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.)

Federal Reserve Gov. Lisa Cook said in a speech Friday that the market’s response to recent volatility shows resilience, but more study is needed about the financial stability implications of business relationships between banks and nonbanks.

This potential transaction would be part of a broader trend of mortgage lenders and servicing players converging, such as Rocket’s recent acquisition of Mr. Cooper.

By restructuring the GSEs into public utilities, we can end decades of free-riding by private investors on the public credit, writes the chairman of Whalen Global Advisors.

The top female loan originator in the mortgage industry logged $186.5 million in dollar volume over the course of 2024.

The top five lenders had an average mortgage origination volume of more than $43 billion at the end of Q1.

Rapidly rising tuition and housing costs both contributed to lower homeownership rates and a more than twofold surge in student debt in under 15 years.

Purchases of new single-family homes increased 11% last month to a 743,000 annual rate, the highest level since February 2022, according to government data.

The Census Bureau reported New Home Sales for April today, and at face value, the news is good.  Economists expected an annual pace of 692k, but were instead treated to a surprisingly high 743k–just edging out 3 of the best months over the past 3 years. Unlike many of the other reports we cover, there’s really no glaring counterpoint when we zoom out to a wider frame of reference.  Sure, sales were higher during the post-pandemic housing frenzy, but unlike existing homes and other housing data, New Home Sales are as good or better than their pre-pandemic levels.  So what’s the catch? It’s too soon to say.  In some sense, today’s results are cheapened by the fact that last month’s numbers were revised quite a bit lower.  Granted, big revisions are not-at-all uncommon for this data series, but if we’re going to award titles like “best levels in 3 years,” it’s worth noting that this will not be the case if we see even a fraction of the same sort of downward revision next month. Geographically, the surprising surge was led by the South and Midwest.  The Western region held mostly steady and the Northeast lost ground. 

Northeast

23k (down 4k from March)

Midwest

84k (up 22k from March)

South

478k (up 50k from March)

West

158k (up 5k from March)

A Little Early Excitement

Bonds began the day with a bit of excitement following Trump comments on raising EU tariffs to 50%.  The reaction was bigger than warranted based on the time of day/week as well as the fact that it’s the Friday before a 3 day weekend. All that to say, markets were easier than normal to push around with seemingly relevant headlines.  By the time human traders were sorting things out, stocks and bonds were moving back in the opposite direction. The day ultimately ended with modest gains, but at levels that represent the 4th weakest close in 3 months. Ho hum in the bigger picture, but better than a sharp stick in the eye.

Econ Data / Events

New Home Sales

 743k vs 692k f’cast, 724k prev

Market Movement Recap

10:07 AM Initial pop toward lower yields on EU tariff escalation is slowly reversing.  MBS still up 2 ticks (.06) and 10yr still down 2.4bps at 4.512

11:13 AM MBS up 1 tick (.03) but down a quarter point from AM highs.  10yr down 1.7bps at 4.519 vs AM lows of 4.45