Servicing, Accounting, TPO Products; What Every Lender and Servicer Should Know About Catastrophes

As many from the conference fly home, there was a lot of information flying around the conference this week. (Check out the climate and catastrophe notes below). My son Robbie and I had the pleasure of sitting with the co-founders of nonprofit CapitalW Collective, Amy Creason, Pat Peters, and Leslie Winick, while in New York this week for the MBA Secondary. They’re on a mission to create a more inclusive and dynamic mortgage capital market through the Collective, looking to engage with everyone in our industry. But all is not peachy. The CFPB is very interested in more details on the rising costs associated with obtaining credit reports, per Director Chopra. “In many cases, a handful of firms have cornered the market, allowing those companies to levy a tax on every mortgage application or transaction in the country… The result is that mortgage lenders can evaluate fewer applicants, and homeowners end up eating higher costs, typically at closing.” No one wants to hear the term “price gouging” regarding their product, but credit folks heard it. (Found here, this week’s podcasts are Sponsored by Truv. Truv lets applicants verify income, employment, assets, insurance, and switch direct deposits. Unlock the power of open finance, with Truv. Today’s features an interview with new Figure Technology Solutions CEO Michael Tannenbaum on the evolution of the HELOC and 2nd Lien space in mortgage.) Lender and Broker Software, Products, and Services Industry Update: Usherpa, the original mortgage enterprise CRM technology, has enhanced its strategic partnership with MortgageFlex, one of the industry’s original mortgage technology developers and creator of the MortgageFlexONE LOS. Usherpa’s SmartCRM is the exclusive marketing automation and Relationship Engagement Platform to be connected to MortgageFlex Loan Origination System (LOS). MortgageFlex offers the industry’s only cloud-native unified technology platform for both origination and servicing. When combined with Usherpa’s sophisticated Relationship Engagement Platform, the partnership is a perfect pairing that wins lenders more business. Read the official press release here.
Source: Mortgage News Daily

Mass Panic as 10yr Yields Lose Almost 4bps

It’s unclear if the industry can recover from what is surely one of the most troubling rate spikes in modern economic history. Invoking one of the most classic Simpsons quotes to qualify today’s headline: “by the way, I was being sarcastic.”  Getting back to saying things that are true and lacking in sarcasm: anything that happens in a yield range of 4.34-4.50 is utterly uninteresting.  Yes, we did have a modest amount of weakness this morning with bonds chasing UK yields higher after hotter inflation data, but again, the weakness didn’t even begin to challenge the range.  The afternoon brings a 20yr bond auction and the Fed Minutes.  Neither are expected to raise any pulses.
Source: Mortgage News Daily

Mini-boom in Refi Apps Continues

Interest rates hit a seven-week low last week, boosting the level of refinancing applications for the third straight week, but those for home purchases continued to recede. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage application volume, increased 1.9 percent on a seasonally adjusted basis during the week ended May 17. On an unadjusted basis, the Index increased 1.1 percent. The Refinance Index jumped by 7.0 percent compared to the previous week and was 21.0 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 34.0 percent of total applications from 32.0 percent week-over-week.  The Refinance Index has gained an aggregate of 17 points since April 25. [refiappschart] Purchasing activity declined for the second week, this time by 1.0 percent on a seasonally adjusted basis and 2.0 percent before adjustment. The index was 11.0 percent lower than the same week in 2024. [purchaseappschart] “The 30-year fixed mortgage rate declined for the third straight week, dropping to 7.01 percent – the lowest level in seven weeks,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “ Rates coming down from recent highs spurred some borrowers to act, with increases across both conventional and government refinance applications . VA refinances had a double-digit increase for the third consecutive week, although the current level of refinancing is still well below its historical average. Purchase activity continues to lag despite this recent decline in rates, down 11 percent from a year ago, as potential buyers still face limited for-sale inventory and high list prices. ”
Source: Mortgage News Daily

No Fireworks Expected From Fed Minutes

No Fireworks Expected From Fed Minutes

Day 4 of the 11 day weekend is in the books and the bond market did exactly what you’d expect if you were expecting the least interesting outcoming.  Specifically, yields had drifted as high as 4.45+ in the overnight session.  That’s a bit too close to the 4.50 range boundary for 11 day weekends!  But traders figured it out and started pushing back toward more central levels in spite of several Fed comments that might be considered hawkish.  Speaking of the Fed, tomorrow brings the minutes from the most recent meeting (3 weeks ago).  While Fed minutes have had huge impacts in the past, we’re not expecting fireworks from this installment. 

