⏱ THE MORTGAGE MINUTE

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It’s time again for the most real estate and mortgage news we can pack into five minutes or less.

They told us five minutes was impossible. They laughed in our faces. They said it couldn’t be done. Well, who’s laughing now, huh?

We’ve got a brief survey this week where the answer may seem simple, but can get more complex the more you think about it. Tell us your thoughts and we’ll share the results in the next newsletter!

Market Sentiment & Economic Calendar

Hopefully, you all locked down your pipeline prior to the 40 basis points loss last Friday! This week, all eyes are on Consumer Price Index (CPI) and Papa J. Powell’s Wednesday press conference. 

(Not to be confused with Papa Smurf. Totally different dude.) 

Taking into consideration market sentiment and technicals, and if we were a betting newsletter, we’d say that CPI on Wednesday will come in at or slightly below expectations, leading to a continued downward trend in rates.

(Just to be clear, we’re not a betting newsletter, but we do love a good horse race.)

What to Watch This Week:

Wednesday, June 12

• May Core CPI - This will be a major market mover. Consider locking in your tight files by the end of the day on June 11^th

• 2:00 PM EST - FOMC economic projections

• 2:30 PM EST - J. Powell press conference

Thursday, June 13 

• 8:30 AM EST - Jobless Claims and Core Producer Prices

Pipeline Save of the Week

Here’s one just in time for Father’s Day. 

A borrower was on the lookout for a new purchase, credit was pulled and they had a 742 score. Not bad, not bad. Found a property they liked. Cool, cool. Only problem was that now months had passed and it was now 90 days since the original credit report was pulled. 

Above the office, the sky shook and a rift opened in the space-time continuum. A giant arm slowly descended down to the loan officer’s desk and handed them a letter. 

One of the worst letters a loan officer can ever get: 

Underwriting Condition.

A new credit report was needed. 

Well, sure enough the loan officer pulled credit and the borrower’s FICO score dropped over 40 points to a score of under 700.

Nothing major was reflected in the credit report except a slight increase in debt. This was a loan with debt-to-income capped at fifty percent, and without any additional funds to pay down the debt or add to the payoff, the loan officer was stuck. 

Closing was in three weeks, and there was only one option in front of them - reduce the interest rate, dropping an $8,000 deal to a zero-dollar deal. 

Sure, they could require the borrower to pay points, but at risk of losing the deal with an angry borrower. They could take the loss, hoping for repeat business in the future. What would you do in this scenario?

It turns out, there was one more trick up their sleeve. 

Authorized Credit User.

Turns out, the borrower’s dad had an 800+ FICO score and a card with a reputable bank with years of perfect payment history. He added his son to the card and his score jumped to 765 overnight! 

Not only did this save the deal, it increased the loan officer’s compensation! 

So, be sure to remind your clients to get something for dear ol’ dad this Father’s Day. Maybe they can get him two ties!

(p.s. Can neither confirm nor deny the space-time continuum giant arm thing, they made us sign an NDA.)

Survey Time!!!

86% of consumers say it’s a bad time to buy a house: Fannie Mae

With headlines like these, it’s now more important than ever to educate your referral partners and clients about the power of building wealth with real estate.  The sponsor of this newsletter, MortgageMaker.ai, is your tool to do just that.  Mortgage reports that build themselves and convert leads into buyers and lifetime clients.

Try it out today, at MortgageMaker.ai.

98% of homeowners in America have equity in their home

17 trillion in home equity combined with skyrocketing credit card balances  = cash-out refinance boom. Most consumers wouldn’t think twice about refinancing their 4% interest rate until faced with mounting credit card debt with 29% interest rates and rapidly growing balances.  We are hearing about the recent uptick in cash-out refinance volumes.  Consider reaching out to your past clients with details on how a cash-out refinance may ease their debt dilemma. 

Loophole Spotlight

Authorized Credit User

This week’s Pipeline Save was just too good to not go into more detail for those needing a refresher, or if you’re seeing it for the very first time.

The Authorized Credit User is a fantastic and oftentimes overlooked strategy, offering a simple way to boost your borrower’s FICO score if the stars align correctly.

A friend or family member will add your borrower as an authorized credit user. The key is that the card must have 100% positive payment history, and is in good standing, with low credit utilization. We don’t want our borrowers piling on more debt by being tied to a maxed out card, now do we?

Now, it’s time for the hardest part…the waiting.

You’ll have to wait for the next cycle and date of the card to report before it’ll be reflected on your borrower’s report. Sometimes that’s on the first of the month, sometimes the twenty-first. It all varies. (Our Pipeline Save story was a nice instance where the borrower was added just prior to the next cycle).

But once it does, the sweet nectar of the credit reporting gods shall shine down upon your borrower with an increased positive payment history. Not for just a month. For the entire length of the card as if it’s been on their report the whole time! 

See? Sweet nectar. Shiny.

Now, we’re talking about credit report math, so your usage may vary, but at The Mortgage Minute we’ve seen upwards of a 60 point increase sometimes within a day of running this strategy.

Just think what you could do if you had a borrower who’s score jumped sixty points!

We will note that in our experience with AMEX, reporting can at times take several months to start reporting, so there are some strategies that will work better than others.

If you’re running short on time, have the borrower ask which cards have the nearest cycle and dates, and then choose those cards for faster reporting.

Stay Connected

See! We told you! Five minutes or less!

Crazy how much we packed in there, right?

Thank you for being a part of The Mortgage Minute community. Stay tuned for next week’s insights and tips!