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says its prior amicus brief, which cited the Fair Debt Collection Practices Act and sided with borrowers, was no longer valid.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

Last week’s overseas headlines raised questions about about a spillover from volatility in the Japanese bond market to US yields. At issue: attention-grabbing newswires regarding a surge in long-term Japanese yields. Now today, overnight headlines made for a decisive correction in Japanese yields–one that’s being credited for opening strength in Treasuries. Is it warranted?  Maybe… Whether it is or isn’t, the movement in Treasuries is insignificant  by comparison. Yields continue operating in the same range, although they are now arguably exiting the prevailing uptrend of the past few weeks.

As for the Japan effect, here’s the case being made for today:

That looks pretty compelling, but if we zoom out, we can see the much larger movements in JGBs (Japanese government bonds) having absolutely zero correlation with Treasuries. 

Bottom line: we’d take the Japan effect with a grain of salt–especially on a holiday-shortened week.

The 30yr fixed mortgage rate index spent 3 consecutive days over 7% last week–the first time that’s happened since February.  Rates have generally been in a more volatile, more elevated range for the past 7 weeks compared to the narrow range seen in March. To put that in perspective, the difference between these two ranges is only 0.125%–not the biggest deal. Another perspective is that any given mortgage borrower may have seen their rate quote jump by 0.50% if they had unlucky timing.  Today’s improvement was partially driven by overnight bond market movement with investors reversing some of the defensive trades seen last Friday.  Later in the morning, the Consumer Confidence Index was stronger than expected, but one of its components raised concern over the labor market. Weaker labor conditions tend to push rates lower, all else equal. The underlying bond market improved after that and several mortgage lenders issued revised rates in response.

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.