The changes that affect how buyer broker commissions are paid go into effect on Aug. 17, but there’s much uncertainty about carrying them out, said Ryan Tomasello of KBW.

Distressed borrowers in parts of Maine, Nebraska and West Virginia are the latest to get short-term leniency on government loan payments due to disasters.

Despite the surge of inventory, the number of available homes is still below pre-pandemic levels, while price movements show wide regional variations, ICE Mortgage Technology said.

The Consumer Financial Protection Bureau Monday completed its rule establishing a nationwide database for a wide swath of financial companies — including payments companies, debt collectors, auto lenders — that have faced regulatory or legal penalties for consumer-related infractions.

Forty-four percent of respondents said they expect Trump to seek to to politicize the central bank or limit its power if he returns to the White House. Overall, they put a probability of 40% on the Fed losing its autonomy under a second Trump administration.

Mortgage rates had a rough go of it in the 4 days following Memorial Day weekend (i.e. last week). To be fair, the tough part was limited to the first two days.  Thursday and Friday both helped to undo some of that damage, but the average lender was still at higher levels compared to the week before the holiday weekend. That has changed today.  The bond market (which dictates rate movement) was hungry for more economic data to provide directional cues and rates readily responded to today’s top offering.  The widely-followed ISM manufacturing index came out weaker than the median forecast, both in terms of overall activity and in the component that measures price pressure.  Prices are still elevated according to this data, but they made a nice move in the other direction, thus putting an end to a disconcerting spike that had dominated the year so far. Sharp improvements in the bond market led to another nice drop in mortgage rates.  The average lender is now back to the lowest levels in nearly 2 weeks, but not yet back to the recent lows seen on May 15th.

Time flies. It was four years ago many of us were watching the mess called “Tiger King. Summer is upon us again. “People are complaining about this being the hottest summer in the last 150 years. I’m more of a glass half full kind of guy. I’m thinking of it as the coldest summer in the next 150 years!” Whether or not you believe in climate change, past poor forest management practices, or that the severity of storm damage has increased, is of no consequence. What is of consequence is that insurance companies, government agencies (including Freddie and Fannie), large investors, servicers, and the rating agencies have either changed their pricing, or will, and that impacts your borrowers. (The current STRATMOR blog is “Catastrophe and Climate Risk Is Only Increasing”.) Homeowner’s insurance is just one example: I’ve heard from plenty of LOs, “They could afford the mortgage payment, but the monthly insurance premium killed the deal.” And how do you think the thousands of homes lost in wildfires, tornadoes, hurricanes, and flooding impact the inventory situation? (Today’s podcast is found here, and this week’s are sponsored by Visio Lending. Visio is the nation’s premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Hear an interview with Carrington’s Steven Winokur on an overview of the non-QM space, evolution, and investor appetite. Software, Products, and Services for Lenders and Brokers

Solid Gains Despite MBS Underperformance

US Treasuries had a tough time digesting auction supply last week, but have been nothing short of enthusiastic since then.  This isn’t to say the auction cycle was the biggest market mover in the past week.  After all, there were logical reactions to economic data.  Rather, we’re attempting to reconcile the underperformance in MBS at the start of the week.  In addition to the ebbs and flows surrounding the auction cycle, outperformance of the long end of the yield curve also commonly causes a bit of a lag in MBS.  As for today’s data, it was all about ISM Manufacturing which came in with a weaker headline and a lower “prices paid” component. 

Econ Data / Events

S&P Global Manufacturing PMI

51.3 vs 50.9 f’cast, 50.0 prev

ISM Manufacturing PMI

48.7 vs 49.6 f’cast, 49.2 prev

ISM Prices Paid

57.0 vs 60.0 f’cast, 60.9 prev

Market Movement Recap

09:46 AM No major reaction to PMI data.  MBS up 3 ticks (.09) and 10yr down 3.8bps at 4.46.

10:06 AM 10s are now down 8bps on the day at 4.418 and MBS are up at least 6 ticks (.19)–possibly more by the time liquidity improves.

03:04 PM MBS perfectly flat at highs, up a quarter point.  10yr near best levels, down 9.5bps at 4.403.

As far as economic data goes, there’s CPI, NFP, and then there’s everything else.  In the “everything else” category, a small group of 3-6 report vie for relevance and impact on any given month.  The ISM PMIs are almost always in the running and are certainly one of the more consistent upper-2nd-tier releases in terms of bond market impact.  This morning’s manufacturing PMI is no exception.  With both the headline and the inflation components coming in weaker than expected, it’s been an easy trade for bonds so far this morning with MBS adding about a quarter point and 10yr yields down 9bps at 4.41% in the 10 minutes after the data came out.

Although experts are predicting an active season, actual damages could be lower depending on how many storms make landfall and where, Corelogic reported.