A quick note for anyone coming to the California MBA’s Western Secondary via LAX and taking a ride share to the venue: grab the lime green shuttle bus and don’t even try to request a ride until you reach the pick-up area. At roughly 700, the attendance of the WS, 26 miles across the sea from Santa Catalina, is well above last year’s. Several of the sessions discuss economics, and interest rates of course, despite everyone’s inability to predict them accurately and with consistency. There’s the old story about the economist with his head in the oven and his feet in the freezer and saying “on average” he felt great. Some ask, “Why cut interest rates? Does the U.S. economy need stimulation?” Others point to unemployment creeping up, inflation coming down, and certain economic measures slightly worsening. Last week’s podcast interview with the MBA’s Chief Economist, Dr. Fratantoni, is definitely worth a listen. Time will tell. (Today’s podcast is found here and this week’s is sponsored by Candor. Candor’s authentic Expert System AI has powered more than 2 million flawless, hands off underwrites. Every credit risk decision Candor makes is backed by a Warranty, eliminating repurchase worries. Hear an interview with Broker First Funding’s Carla Meyers on the inner workings of mortgage company marketing departments.) Lender and Broker Software, Services, and Products Assumable mortgages are making a resurgence in today’s market conditions – and two new fee changes at the federal level create an unexpected opportunity for servicers. In a new blog, the experts at ICE Mortgage Technology detail what’s changing with those fees and the FHA and VA regulatory requirements that servicing teams must be ready to meet. The blog also explores how servicers can find a competitive edge if they are prepared to service assumable mortgages. Read the new blog here to see how you can meet the moment and make the most of these recent fee changes.

The changes laid out in the agreement are technical, revolving around paperwork consumers complete at the beginning of the buying or selling process, and they add new wrinkles to an already complicated undertaking.

Vice President Kamala Harris outlined a raft of populist economic proposals in her first major economic speech since securing the Democratic presidential nomination, including some aimed at lowering housing costs and boosting supply.

Their second quarter pace trailed pandemic highs but still accounted for one of every six homes sold nationwide.

Loandepot and Mr. Cooper said they’ve spent tens of millions of dollars this year following recent, major hacks.

A sizable decline in the South may have reflected the impact of Hurricane Beryl.

The FHA share of new-home loan applications also increased to a new record high, according to the Mortgage Bankers Association.

Mortgage rates had a much calmer week this week compared to the previous 2.  The average top tier 30yr fixed rate held a fairly narrow range between 6.49 and 6.58, with Friday’s latest move being a decent drop back to 6.56%.  Contrast that 0.09% range to the previous two weeks, which saw ranges of 0.29% and 0.41%!   The volatility is a byproduct of the market honing in on the likely path of economic data heading into the September rate announcement.  The market is 100% convinced the Fed will cut by at least 0.25%.  Earlier in the month, a majority of traders thought it would a 0.50% cut and some were even calling for an immediate emergency cut of 0.75%. That drama was based on the lackluster jobs report at the beginning of the month.  Since then, the weekly jobless claims updates (separate data) have painted a less dire picture for the labor market–an important development considering the Fed is increasingly comfortable with inflation progress and instead focusing more attention on jobs.  In the coming week, investors don’t have nearly as much data to digest as the past 3 weeks, but there’s an important speaking opportunity for Fed Chair Powell on Friday morning at the Jackson Hole Symposium. One day earlier, there will be another chance for weekly Jobless Claims numbers to either stick to the same old script or to suggest that things may indeed be shifting (something that looked like it might have been happening 4 weeks ago as seen in the red line in the following chart).

Calmer Week, But Are Storms Brewing?

By the time this week’s CPI data came in as expected, it was highly unlikely that the present week would live up to the volatile legacy of the previous two weeks. Thursday’s jobless claims / retail sales combo did its best to stir the economic pot, but bonds weren’t interested in panicking.  Treasuries followed European yields lower overnight and then drifted back toward unchanged levels before ending the day in stronger territory.  All told, the entirety of this week’s trading session would fit inside NFP Friday from 2 weeks ago… Next week’s focus is on Fed Chair Powell in the event he offers any clarification or setting of the stage for the September rate cut.

Econ Data / Events

housing starts

1.238m vs 1.33m f’cast, 1.329m prev

building permits

1.396m vs 1.43m f’cast, 1.454m prev

Consumer Sentiment

67.8 vs 66.9 f’cast, 66.4 prev

Consumer Inflation Expectations

unchanged vs previous

Consumer Current Conditions

60.9 vs 62.7 prev
lowest since Dec 2022

Market Movement Recap

09:49 AM Modestly stronger overnight but giving up some gains early.  MBS up only 1 tick (.03).  10yr down 1.7bps at 3.894.

12:13 PM Some additional weakness after consumer sentiment data.  MBS unchanged and 10yr down less than half a bp at 3.907.

01:48 PM Bouncing back a bit.  MBS up 3 ticks (.09) and 10yr down 2bps at 3.89

05:40 PM Heading out near the best levels with MBS up 5 ticks (.16) and 10yr down 3bps at 3.881

On a sad note, entrepreneur “Famous Amos” passed away a few days ago. Cookies are a major food group for me, and here was a fellow who had fun and made money providing a simple product and helping consumers! Home loans sure aren’t simple, but here in Michigan, at the MMLA, and across the nation there are a lot of mortgage people focused on helping consumers too. The talk in many places revolves around continuing to lower the cost to produce a loan, how certain exceptions should be made to the LO comp rules (for bond programs, for instance), and how the owners of servicing are quick to refinance borrowers. The folks attending the MMLA conference from Illinois are also watching a story unfold involving Ishbia. No, not Mat. His brother Justin; “A Chicago billionaire is ruffling feathers in a ritzy Lake Michigan neighborhood after he razed shorefront bluffs on his property to make way for an enormous $44 million mega-mansion. Justin Ishbia, 46, who co-owns the Phoenix Suns NBA team with his brother Mat, is already hard at work constructing his new home in Winnetka – which has seen the bluffs on his 3.7-acre property completely leveled and all greenery removed.” I know, not mortgage-related, but the activities certainly highlight the rights of property owners. (Today’s podcast is 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 Realfinity’s Luca Dahlhausen on the dual licensing future that potentially awaits originators and real estate agents.)