Market Movement Recap

10:26 AM Modestly stronger overnight with additional gains in the first two hours.  10yr down 3.4bps at 4.412 and MBS up 5 ticks (.16).

11:40 AM Mostly sideways, near best levels.  MBS up 5 ticks (.16) and 10yr down 3.7 at 4.409

02:45 PM Guess what! Still sideways.  MBS up 5 ticks (.16) and 10yr down 3.4bps at 4.412
Source: Mortgage News Daily

Mortgage Rates Stabilize After 3 Day Losing Streak

Referring to the past 3 business days as a “losing streak” for mortgage rates may be a bit harsh.  During that time, the average top tier 30yr fixed rate rose less than an eighth of a percent–the smallest increment typically separating one rate from the next.  This also meant they remained well below the recent highs from late April (another 0.375% higher than yesterday’s levels). In nuts and bolts terms, yesterday’s average was 7.10.  Today’s is 7.05.  And April 30th was 7.51%.  Prefer pictures?  Here you go: [thirtyyearmortgagerates] In terms of the interesting stuff that has an impact on rates from day to day, there really hasn’t been much going on this week.  Yes, rates have moved a bit, but the underlying market movement hasn’t been clearly driven by any data or headlines.  The only exception would be some volatility this morning surrounding comments from several Fed speakers, but trading levels were not much different than before the comments. Tomorrow brings the release of the minutes from the most recent Fed meeting (3 weeks ago).  In this environment of high transparency and frequent speeches from Fed members, it’s hard to imagine that the minutes will cause any drama.  This is a bit of a paradigm shift for some market watchers who have seen the minutes send rates quickly higher or lower in the past.  But that was then, and this is now… probably.  
Source: Mortgage News Daily

Bonds Unfazed By Fed Tone Shift

Ever since the inflation data in Q1 proved to be less rate-friendly than we might have hoped, the Fed has been exactly as unfriendly as we might have expected.  In other words, things have been logical.  The Fed didn’t have enough confidence to talk about rate cuts before and they have even less confidence now.  Still, they had to address the improvement in April’s data (out last week) and they’ve been quick to say they need several more months of the same in order to cut.  Indeed, the conversation has shifted decidedly back in favor of “caution against cutting too soon” as opposed to caution against sabotaging an economic recovery by leaving rates too high for too long.  Apparently, bonds are well-priced for such things. Even as several Fed speakers reiterated hawkish messages this morning, yields moved modestly lower.

Tuesday is 4th day in the 11 day weekend culminating in next Monday’s Memorial Day holiday.  The base case is for broadly sideways movement in the bond market with anything inside a range of 4.34 to 4.50 being completely uninteresting.  Fed speakers were the only game in town on today’s event calendar and at 4.41-ish, yields are safely in the middle of the range. 
Source: Mortgage News Daily

Mostly Flat After Initial Weakness

Mostly Flat After Initial Weakness

There’s a risk that a theme will emerge in the coming days, but a theme that only matters to people who write daily commentary on the bond market.  It involves an absence of new, interesting things to say as well as plenty of repetition. If today was any indication, the bond market’s base case for this week is to play the “11 day weekend” game that we joked about last week.  It looked like we might actually have some volatility earlier in the session.  Bonds sold off modestly at the 8:20am CME open, but the damage was limited to roughly 3bps in 10yr yields and much less than that by the 3pm CME close.

