Ahead of Sprout’s bankruptcy, at least $27 million was transferred from its accounts to entities owned by Michael Strauss and accounts for his family, a new filing alleges.

The world’s largest credit union said that Dietrich Kuhlmann, a retired rear admiral and currently the institution’s chief operating officer, would succeed retiring CEO Mary McDuffie on March 1.

Rates Testing Ceilings After Bond Auction and European Weakness

Bonds managed to start the day in modestly stronger territory, but it’s just as fair to say “sideways.”  Things didn’t start moving until after 10am when European bond market weakness spilled over to Treasuries.  Yields drifted several bps higher into the 20yr bond auction and popped to the highs of the day after the lackluster auction results came out.  The 4.32+ ceiling remained intact despite a bit of volatility surrounding the release of what was a mostly uneventful reading of the Fed Minutes.  If the proof is in the pudding, consider that Treasury volumes were much higher after the auction than the Fed minutes, and the latter only caused about 1bp of movement.  Translation: the Fed Minutes contained no surprises. 

Market Movement Recap

09:57 AM Modestly stronger overnight despite weakness in EU bond market.  10yr down half a bp at 4.27.  MBS up 2 ticks (.06).

12:06 PM 2 mini waves of selling into the PM hours.  MBS down 5 ticks (.16) and 10yr up 2.8bps at 4.303.

01:07 PM Sloppy 20yr auction.  10yr up 4.8bps at 4.323.  MBS down a quarter point.

02:49 PM Sideways after Fed minutes, but losing some more ground into 3pm close.  10yr up 5.4bps ta 4.329.  MBS down 9 ticks (.28).

In the short term, mortgage rates haven’t experienced any extreme movement since earlier in the month, but a slow trickle of weakness is starting to add up.  As of last Friday, the average 30yr fixed rate was as high as it’s been since late November.  There was a modest recovery yesterday, and it has now been erased by today’s market movement. In other words, the average lender is now back in line with last Friday’s rates–the highest since November 30th, 2023. That’s the bad news.  The good news is that those rates are still almost a full percent lower than the long-term highs seen in October. Good, bad, or indifferent… where we’re going is more interesting than where we’ve been.  That itinerary is constantly evolving based on incoming economic data and other events.  The biggest influences are still several weeks away.  We’re just watching fine-tuning adjustments in the meantime. 

There’s an old LO joke, telling their client, “When you’re buying a house, be sure to do it with a significant other, and make sure that one of you has good credit. That’s why it’s called ‘significant’ other: sign-if-i-can’t.” Everyone in our biz knows that owning property is a great way to build wealth, although between elevated inflation, stubborn mortgage rates, and general economic uncertainty (one can argue that the future is always uncertain, right?), it may not feel like the right time to plunge into the housing market. But every LO should know that if past patterns hold true, inflation can actually boost homeownership and people who are living through this time may be more inclined to buy a house in the future! A fine selling point when an originator is speaking with a potential client. (Found here, this week’s podcast is sponsored by Truv. Truv lets applicants verify income, employment, assets, insurance, and switch direct deposits. Unlock the power of open finance, with Truv. Today’s has an interview with Sagent’s Uday Devalla and Perry Hilzendeger on new servicing platforms and technology.) Lender and Broker Services, Products, and Software On Jan. 1, 2024, ICE’s dedicated technology experts rang in the new year by helping 92 mortgage and home equity clients successfully complete all month-end, quarter-end and year-end processing. That’s nearly 52 million active and inactive loans serviced using the industry-leading MSP® loan servicing system processed in under 24 hours. Read more from the mortgage technology experts at ICE to learn what goes into this critical yearly regulatory process and see how ICE helps its clients meet reporting requirements.

Bonds had a generally constructive day to start the holiday-shortened week yesterday, with yields rallying in the morning and ultimately holding modest gains after some afternoon weakness.  Today looked to be off to a similarly constructive start, but the selling pressure has shown up a bit earlier.  Who’s to blame? The easiest scapegoat is simply the bigger selling pressure in Europe where Bund yields are up 7bps from the lows. 

If we want to jump to conclusions, we could also consider some trepidation ahead of this afternoon’s Fed Minutes, but it would still be a surprise to see any new ideas brought to light in that venue.  Blame aside, none of today’s movement matters in the bigger picture as long as we remain inside the “triangle” that’s been forming between the 4.32 highs and the uptrend of the past two weeks.

Higher interest rates continued to depress mortgage applications last week. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, decreased 10.6 percent on a seasonally adjusted basis during the week ended February 16. The volume declined 8.0 percent before adjustment. The Refinance Index declined by 11.0 percent compared to the previous week but eked out a 0.1 percent gain from the level one year earlier. Refinance applications accounted for 32.6 percent of the total, down from 34.0 percent the previous week.   [refiappschart] The seasonally adjusted Purchase Index dropped 10 percent week-over-week and was down 6 percent before adjustment. Purchase applications lagged the same week in 2023 by 13.0 percent.   [purchaseappschart] “Mortgage rates moved back above 7 percent last week following news that inflation picked up in January, dimming hopes of a near-term rate cut,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Mortgage applications dropped as a result with a larger decline in refinance applications. Potential homebuyers are quite sensitive to these rate changes , as affordability is strained with both higher rates and higher home values in this supply-constrained market.” Other Highlights from MBA’s Weekly Mortgage Applications Survey
Loan sizes were changed only slightly, to an average of $381,800 for all submissions and $440,700 for purchase mortgages.
The FHA share of applications decreased to 13.2 percent from 13.5 percent and the VA share decreased to 12.1 percent from 13.3 percent. USDA applications accounted for 0.5 percent of the total.
The average contract interest rate for conforming 30-year fixed-rate mortgages (FRM) increased to 7.06 percent from 6.87 percent, with points inching up to 0.66 from 0.65.
Thirty-year FRM with jumbo loan balances had a rate of 7.16 percent with 0.45 point. The prior week the rate was 7.00 percent with 0.39 point.
The average rate for FHA-backed 30-year FRM jumped to 6.91 percent from 6.68 percent and points increased to 1.03 from 0.89.
Fifteen-year FRM saw an increase of 8 basis points to an average rate of 6.61 percent while points dropped to 0.77 from 0.94.
The average contract interest rate for 5/1 adjustable-rate mortgages (ARM) increased to 6.37 percent from 6.30 percent, with points increasing to 0.71 from 0.60.
The ARM share of activity increased from 7.0 to 7.4 percent of total applications.

Significantly more Americans own a home now than a decade ago, but the disparity between Black homeownership rates and those of other racial and ethnic groups has grown wider, according to the National Association of Realtors.

The notorious group also allegedly targeted Academy Mortgage and Fidelity National.

Cenlar’s chief digital officer shares his story while weighing in on AI, vendor consolidation and cybersecurity.