Overheard in the hallways at last week’s MBA conference: “At my age, instead of a condom I carry a moist towelette in my wallet. At my age, I run into buffalo wings far more often than sex.” There is always news in our biz (like rumors of Guild and Bayview, layoffs at nCino), but the industry, age jokes aside, continues to talk about the topics that were discussed last week. A fair amount of talk suggests that Freddie and Fannie’s influence and market share is waning and moving to non-QM investors with their “can do” attitudes, although both F&F are still relevant. Fannie Mae, for example, will announce a new initiative to combat mortgage fraud in the U.S. housing market this morning. Freddie Mac recently reported that repurchases are steady. It is generally agreed that market conditions are tough, although when surveyed, 18 public builder CEOs maintain an optimistic long-term outlook for the new-home market despite a slower-than-typical spring selling season and muted traffic in the first quarter. (Today’s podcast can be found here and this week’s is sponsored by Calque. Calque provides a binding backup offer on your borrower’s departing residence to clear the existing mortgage balance and closing costs in 48 business hours or less. And it costs less than other buy before you sell solutions. Hear an interview with HomeLight’s Nick Friedman on how lenders are navigating a challenging market shaped by recession fears, rising tariffs, buyer hesitation, and the resurgence of creative tools like buydowns and seller concessions to keep deals moving.)

After starting the holiday-shortened week on a positive note yesterday, bonds are already circling the wagons and encountering some resistance. This doesn’t necessarily kill the notion of a supportive ceiling overhead, but it does confirm the broader, persistent reality: bonds will need a compelling reason for sustained improvement.  This could take the form of exceptional weakness in economic data, surprisingly tame inflation, or the seemingly impossible accomplishment of lowering Treasury issuance via fiscal policy. As for today, bonds are moving to the sidelines ahead of the 5yr Treasury auction.  There also looks to be some front-running of month-end rebalancing with risk parity trading hitting both stocks and bonds at 9:30am.

After moving moderately lower to start the new week yesterday, mortgage rates backtracked ever-so-slightly today.  Top tier conventional 30yr fixed rates remain just under 7% for the average lender.  They spent 3 days above that mark last week. Rates can move for a variety of reasons with some of the most common being surprising results in big economic reports. That was not a factor today.  Rather, as traders prepared for this afternoon’s auction of 5yr Treasuries, the rate market faced some headwinds. The securities that underlie mortgage pricing take major cues from US Treasuries. If investors are more hesitant to buy Treasuries, as they were this morning, it can put some upward pressure on all related rates. All that having been said, the pressure was small enough to be ignored in today’s case.  There will be higher-consequence economic data over the next 2 days and thus additional risk of bigger swings.

The transaction is the fourth of its type the company has done this year through the partnership it has had with Crosscountry Mortgage since late 2022.

The company, which already offers services in 41 states, through the Summit Mortgage Training buy gets a foothold in New Jersey and Pennsylvania.

The regulator says its prior amicus brief, which cited the Fair Debt Collection Practices Act and sided with borrowers, was no longer valid.

The Federal Reserve and several industry groups agreed to put an indefinite stay on their legal fight over the annual examination process.

Regulators say the Mississippi-based depository satisfied the terms of the $5 million settlement it reached with Biden administration officials in 2021.

Bonds Finally Seeing Some Support

Whether one wants to give credit to the big rally in Japanese bonds, the weak labor market implications in the Consumer Confidence data, or the simple matter of re-positioning after a 3.5 day weekend, bonds managed to hit their best 3pm close in 2 weeks. Given the heavy, directional selling in May and the 15+bp recovery from last week’s high yields, there’s a temptation to view last week a short-term ceiling until further notice. Wednesday’s 5yr Treasury auction will be informative in that regard, but it’s next week’s data that’s more capable of informing bigger picture momentum shifts.

Econ Data / Events

Durable Goods

-6.3 vs -7.8 f’cast, +7.6 prev

Core Durable Goods

-1.3 vs 0.3 prev

Consumer Confidence

98.0 vs 87.0 f’cast, 85.7 prev

Market Movement Recap

10:59 AM Bonds rally modestly overnight and add to gains early.  MBS up a quarter point and 10yr down 5.2bps at 4.462

12:19 PM Gains continue. MBS up almost 3/8ths and 10yr down 7.8bps at 4.436

03:57 PM Mostly sideways in PM hours.  MBS up 10 ticks (.31) and 10yr down 7.4bps at 4.44

Are your underwriters this fast? The current Administration has been fast to ax groups of employees in various government departments, including the Agencies. The Supreme Court challenged 90 years of precedent and has decided that firings of government agency members will stand (including, of interest to lenders, the CFPB) as the cases work their way through the lower courts, giving the President unfettered power to oust regulators without good cause. However, SCOTUS spared the Federal Reserve in the ruling, writing that the Fed is “uniquely situated” and unlike other government agencies. Justice Elena Kagan sharply dissented, writing that the court’s ruling was “nothing short of extraordinary” giving President Trump the power to fire the heads of government agencies while sparing the Federal Reserve. In other legal news of interest to lenders, a Hawaiian woman pleaded guilty last week to defrauding her mortgage lender and conspiring to defraud the IRS. Yes, it happens even in a wonderful place like Hawai’i. (Today’s podcast can be found here and this week’s is sponsored by Calque. Calque provides a binding backup offer on your borrower’s departing residence to clear the existing mortgage balance and closing costs in 48 business hours or less. And it costs less than other buy before you sell solutions. Hear an interview with Bill Dallas on evolving business models, game-changing innovations, leadership lessons from past cycles, and how to build a more inclusive, tech-driven mortgage system from the ground up.)