James is contesting charges brought earlier this month by a prosecutor whom President Donald Trump abruptly installed after her predecessor resigned under pressure.

The mortgage unit of Hilltop Holdings lost $7.2 million pretax in the third quarter with lower volume, following making a small profit three months prior.

The company cited efforts to improve profitability behind its decision, with Popular joining a line of other banks in ending mortgage operations in 2025.

The Federal Reserve Friday issued a set of proposed changes to its stress testing program for the largest banks that would disclose the central bank’s back-end stress testing models, a move that the Fed had long opposed out of fear of making the tests easier for banks to pass.

FHA loans accounted for about half of the annual rise in foreclosure starts and 80% of the rise in active foreclosures in September, according to ICE.

This morning brought the release of the much-anticipated Consumer Price Index (CPI). This is one of the two biggest inflation reports from the U.S. government, and the only government inflation report that’s coming out during the shutdown.  With big government data being a key consideration for interest rates, this special release got extra attention. Core monthly inflation was lower than expected (.227% vs 0.3 forecast) as was the annual level at 3.0% versus a median forecast of 3.1%. Inflation is the nemesis of interest rates, so the lower-than-expected result is rate-friendly at face value. The underlying bond market agreed to some extent.  The first reaction was stronger, thus implying lower mortgage rates. But mortgage lenders don’t tend to publish rates for the day until around 10am ET, 90 minutes after CPI came out.  In that time, bonds had second thoughts about how strong their reaction would be–possibly due to internal components of the data that suggested non-tariff-related inflation remains elevated outside after removing the impact from housing payments. Bonds remained in just barely stronger territory, but didn’t quite make it back to yesterday morning’s levels. As such, most mortgage lenders were just a hair higher in rate compared to yesterday–a completely logical outcome based on how bonds were trading. The best way to view today’s rate move (or lack thereof) in the context of the inflation data is to say that rates would have been more noticeably higher in the absence of CPI.

Decent Recovery After AM Backtracking

CPI data was a mixed bag for bonds.  Top-line numbers fueled a quick rally and digestion of the details brought us back to negative territory (albeit with help from stronger S&P PMI data). Bonds found their footing shortly after 10am at just slightly stronger levels and then stayed mostly sideways through the close.  Pretty ho-hum CPI day given all the anticipation…

Econ Data / Events

m/m CORE CPI (Sep)

0.227% vs 0.3% f’cast, 0.3% prev

m/m Headline CPI (Sep)

0.3% vs 0.4% f’cast, 0.4% prev

y/y CORE CPI (Sep)

3.0% vs 3.1% f’cast, 3.1% prev

y/y Headline CPI (Sep)

3.0% vs 3.1% f’cast, 2.9% prev

m/m SUPERCORE

.351 vs .330 prev

Market Movement Recap

09:51 AM Initially stronger after CPI data, but now turning red after PMI data.  MBS unchanged and 10yr up 1.2bps at 4.013

01:51 PM Crawling back into positive territory.  MBS up an eighth and 10yr down 1.2bps at 3.99

04:40 PM Heading out at just slightly stronger levels with MBS up an eight and 10yr yields down half a bp at 3.997

As shown in this video clip, don’t ever underestimate your opponent, or competitor. There were plenty of opponents and competitors at this week’s MBA Annual, and today on Last Word at 1PM ET, Brian Vieaux, Kevin Peranio, and Courtney Thompson discuss highlights from the conference, how the ongoing government shutdown could affect borrowers’ ability to pay and broader market stability, and what “shutdown economics” means for lenders, policymakers, and the housing industry heading into year-end. Affordability, or lack thereof, has been a major topic for the last few years, what with rising insurance costs, HOA fees, rates in the 6’s, and increasing property taxes. FHFA Director Bill Pulte announced a review of loan-level price adjustments, which are created by looking at the historical performance of loans with certain attributes, to potentially reduce fees for homeowners and buyers. The review could impact conventional mortgage fees, offering relief amid past controversies over fee structures. Anything helps, right? (Today’s podcast can be found here and this week’s are sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender. nCino Mortgage Suite’s three core products nCino Mortgage, nCino Incentive Compensation, and nCino Mortgage Analytics, unite the people, systems, and stages of the mortgage process into a seamless end-to-end solution embedded with data-driven insights and intelligent automation. Hear an interview with Blue Sage Solutions’ Carmine Cacciavillani on modified workflows versus true artificial intelligence and how their partnership with Movement Mortgage is where the mortgage industry is headed.)

Mortgage application activity edged lower last week, driven by purchases, but the decline was marginal compared to recent swings. According to MBA’s Weekly Applications Survey for the week ending October 17, total volume slipped 0.3% on a seasonally adjusted basis and 0.2% unadjusted. The Refinance Index rose 4% from the previous week and was 81% higher than the same week one year ago. The uptick was driven by a 6% increase in conventional refinances and a 12% jump in FHA refinances as borrowers capitalized on the lowest rates in a month. “The lowest mortgage rates in a month spurred an increase in refinance activity, including another pickup in ARM applications,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The refinance index increased 4 percent, driven by a 6 percent increase in conventional refinances and a 12 percent increase in FHA refinance applications, as borrowers remain attentive to these opportunities to lower their monthly mortgage payment. VA refinances bucked the trend and were down 12 percent.” Purchase applications decreased 5% from the previous week on a seasonally adjusted basis and 5% unadjusted, but remained 20% stronger than a year ago. While activity has cooled from early-fall highs, demand remains resilient amid improving inventory and a more stable rate environment. The refinance share of mortgage activity increased to 55.9% of total applications from 53.6% the week prior. The adjustable-rate mortgage (ARM) share climbed to 10.8%. The FHA share rose to 21.8%, while the VA share declined to 13.5%.

Existing-home sales climbed modestly in September, rising 1.5% to a seasonally adjusted annual rate of 4.06 million , according to the National Association of Realtors (NAR). Sales were also 4.1% higher than a year earlier as easing mortgage rates and better affordability began to lift demand. Even so, the market remains well below pre-pandemic norms as many owners stay put. “As anticipated, falling mortgage rates are lifting home sales,” said NAR Chief Economist Lawrence Yun. “Improving housing affordability is also contributing to the increase in sales.” Yun added that inventory levels are near a five-year high but remain below pre-COVID averages. “Many homeowners are financially comfortable, resulting in very few distressed properties and forced sales. Home prices continue to rise in most parts of the country, further contributing to overall household wealth.” Regional Breakdown (Sales and Prices, September 2025)

Region
Sales (annual rate)
MoM Change
Median Price
YoY Change

Northeast
490k
+2.1%
$500,300
+4.1%

Midwest
940k
-2.1%
$320,800
+4.7%

South
1.86m
+1.6%
$364,500
+1.2%

West
770k
+5.5%
$619,100
+0.4%