning Easter Sunday performance which was broadcast around the world. If there’s one song you watch, it’s ‘Amazing Grace’. Get out a box of tissues.

Coronavirus Update: Total confirmed cases as of 5 a.m. ET: 1,854,464 — Total deaths: 114,331 — Total recoveries — 435,074

In Today’s Newsletter:

  • Lenders get strict
  • Hollywood real estate hit hard
  • Mortgage crisis could be worse than ever


Program Rate Change APR Change
30 year 3.72% 0.02% 3.80% 0.01%
15 year 3.19% 0.02% 3.36% 0.03%

The Lead: Mortgage Meltdown

credit: giphy

We don’t want to scare you, but if you have not already braced for a mortgage collapse, now is the time. In addition to being painful, we will also get a valuable lesson in just how connected the finance world is.

Retailers around the country have said that they cannot pay rent on store locations this month. Staples, Cheesecake Factory, Equinox, and Urban Outfitters have all announced that the forced closures of their stores mean that they cannot pay rent on retail stores. This means that property owners will either not be able to pay the mortgage or have to reach into their cash reserves to do so. With less cash on hand, banks cannot lend out at the same rates.

This is because banks are allowed to lend out 90% of every dollar held inside their coffers. If less cash is in the coffer, less can be lent out and with far more restrictions.

Add to that the stress of the coronavirus stimulus package where each bank is lending to employers directly backed by the government and it is clear to see that banks are really going to struggle to manage this all.

If 2008 taught us anything, it is that a mortgage crisis is a national crisis. It also means opportunities for those who have been battle-tested so keep your ear to the ground for deals if you can weather the storm.

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News By The Numbers

43,000. That’s the number of employees Disney plans to furlough during the pandemic. In a statement Sunday, Disney confirmed it reached an agreement to maintain health insurance and other benefits during the furlough, which will begin April 19.

50. All 50 United States are now under disaster declaration for the first time in history. Trump approved the first major disaster declaration for coronavirus in New York on March 20, Wyoming wrapped things up on Saturday as the 50th state to declare.

83%. That’s California Governor Gavin Newsom’s approval rating this morning which has skyrocketed during the pandemic. He’s been praised by republicans and democrats alike for the state’s response. His approval rating before COVID-19 was 42%.

Banks Are Get Strict

giphy.gif credit: shutterstock

The lending industry is showing that it did learn its lesson from the 2008 mortgage collapse. Now that we are in a similar – or worse – position of volatility, lenders are getting stricter about qualifying new borrowers.

In 2008, mortgage companies were lazy or downright negligent about qualifying people who should have never been qualified for loans that they neither understood nor could afford. To prevent that from happening again, lenders are extra tight with their belts, not lending to anyone without dotting i’s and crossing t’s – and then circling to do it again.

Some lenders are going as far as to re-verify a borrower’s employment within 24 hours of closing to be sure that the borrower has not since lost their job in the pandemic. They also require an affidavit to verify that the same borrower has not been notified of a layoff or pay reduction.

And who can blame them? Almost 14 million Americans have filed for unemployment in the last two weeks. As painful as this sounds, it is comforting to know that some hard-learned lessons stick.

Million Dollar Listings

Tom Brady’s new mansion credit: tampa bay times

The pandemic is affecting the 1-percenters too. I know, cry them a river. Million-dollar listings are sitting on the market or going for a fraction of asking price.

Actress Kaley Cuoco from CBS’ Big Bang Theory sold her home for $3 million less than her asking price of $6.9 million. Tom Brady and his wife Gisele Bundchen are selling their Massachusetts home to settle in Florida, where Brady will join the Tampa Bay Buccaneers – assuming the NFL season happens this year. The 10,000-square-foot mansion sits on a 5-acre property and is currently sitting on the market for a cool $33.9 million.

Is this indicative of a more significant trend? Less cushion for the cushy? It’s too early to say. Agents are reporting deals falling through and far fewer offers in the upper echelon. When a real estate crisis happens, all price brackets suffer. Still, it is somehow hard to feel the same empathy for the despair of these homeowners and those that are waiting on their $1,200 stimulus checks to buy groceries.

Black Gold

credit: giphy

The oil industry is also suffering due to the pandemic since the demand for travel has plummeted. Air travel is all but halted, and people who regularly commute are not doing so. The only essential movement of goods and services is consuming oil, and that leaves the industry with a large share of profits going out the window.

Oil is not scarce. It is just not in demand. Global oil consumption declined by 25 million barrels this month alone, more than seven times the most significant quarterly drop from the 2008 economic crash.

Oil prices are usually market leaders, so when they suffer, it is a domino effect. I wish we could take advantage of these cheap gas prices, but we have nowhere to go to use up that gas.

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