Cardinal Financial’s utilization of the FICO alternative credit metric could help pave the way for broader use as Fannie Mae and Freddie Mac move to adopt it.

A rate drop was a common concern for some servicers during the quarter, and Ocwen recently took a step aimed at better addressing this risk in the future.

The lender had previously revealed that personally identifying information from 16.6M customers had leaked, but hadn’t offered these details.

Weird Reaction to Durable Goods, But Generally Slow and Sideways

The economic data drought finally began to dry up this morning with Durable Goods being the first remotely relevant report since last Thursday.  Results were mixed for the bond market with most of the normal line items seemingly being good for bonds. The more obscure “core capital goods shipments” was bad for bonds due to its implications for Q1 GDP.  While that’s not the GDP data coming out this week, it was still enough to reverse the microscopic gains seen in the first minute or two of the trading reaction.  Of course all of the above is much ado about nothing in the bigger picture as bonds must continue waiting for truly meaningful data.  There was similarly uneventful volatility surrounding the 7yr Treasury auction, but yields remained under the prevailing technical ceiling at 4.32%.

Econ Data / Events

Durable Goods

-6.1 vs -4.5 f’cast, -0.3 prev

Durables excluding defense and aircraft

0.1 vs 0.1 f’cast, -0.6 prev

Consumer Confidence 

106.7 vs 115 f’cast, 110.9 prev

FHFA Home Prices y/y

6.6 vs 6.7 prev

Case Shiller Home Prices y/y

6.1 vs 6.0 f’cast, 5.4 prev

Market Movement Recap

12:16 PM A hair stronger overnight, and now a hair weaker after AM econ data (not necessarily because of it).  10yr up 1.6bps at 4.299.  MBS down 2 ticks (.06).

01:46 PM Decent initial reaction to decent 7yr auction, but giving up that improvement now.  10yr up 1.2bps at 4.295.  MBS down 2 ticks (.06).

02:30 PM Weakest levels of the day with MBS down 5 ticks (.16) and 10yr up 2.5bps at 4.307.  

04:00 PM Additional selling just before 3pm, but off the weakest levels now with MBS down an eighth.  10yr up 2.8bps at 4.311 (had been up to 4.321 briefly).

One of the downsides of rates being very close to the highest levels in months is that it doesn’t take much of nudge to hit new highs.  That was ALMOST the case today as the average lender moved just slightly higher compared to yesterday’s latest levels.  The average borrower might not see much of a detectable difference in loan quotes in the past 24 hours, but it was just enough to push 30yr fixed rates very close to the highest levels since November 2023.   There were no interesting or obvious catalysts for the move, nor would we expect there to be when it comes to the level of volatility seen on almost any day of the past 2 weeks.  A top tier, conventional 30yr fixed scenario is now well into the 7% range for the average lender.  While this is still far below the multi-decade highs seen in October, it’s noticeably higher than the end of 2023 when lenders were closer to the 6.625% level. While we’ll have to wait until next week for the most important economic data (the stuff with the biggest chance of causing rates to rise or fall) the next few days provide a few supporting actors.  These economic reports could create a bit more movement than we’ve seen in the past two weeks, but that depends entirely on how far they fall from forecasts.

With apologies to those who follow closely enough to know how frequently this notion has been recycled recently, bonds continue grinding sideways as investors continue waiting on a small handful of key economic reports to suggest the next major departure from the trend.  As repetitive as it may be, this thesis easily applies to every trading day since the February 13th CPI release.  Today’s early trading is just another reminder that the average economic report is not a big enough deal to get much of a trading reaction. 
Specifically, Durable Goods came in at -6.1 vs -4.5 forecasts with a -0.3 downward revision to last month.  The core number was right on target, but also revised down sharply for last month.  Despite the seemingly good news for bonds, there was no real reaction (if anything, it was a negative reaction).  Traders could once again be apprehensive about today’s Treasury auction.  On a positive note, it’s the last auction of the week.
On another positive note (or at least a note that is not negative), yields have exited the recent uptrend (yellow line in the chart below) and are well within the sideways range between 4.19 and 4.32.

Counterpoint: there are other ways to draw trendlines.

Despite the upward path of interest rates, both the CoreLogic Case-Shiller indices and the Housing Price Index (HPI) published by the Federal Housing Finance Agency (FHFA) showed continued appreciation in home prices last year, although not at the double-digit rate seen during the pandemic and its immediate aftermath. While all indices showed annual gains, all also indicated a softening of the market in recent months.   The Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, reported a 5.5 percent annual gain in December, a half-point more than the annual gain in November. The 10-City Composite was up 7.0 percent compared to 6.3 percent the prior month and the 20-City Composite posted a year-over-year increase of 6.1 percent, up from 5.4 percent in November. San Diego reported the highest year-over-year gain among the 20 cities, 8.8 percent, It was followed by Los Angeles and Detroit, each at 8.3 percent. Portland showed a 0.3 percent increase this month, holding the lowest rank and reported the smallest year-over-year growth, however, this reversed 11 consecutive monthly losses. Non-seasonally adjusted month-over-month changes were all negative. The U.S. National Index was down 0.4 percent while the 20-City and 10-City Composites dipped 0.3 percent and 0.2 percent, respectively. After seasonal adjustment, all three indices eked out gains of 0.2 percent. “U.S. home prices faced significant headwinds in the fourth quarter of 2023,” says Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices. “However, on a seasonally adjusted basis, the S&P Case-Shiller Home Price Indices continued its streak of seven consecutive record highs in 2023. Ten of 20 markets beat prior records.

A correction to yesterday’s Commentary regarding the next holiday (Memorial Day) being two months out. Several emailed that Memorial Day is actually three months away! Overheard here in Texas the hallways at the TMBA Secondary Conference: “So if we don’t let athletes bet on games that they have the ability to influence, why do we allow Congress to invest in companies they regulate?” Here at the conference, the wise use of technology is definitely an important topic (today’s Mortgages With Millennials focuses on this), as are the desirability of better mortgage regulations rather than more regulations, how many politicians seem more focused on their reelection prospects rather than bettering things, and the role of Ginnie Mae, Fannie Mae, and Freddie Mac going forward. (Found here, this week’s podcast is brought to you 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. Today’s has an interview with Polunsky Beitel Green’s Peter Idziak on the U.S. Treasury Department’s proposed rule that would require real estate professionals involved in closing and settlements to disclose the names of people behind the anonymous limited liability companies.) Lender and Broker Services, Products, and Software “Is your loan origination system (LOS) helping you maximize efficiency and meet the needs of every borrower? Taking the time to assess the health of your operations today will help you set yourself up for success in the year ahead and beyond. Read our recent blog to learn which LOS features can have the biggest impact on your business and how Encompass® helps you maximize these important components.”

The volume of active for-sale condo listings in the Sunshine State increased by 40% last month compared to a year earlier, Redfin said.

While mortgage volume should rise this year, the government-sponsored enterprise expects slightly less activity than it did back in January.