Market Movement Recap

09:46 AM Unchanged overnight, but sellers were lined up for the 8:20am CME open.  10yr now up 2bps and MBS down 2 ticks (.06).

12:43 PM Off the weakest levels and flat.  MBS unchanged and 10yr up 1.6bps at 4.438

03:11 PM Little changed.  MBS down 1 tick (.03) and 10yr up 1.4bps at 4.437
Source: Mortgage News Daily

Mortgage Rates Close Enough to Unchanged Over The Weekend

Mortgage rates moved modestly higher on the two days at the end of last week.  This put an end to a decent winning streak that had been in place since the beginning of the month, but it stopped well short of undoing much of the progress.  Technically, today’s average mortgage rates are higher for a third straight business day, but most prospective borrowers won’t even notice. For many lenders, the changes are so small that the average borrower won’t see any change from scenarios quoted on Friday afternoon.  In cases where there is a difference, that difference would be very small.   There were no significant sources of volatility in the bond market today (bonds drive interest rate changes) and that’s a theme that could continue for much of the week–at least as far as scheduled events are concerned.  In other words, there are times when we can point to calendar events that are highly likely to cause rate movement (like last week with the CPI data).  Then there are times like this week where it would not be a surprise to go the entire week without a big reaction to a scheduled event.  If you’re a fairly devout market watcher, you may be thinking “what about the Fed minutes on Wednesday?”  While it’s true that some past examples of Fed minutes have had a big impact on rates, it’s currently hard to imagine what they might contain that would constitute a surprise or new information in the current environment. 
Source: Mortgage News Daily

Portfolio ARM; Market Intelligence, VOE Tools; Bank of England & RESPA; CFPB Ruling Interview

Greetings from the Arch MI meeting room space! Heard in the hallways here at the MBA’s Secondary conference in Manhattan: “Our loan officers are telling their clients, ‘Yeah, the best time to buy a house was five years ago. The second-best time is… now.’” People’s memories are short, no one writes about how our industry helped millions of people during the pandemic, and the mainstream press is always looking for sensationalism. The latest example is “zombie mortgages”: 2nd mortgages taken out during 2008-2010 and that haven’t been paid. And we’re to blame? UWM’s DPA program, purportedly tied to Freddie, has garnered some interest. There’s another saying: the stock market is not the economy. But last week the Dow Jones Industrial Average closed above 40,000 for the first time in history. Apparently, investors have confidence the Federal Reserve will get inflation under control without throwing the country into a recession. Should we attribute this to the policies advanced by President Joe Biden and Secretary of the Treasury Janet Yellen? Some will. On an annualized basis, during the Trump Administration the Dow rose 11.8 percent, Barack Obama (+12.1 percent) and Bill Clinton (+15.9 percent). (Found here, this week’s podcasts are Sponsored by Truv. Truv lets applicants verify income, employment, assets, insurance, and switch direct deposits. Unlock the power of open finance, with Truv. Today’s features an interview with attorney Jay Beitel on the Supreme Court finding the funding of the CFPB constitutional.)
Source: Mortgage News Daily

Slightly Weaker to Start Super Slow Week

It’s not too common to refer to a week with Fed meeting minutes as “super slow,” but at the risk of complacency, how could the Fed possibly share any new ideas three weeks ago (the minutes are from the May 1st meeting) amid what has been a vast sea of Fed comments since then?  Moreover, how could any Fed member say anything to surprise the market when all of them have been so consistently on message or at least “near message?”  Beyond the Fed minutes and Fed speakers, there’s very little by way of market-moving econ data until Thursday and even then, the Thu/Fri reports are not traditionally a big deal.  Last but not least, Friday is a half day before a 3 day weekend.  All we can do in such an environment is watch and wait. 
So far, we’re watching modest weakness at the 8:20am CME open, but nothing that changes the prevailing 4.34-4.50 range.  It’s not uncommon to see opening/closing times move the market a bit more than normal when everything else is so quiet.
Source: Mortgage News Daily