Daily Rate Briefing:

OIL ROCKED RATES

If you happen to be in Memphis TN at the Great River MBA Conference this week, come introduce yourself at my AD Mortgage booth. I would love to meet you.

Yesterday was one of those days where the market reminded us how quickly things can shift. Mortgage bonds sold off about 35 BPS, which is roughly 350 worse in pricing per 100K at the same rate, and the move had very little to do with traditional economic data.

Oil drove the story. As tensions picked up around the Strait of Hormuz and shipping concerns escalated, oil prices surged up near 108 a barrel. When oil moves like that it raises inflation concerns, and when inflation becomes the concern, mortgage rates tend to move higher. That pressure showed up quickly in pricing throughout the day.

This morning we are seeing a bit of relief and are up 16 BPS at the moment. Oil has pulled back into the low 100s, the 10 year Treasury has eased slightly to around 4.42, and mortgage bonds are mostly flat to start the day. Stocks are also trying to stabilize after yesterday’s move.

The way to explain this to your borrowers and partners is simple. Rates did not worsen because of something inside housing. They moved because of global uncertainty and the ripple effect it has on inflation expectations. When headlines drive the market, money moves quickly and mortgage pricing follows.

The flip side is just as important. When things calm down, even slightly, you can see improvement just as fast. That is what we are starting to see this morning.

We do have economic data today with JOLTS, ISM Services, and New Home Sales, so there is still potential for movement, but right now this feels like a typical calm after the storm setup. HA! This goes great with my morning Jackism below. You should read it.

Bottom line. Volatility is being driven by headlines more than fundamentals, and in this type of environment shorter term lock strategies continue to make the most sense until we get clearer direction.

DYK – Mortgage Playbook:

RETHINKING THE LOAN

Sometimes the deal is not dead. It is just in the wrong box.

I had a file come across my desk that looked completely clean at first glance. W2 borrower, over two years on the job, fully documentable income. Agency all day long, right? Not quite. The curveball was rental properties. They owned a couple, and like many savvy investors, they wrote off everything they legally could. Great for taxes, not so great for qualifying. The tax returns showed heavy losses, and those losses were wiping out the deal. Using agency guidelines, there was no way around it. If the properties were on last year’s returns, you are tied to those numbers.

Here is where things shifted. Instead of trying to force the deal through the same channel, we stepped into a different one. In the Non-QM world, there are programs that look at income differently. In this case, we used a WVOE program. Now, this is the interesting part. Even though this borrower clearly had W2 income, the program does not rely on W2s, pay stubs, or tax returns. It uses a written verification of employment only. Because we are not using tax returns at all, we are not required to show them, which means those rental losses are no longer part of the equation.

So what do we do with the rentals? We use the lease agreements. Take the documented rent, apply 75 percent, and now instead of a liability dragging the file down, those properties are contributing positive income. Same borrower, same properties, completely different outcome just by changing the box we placed them in. If the loan is above 70 percent LTV, we support the income with deposits. If it is below 70 percent, we do not even need that.

The bigger takeaway is this. Borrowers do not just fit into agency guidelines. They fit into lending strategies. I will be the first to tell you, most of my business is still agency and we are very good at it. But adding Non-QM to the mix has changed how I look at files. Deals that used to be quick declines are now second looks. And those second looks are turning into closings.

If you do not spend time in the Non-QM space yet, it is something I strongly encourage you to think about. A lot like AI. If your not considering it you may be leaving a lot on the table.

Just know there are more options than what shows up in an AUS findings. Sometimes it just takes a different lens to see it. And when you do, you start realizing how many deals are still sitting on the table. The best way to be successful at Non-AM is having the right AE. Got questions? Just ask.

Jackism – A Thought For Today:

BRING ON THE STORM

Yesterday a client shared something Jalen Hurts said that stuck with me. I may not have it word for word, but the heart of it was this. I was made for the storm, not for the calm.

That will make you pause if you really think about it. Most of us wake up hoping for smooth waters, easy conversations, and a clean path. But what if we flipped that. What if we started the day saying I got this, bring it on. Whatever shows up today, especially the hard stuff, that is where I will thrive.

When the pressure rises, when someone is frustrated, when a situation needs someone to step in and lead, that is not the moment to shrink back. That is the moment to lean in. That is where your light shows up. That is where people remember you.

It reminds me of Luke 6:32-35. If you love those who love you, what credit is that to you. Even sinners love those who love them. But love your enemies, do good to them, and lend to them without expecting to get anything back.”

Life has a way of putting all of us in those moments. Not once, but over and over again. The fourth down situations. The game on the line. The moments where something has to be said, something has to be done, and someone has to step forward. It is not just on a field with a clock ticking down. It is in your office, in your home, in your conversations, in the way you respond when things do not go your way.

The truth is, those moments are coming whether we like it or not. The question is not if, it is when. And when they come, who will you be. Will you be the one hoping someone else steps up, or will you be the one who quietly says I am ready for this.

Because here is the opportunity in all of it. When you know the storm is coming, you prepare differently. You think differently. You carry yourself differently. You stop fearing the pressure and start understanding that this is where you can make a difference that actually matters.

Anyone can show up when it is easy. Anyone can perform when everything is going right. But when things get hard, when emotions run high, when outcomes are uncertain, that is where a life of impact is built. That is where faith shows up. That is where strength is revealed.

Appreciate the calm when you have it. Be present in it. Enjoy it. But do not confuse calm with purpose.

The storm is where growth happens. The storm is where character is formed. The storm is where you separate from the crowd.

So the question is simple. What are you going to run toward today that most people are running from.