Often the economy and general business trends are separate from management and business acumen. Like Block Buster, which at the high point had over 9,000 stores, Rite Aid had 5,000. Now it has… zero, despite people always needing drugs and toothpaste. Companies have to react to changing times… remember when CVS began locking its shelves to stop theft, and then made users add its app to help unlock them? The government shutdown is impacting lender’s business but is not impacting M&A news: Independent mortgage banks who need warehouse facilities are taking note that Fifth Third announced it will acquire Comerica in a $10.9 billion stock deal. It would create the nation’s ninth-largest bank… and could be the start of a long-anticipated consolidation among the bigger regional banks since there is an expectation that the Trump administration will look favorably on such deals. (Today’s podcast can be found here and this week’s are sponsored by Truework, the only all-in-one, automated VOIEA platform that helps mortgage providers achieve up to 50 percent cost savings with an industry leading 75 percent completion rate. Today’s features an interview with CHLA’s Taylor Stork on why FICO’s direct licensing pricing creates more options for consumers and lenders, but the mortgage industry should remain wary of FICO’s monopolistic pricing and practices.) Services, Products, Software, and Tools for Lenders and Brokers Las Vegas has a new icon: the Sphere. With its 580,000-square-foot LED exterior lighting up the Strip, it redefines what’s possible in entertainment and innovation. FirstClose™ has done the same for lending through its certified integration with Optimal Blue’s product, pricing, and eligibility (PPE) engine. By linking FirstClose’s advanced point-of-sale platform with Optimal Blue’s trusted pricing data, lenders can accelerate home equity closings from 45 days to 10 or fewer. The integration delivers a seamless borrower experience by combining real-time property data, eligibility insights, and precise loan pricing in one transparent, branded application journey. The result: faster approvals, stronger borrower trust, and more opportunities to serve the surging demand for home equity lines and second mortgages. Heading to Vegas for MBA Annual? Meet with the FirstClose team and see how we’re helping lenders achieve iconic results in home equity lending. Book your meeting here.

On paper, it was supposed to have been a sleepy session for bonds with nothing of note on the econ calendar. But in practice, we’re seeing one of the larger instances of overnight selling in months. Ironically, the extreme absence of domestic market movers can grease the skids for more volatility (via illiquidity) if unexpected motivations pop up.  That’s arguably the case overnight as political developments in Japan and the EU pushed yields higher in both sessions (but mainly the former). 

The oversight agency for Fannie Mae and Freddie Mac is taking a new approach to affordability targets and is withdrawing some unrelated, older initiatives.

In a case mentioned alongside one decided by the U.S. Supreme Court, by 2-1, the judges said they could not overturn a past decision on California’s escrow law.

The loan boarding dataset aims to identify potential problems early during the transaction’s setup to avoid slowdowns after origination is completed.

Federal Reserve Vice Chair Philip Jefferson said Friday that the economic outlook is uncertain and that he was adopting a cautious approach to gauging whether slowing growth and a softening labor market outweigh inflation pressures from tariffs.

VantageScore’s claims of outperforming Classic FICO rely on flawed methods and biased comparisons that overstate its impact, according to analysts from AEI Housing Center.

Weaker Day, Stronger Week

Friday ended up seeing the bond market give up some ground with most of the weakness following the ISM Services data. The headline wasn’t the culprit. Rather, resilience in the employment index and persistence in the price index did the damage. Even then, the damage was minimal in the bigger picture and not sufficient to derail what ended up being a stronger week overall.

Econ Data / Events

ISM Biz Activity (Sep)

49.9 vs 51.8 f’cast, 55 prev

ISM N-Mfg PMI (Sep)

50.0 vs 51.7 f’cast, 52.0 prev

ISM Services Employment (Sep)

47.2 vs — f’cast, 46.5 prev

ISM Services New Orders (Sep)

50.4 vs — f’cast, 56.0 prev

ISM Services Prices (Sep)

69.4 vs — f’cast, 69.2 prev

Market Movement Recap

10:01 AM No major reaction to ISM data.  MBS down 2 ticks (.06) and 10yr up 1.9bps at 4.101

12:03 PM Off the weakest levels.  MBS down 2 ticks (.06) after being down more than an eighth earlier.  10yr up 2.8bps at 4.109 after hitting 4.117 earlier.

03:34 PM Weakest levels of the day.  10yr yields up 3.8bps at 4.12 and MBS down 6 ticks (.19) on the day. 

Mortgage rates moved just a bit lower today. Relative to any other day in the past 2 weeks, it was unremarkable.  But because the range has been so narrow over that time, and because rates were already at the lower boundary of that range yesterday, it technically resulted in the lowest average rate since Fed Day on September 17th. The underlying bond market was slightly weaker. This would typically result in mortgage rates moving higher. The catch is the timing of the weakness (and yesterday’s strength).  Specifically, bonds improved yesterday afternoon but not enough for the average lender to change its rates for the day. Today’s bond market is weaker compared to yesterday afternoon’s levels, but stronger than yesterday morning’s levels (when a majority of mortgage lenders published rates).  In other words, today’s drop in rates had everything to do with yesterday afternoon’s bond market gains.  All that needed to happen this morning was for bonds not to lose too much of that ground.

The National Association of Realtors’ Pending Home Sales Index (PHSI)—which tracks contract signings on existing homes—ticked higher in August, but remains locked in the same flat, depressed range that has defined the past two years. Pending home sales rose 4.0% in August, lifting the index to its highest level since March, and 3.8% above the same month last year. That all sounds pretty good, but the chart tells a more sobering story. The overall trend hasn’t changed: contract activity continues to bounce around within a narrow band, showing only modest sensitivity to month-to-month rate shifts (which could also simply be coincidental). Regional Breakdown (Month-Over-Month)
Northeast: −1.1%
Midwest: +8.7%
South: +3.1%
West: +5.0%
Regional YoY Change
Northeast: +2.6%
Midwest: +6.7%
South: +4.2%
West: +0.2%
Three of the four regions posted solid monthly gains, led by the Midwest and West. On a yearly basis, all four regions were slightly positive, with the Midwest again the strongest performer.