A new generative artificial intelligence tool from Ncontracts can assist in summarizing lengthy agreements with fintech partners and identifying important clauses.

The volume of loans coming due swelled 40% from an earlier estimate by the Mortgage Bankers Association of $659 billion, a surge attributed to loan extensions and other delays rather than new transactions.

State distribution of the Treasury funds for distressed homeowners is now reportedly at least two-thirds complete.

Heartland Tri-State Bank, which failed after its CEO allegedly embezzled money to fund cryptocurrency investments, had received $21 million in advances from the Federal Home Loan Bank System.

January volume increased 36% compared to the month before and the annual decline in activity was the lowest in almost two years, Optimal Blue said.

No Way to Know What CPI Looks Like Until We See It

Monday was very much a placeholder in the grand scheme.  The same could be said for most of last week as well.  As the Fed and the market wait to refine their sense of the rate trajectory, there are only so many reports capable of setting the tone for weeks on end.  CPI is one of them and tomorrow’s installment will be the first true big ticket data since the jobs report.  It’s always tempting to imagine that there’s some way to reliably predict a slightly stronger or weaker result, but that same sentiment is shared by many other market participants and professional forecasters. The net effect is a market that’s priced to perfection based on the forecast consensus.  Translation: it’s anyone’s game on Tuesday morning. We know the reaction could be big.  We do not know the direction.

Market Movement Recap

10:09 AM No data or market movers so far.  MBS up 1 tick (0.03).  10yr up 0.4bps at 4.181.

11:58 AM Some weakness into 11am, but stabilizing now.  MBS and Treasuries both right in line with last update.

02:27 PM Gains into 2pm and pulling back a bit now.  MBS up 3 ticks (.09) and 10yr down 1.1bps at 4.166

After spiking to the highest levels in over a month last Monday, rates have held eerily steady.  To be fair, the steadiness started the following day after a moderate recovery that took the average conventional 30yr fixed rate from just over 7% to just below.   To put all of the above in perspective, that rate jumped by 0.41% from Thursday, Feb 1 though Monday, Feb 5.  The following day saw a decent correction of 0.08%, but the day over day change has been limited to 0.02% since then. If any event on the calendar has the power to change this calm, sideways slide, it’s Tuesday morning’s Consumer Price Index (CPI).  This is the biggest inflation report of any given month and one of the two biggest economic reports (the other being the jobs report that started that 0.41% jump just over a week ago). Whether CPI swings as hard as the jobs report remains to be seen.  All we can know ahead of time is that it carries the potential to send rates quickly higher or lower. Keep in mind that the market already knows 11 out of the 12 months used for any annual calculation.  It will not be a surprise to see headline inflation drop from 3.4% to just under 3%, nor will it be a surprise if core inflation drops to 3.7% from 3.9%.  The fact that 3.7% is still much higher than the 2.0% target will also not be news.  The focus is mainly on the “core” month over month number, currently expected at 0.3%. If that number comes in at 0.2% or lower, rates will likely improve.  0.4% or higher and rates will likely jump.

Why should lenders and vendors care about servicing? (STRATMOR’s current blog is titled, “It’s 2024: Do You Know Where Your Servicing Is?”) Not only do servicing values fluctuate, which impacts the prices that borrowers see, but servicing is a huge touchpoint with consumers and therefore garners the attention of regulators like the CFPB, headlines, and the courts. The latest example is a California couple suing Specialized Loan Servicing, LLC for negligence that led to a “lost home and destroyed life.” Of course, anyone can sue anyone at any time, but the multi-count lawsuit against Specialized Loan Servicing, LLC alleges breach of contract, theft, and several other counts, accusing SLS of negligence as the mortgage servicer added a quarter of a million dollars to the couple’s mortgage, leading to their “financial and personal ruin.” (Today’s Commentary podcast can be found here and this week’s is sponsored by Lender Toolkit and its AI-powered AI Underwriter and Prism borrower income automation tools. By providing lightning-fast underwriting decisions, your market reputation with borrowers and Realtors will soar, which means more repeat and referral business. Hear an interview with Jeremy Potter and Marvin Chang on broader and more flexible tools for homeowners to navigate our fast-paced and modern economy.) Lender and Broker Software, Products, and Services What’s better than a free consultation from a mortgage tech expert? Getting the advice of six. That’s what’s in store if you join “Strategies to Master the Market Now with the Right Mortgage Technology,” next Wednesday, Feb. 21 at 2 pm ET. This free webinar, co-sponsored by Floify and Truv, Christy Soukhamneut, chief lending officer at UFCU; Raven Johnson, VP business systems at Legacy Mutual Mortgage; Craig Ungaro, COO AnnieMac Home Mortgage; features Jodi Hall, founder & CEO of DandaRoad, LLC; Richard Grieser, vice president of marketing at Truv; and Sofia Rossato, president & GM of Floify. Click here to register.

Have you heard about the Consumer Price Index (CPI)?  We can’t shut up about it, largely because there’s not much to talk about in terms of scheduled data/events save for a few other contenders such as the jobs report or Fed announcements.  But jobs and the Fed are about a month away while CPI pops tomorrow morning.  The timing is interesting considering recent weakness in the bond market.  Yields are right up against 2024’s ceiling, or perhaps it’s a wall?  Either way, it’s the last line of defense against the bad guys and even if the battle looks lost today (i.e. if yields drift up and over 4.19%), it won’t truly be decided until tomorrow. 

In a surprise move this week, banking veteran Sandro DiNello was appointed executive chairman of the embattled Long Island-based company, whose stock plummeted in the face of questions about its financial health.