The Senate passed a bipartisan housing package, which includes certain community bank provisions, in an 85-5 vote. The House is set to vote on the package Wednesday.

The proposal is $10 billion of general obligation bonds for affordable housing and $1.25 billion of revenue bonds for the state’s veterans home loan program.

Ralo uses artificial intelligence to automate the entire process, saving consumers money by cutting out commissioned loan officers, processors and underwriters.

Part of the proposal affects the risk weighting for certain “investment properties and other cashflow-dependent” mortgages, according to a new Pennymac report.

William Isaac led the Federal Deposit Insurance Corp. through the banking and thrift crises of the 1980s and was a frequent commentator on bank regulation after his time in public service.

What’s Up With Bonds Decoupling From Oil, Etc.?

On the average trading day in the past few months, if oil prices were down, and especially if other bond markets were rallying, U.S. bonds were probably rallying too.  Today was the opposite and there are no glaringly obvious reasons. It’s the sort of trading session where analysts must go hunting for narratives to fit the unexpected trading action. The quarry of such hunts is fairly limited. There’s the notion of an “ongoing reaction to last week’s Fed announcement” (which we don’t love considering there was already a friendly bounce on Thursday) and from there things get even less concrete, though not necessarily wrong. The upcoming Treasury auction cycle could indeed be causing some hesitation to buy at the start of the week. There’s also some buzz surrounding military re-provisioning, which continues to imply ever-higher government debt issuance (a double whammy on auction week).  Either way, the recent range remained easily intact, so while it’s a bummer for today, it’s not exactly an emergency. 

Market Movement Recap

08:51 AM Weaker over the weekend. MBS down 6 ticks (.19) and 10yr up 3.8bps at 4.493

12:23 PM MBS down a quarter point and 10yr up 5.3bps at 4.508

03:41 PM MBS down 7 ticks (.22) and 10yr up 5.2bps at 4.508

Mortgage rates gave back the improvement seen last Thursday and broke above last Wednesday’s levels to hit the highest mark since June 10th. This isn’t a big range in the bigger picture, but it does leave rates near 10-month highs. The move is also a bit counterintuitive given developments in other markets and typical correlations. For instance, On almost any other recent trading day, if oil prices and European bond yields are both moving lower (they are), so are U.S. bond yields and rates.  The disconnect may be as simple as an ongoing reaction to last week’s Fed announcement which confirmed that investors need to brace for a potentially higher rate path in the future and–at the very least–less transparency about how that rate path may evolve. [thirtyyearmortgagerates]

Pennymac has released the latest edition of its Pennymac Policy Pulse, a newsletter tracking key federal policy developments shaping the housing market and broader U.S. economy. When national or state-level organizations engage in advocacy, they don’t visit the NAR or home builders or large title companies. They visit state legislators, Congress, or federal regulators. It has become impossible to separate politics from residential lending. Lenders are confronted with regulators, people moving states due to politics, expensive property taxes from local governments, state-specific lender and servicer restrictions, policies and procedures and document sets that come from Agencies under government conservatorship, and lastly interest rates that are higher than they should be due to due to oil price-induced inflation. If you can be successful in this business by ignoring all of that, congratulations. (Today’s podcast can be found here and this week’s ‘casts are sponsored by Equifax. With Equifax’s suite of mortgage solutions, mortgage lenders can use trusted, independently verified consumer and financial data and analytics to reduce manual processes, accelerate loan decisions, improve accuracy, manage risk, and enhance the borrower experience from initial application through ongoing loan servicing. Today’s has an interview with Class Valuation’s Mark Walser on UAD 3.6: stages of panic versus planning, and what lenders can expect in the fall.) Broker and Correspondent Loan Products

European bond yields surged higher on Friday in response to political uncertainty in the U.K., among other things (ongoing global reaction to Fed day and U.S./Iran peace deal status, etc). Treasury yields were set to open higher in the overnight session as a result. All of the above is logical and fairly boring. What’s interesting is that Treasuries haven’t taken the opportunity to recover. European yields certainly have and oil prices have steadily dropped back toward Thursday’s lows. Additionally, the fact that 10yr and 2yr yields are up by the same amount suggests there’s not an active Fed trade going on. That doesn’t leave many compelling scapegoats. The only two that jump to mind are asset allocation trading (selling bonds, buying stocks), and perhaps some concessionary selling ahead of the Treasury auction cycle. On a more speculative note, the market could also be bracing for various Fed speeches this week, but we’d expect to see 2yr TSYs doing worse than 10s in that case. 

The D.C. Circuit Court of Appeals halted the Trump administration’s attempt to fire nearly two-thirds of the Consumer Financial Protection Bureau’s workforce, upholding a March 2025 injunction.