The mortgage lender lost its license two weeks after Connecticut also axed its ability to originate loans, following an investigation that questioned the company’s financial wherewithal.

Government lending leaders also addressed efforts to increase housing stock and affordability in a discussion at the Mortgage Bankers Association’s annual conference.

As I head from Denver to the Bay Area early this morning, I thought to myself, “Why are corn farmers great at eavesdropping? Because they have ears everywhere!” Heard in the hallways in Denver. “It sure has become obvious that what got us ‘here’ isn’t going to get us ‘there.’” “FHA delinquencies are truly increasing and are often correlated to the unemployment rate. So, if unemployment begins creeping up, we know what’s next. Forbearance and workout trends aren’t doing well either.” “You gotta figure that any middle-aged white guy walking within 5 blocks of the convention center is in this industry.” (That said, I definitely am seeing some welcome diversity with age, sex, and heritage!) “I am sure glad that my company has servicing. We couldn’t have made it through the last year or two without it.” “I wouldn’t be surprised, if rates stay around where they are for a while,” that we’ll see further cutbacks and/or mergers & acquisitions.” (Today’s podcast can be found here, and this week’s is sponsored by Truv. Truv lets applicants verify income, employment, assets, insurance, and switch direct deposits. Unlock the power of open finance, with Truv. Hear an interview with FundingShield’s Adam Chadhaury on the latest wire and title fraud risks as well as best practices for risk mitigation.) Lender and Broker Software, Services, and Products Champions Funding extended a heartfelt thank you to everyone who visited its booth at NAMB National in Las Vegas last week. Attendees left with confidence, knowing the lender has all their Non-QM bases covered, especially with the introduction of two new products designed to knock it out of the park for loan originators and their borrowers. In November, Champions Funding will unveil new and expanded loan programs including Foreign National borrowers with Full and Alt-Doc options, simplifying the process and broadening opportunities for international clients in the U.S. real estate market. Become an approved broker partner with Champions Funding to get access to the hottest products in the Non-QM. Email us to get connected with an Account Executive today.

The jobs report that came out at the beginning of October was a big wake up call for interest rates.  Up until then, the prevailing belief was that the labor market was progressively softening and perhaps at risk of softening too quickly.  The Federal Reserve had singled out the jobs market as an indicator that would dictate the pace of the rate cut cycle that had begun just 2 weeks earlier.   Much of the Fed’s decision to opt for a 0.50% cut as opposed to a 0.25% cut had to do with the previous 2 jobs reports (the one that came out in early August and September).  Both were markedly weaker.  Taken together, they tipped the scales for the Fed.   The early October jobs report not only came in much stronger than expected, but it also revised the previous 2 reports quite a bit higher.  That single moment of economic data completely changed the tone for interest rates, arguably contributing to just as much of the pain we’ve seen in October as any other factor.  The only thing that comes close would be pre-election trading. The next jobs report comes out this Friday morning, but this week has other economic reports that often serve as anecdotes.  Today’s ADP employment report came out much stronger than expected this morning, suggesting forecasters may be undershooting expectations for Friday’s job count. The underlying bond market (bonds dictate rates) maintained as much composure as we could have hoped for in light of the data. There was some weakness in response, but not enough to make for a big change in rates versus yesterday.  Consider this a calm before two storms with the first being Friday’s jobs report reaction and the second being next week’s election-related market volatility.  Either event has the potential to be very good or very bad for rates.

Decent Showing in Light of Stronger Data

Bonds lost ground today, but not as much as one might expect given the 233k vs 115k result in the ADP Employment data.  Granted, ADP is a notoriously imperfect predictor of the NFP number that follows 2 days later, but that never stops markets from reacting on occasions like this.  So what stopped them today?  Some combination of month-end trading, a favorable report on new Treasury auction amounts, “bigger fish to fry,” and perhaps the fact that payroll counts are being taken with a grain of salt due to weather-related disruptions in September.  Ultimately, bonds did manage to lose a bit of ground, but not until well after the morning’s econ data reaction window had passed.  

Econ Data / Events

ADP Employment

233k vs 115k f’cast, 143k prev

GDP Q3

2.8 vs 3.0 f’cast, 3.0 prev

Core Q3 PCE price index

2.2 vs 2.1 f’cast, 2.8 prev

Market Movement Recap

08:40 AM Slightly stronger overnight and weaker after data.  MBS down 5 ticks (.16) and 10yr up 1bp at 4.264

10:32 AM Nice recovery into the 10am hour with 10yr now down 1.7bps at 4.238 and MBS up 1 tick (.03).

01:16 PM less volatility now.  Modest weakness remains.  MBS down 3 ticks (.09) and 10yr up half a bp at 4.259

It’s been an interesting morning for the bond market so far.  ADP employment came in much stronger than expected.  15 minutes later, Q3 GDP was slightly weaker (2.8 vs 3.0) but with higher core inflation seen in core PCE prices (2.2 vs 2.1).  This is the only Q3 GDP report that is a relevant market mover because the next two will be exceedingly stale by the time they come out.  Bottom line, between ADP and PCE, bonds had a reason to sell and that’s what they did… at first. A few short minutes after GDP, 10yr yields turned around and moved to the lows of the day.  This is a bit deceptive considering what’s going on in the short end of the yield curve where 2yr Treasuries are losing much more than 10s are gaining. 
Moreover, as the morning progresses, 10s are moving into weaker territory (just not as weak as 2s).

Any time you see a big discrepancy between 2 and 10yr trading, consider that the market may simply be focusing on something that is impacting Fed rate cut/hike odds.  That is arguably the case this morning, with the data causing traders to pare bets on the Fed’s rate cut trajectory–not so much for the next meeting or two, but more so for the first half of next year.

The lawmaker said leadership on the House Financial Services Committee is supportive of the legislation, which would limit the ability of credit-reporting agencies to sell homebuyer information to financial service providers.

The Dallas-based bank swung to a loss in the third quarter after reclassifying a large bundle of multifamily loans that it plans to offload under a recently announced strategy pivot.

August’s Corelogic S&P Case-Shiller Home Price Index was down 0.13% versus July, affected by tougher housing markets in the South and West.

Treasury Secretary Janet Yellen announced an initiative aimed at enhancing financial inclusion. The plan includes calling on U.S. banks to participate in upholding fairness and expanding consumer financial access.