More people are about to find out what exactly a “crawl space” is. United Wholesale Mortgage (UWM), one of America’s largest mortgage lenders, is offering zero-down mortgages, opening up home ownership to more people but revitalizing a controversial practice that carries as many risks as opportunities.

Here’s how it works: For first-time homebuyers making 80% of their area’s median income or less…

• Buyers take out a mortgage for 97% of the value of the house they buy.
• The remaining 3%, up to $15,000, takes the form of a second mortgage without interest.

But there’s a catch. The second mortgage has to be paid back in one payment when the first mortgage is paid off or the house is sold or refinanced. That’s where financial experts see risks:

• Under this arrangement, homebuyers start without any equity, so if the value of their home decreases, they would instantly owe more than the house is worth.
• If for some reason a buyer has to sell quickly, they’ll still have to pay back the second mortgage all at once or risk default/foreclosure.
• They may get stuck with a higher mortgage rate, even if the Federal Reserve starts to cut interest rates because in order to refinance, they need to have enough cash on hand to pay back the second mortgage.

Did Twilight just come out? Because it feels like 2008. Loose restrictions on mortgage underwriting programs helped fuel that year’s market crash…and some analysts worry that zero-down mortgages are a way for financial entities to prey on low-income individuals who could end up bankrupt if home prices go down.

Big picture: In the first quarter of 2024, the average homebuyer put down $26,000. But as inflation continues to put pressure on paychecks, there are a lot of young people who don’t have thousands of dollars in their savings but still want to own their place.—CC

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Hunter Biden faces trial on federal gun charges. There’s a new criminal trial with potentially explosive political implications in town: The case accusing the president’s son of illegally buying and owning a gun in 2018 while being addicted to drugs began yesterday in Delaware with jury selection. After a plea deal that would have let him avoid a trial fell apart, Hunter Biden pleaded not guilty to the three charges. President Joe Biden stood by his child, saying, “We are so proud of the man he is today.” If convicted, Hunter Biden faces a maximum 25-year sentence. The trial kicked off just days after former President Donald Trump, the president’s 2024 election rival, was convicted of 34 felonies.

President Biden plans to limit asylum claims. The president is expected to sign an executive order today that would bar migrants who illegally cross the border from Mexico into the US from claiming asylum once the number of daily entries hits 2,500 (which it already has). The ability to seek asylum would resume when entries fall to 1,500 per day. The move comes as many voters have expressed that immigration is one of the top issues they’re concerned about in this year’s presidential contest—and that they’re unhappy with how Biden has handled it.

🩺 Dr. Fauci faces congressional grilling. The doctor who helped oversee the US’ Covid-19 response as director of the National Institute of Allergy and Infectious Diseases testified before a House subcommittee yesterday for the first time since retiring. Things got heated as some Republicans accused him of covering up the virus’s origins and raised questions about personal email use for government business. Fauci defended the steps the government took during the pandemic and also emotionally described threats that he and his family have received.

That friend who likes to sound intellectual by summarizing podcasts will get charged more: Spotify said yesterday it’s raising subscription prices for the second time in under a year.

Under the new pricing, the soundtrack of your daily life will cost $11.99 per month for an individual premium plan (up from $10.99), $19.99/month for a family plan (up from $16.99), or $16.99/month for a two-person Duo plan (up from $14.99). The change will take effect in July.

The price hike is part of the company’s effort to become consistently profitable and fund its push into audiobooks. Investors turned on their pump-up playlists upon hearing the news, with Spotify’s stock gaining 5.7% yesterday.

Sound byte supplier supreme

The audio streaming giant is still growing, having gained 4 million paying subscribers from 2022 to 2023 and 30 million monthly active users. And it has an ultra-loyal customer base: Its 2% monthly churn rate is lower than that of competitors Apple Music and Amazon Music Unlimited, as well as most video streaming services, per Antenna data seen by Bloomberg.

Spotify can get away with charging more…without many people ditching the service, Bloomberg reporter Lucas Shaw argues, because its status as a repository of personal playlists for every mood keeps customers hooked.—SK

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Keith Gill, aka Roaring Kitty, the meme stock frenzy flagbearer, sent GameStop shares soaring for the second time in less than a month yesterday after his Reddit account posted a screenshot that appears to show his $116 million position in GameStop.

His stock and call options could get him close to billionaire status very soon.

Meme stock king speak → number go up. $GME rose 21% yesterday to close at $28—a calmer bump than the mid-May spike spurred on by Gill’s cryptic return to social media, and a far cry from the historic 2,000% rally he led in early 2021 that saw $GME briefly peak at $483.

The screenshot of Gill’s holdings—which hasn’t been verified yet but is consistent with trading data crunched by Bloomberg—shows call options that will let him buy 12 million shares for $20 each on or before June 21.

According to Bloomberg:

• If he executes on these calls (which are only beneficial if the stock’s price stays above $20), Gill would own 17 million shares in total. That’d be worth almost $700 million based on yesterday’s price.
• That would make Gill the fourth-largest GameStop shareholder.

Is all this kosher? “We don’t like it, but it’s legal,” CNBC’s Jim Cramer said yesterday…but not everyone’s so sure. E*Trade is thinking about banning Gill from the platform over market manipulation concerns, the Wall Street Journal reported.—ML

Even if you got a sweet raise after your last performance review, chances are the CEO got a bigger pay bump. A recent Associated Press survey found the median CEO compensation package at S&P 500 companies went up 12.6% to ~$16.3 million last year, while government data shows private sector worker wages climbed 4.1%. And in case you need a reason to make quiet quitting a real thing: At half the companies surveyed, the CEO made 196+ times what a median employee earned (up from 185x the year before)—meaning an employee at the middle of the pay scale would need to work for nearly 200 years to make the same amount as the head honcho makes in one.