The agency reconfirmed the new nonbank capital rule won’t become effective until late next year after inadvertently publishing an update with an earlier date.

The correspondent loan buyer, which does business as Essex Mortgage, wants $700,000 in damages.

Credit unions have announced 11 deals for banks so far in 2023, five short of 2022’s total.

Random Bounce Back After Random Rally

Bonds failed to do anything remarkable on Thursday as the random strength seen in Wednesday’s session was mostly erased.  There wasn’t any obvious catalyst for moderate overnight losses, nor for the additional weakness leading up to the 7yr auction.  Perhaps traders were apprehensive about the auction considering the weak results.  At that point, we had our only logical correlation of the day (weak auction = higher yields), but nearly all of the volatility was contained inside yesterday’s trading range.  

Econ Data / Events

Jobless Claims

218k vs 210k f’cast, 206k prev

Wholesale Inventories 

-0.2 vs -0.2 f’cast, -0.4 prev

Market Movement Recap

08:35 AM barely weaker overnight. Minimal reaction to data.  10yr up 2.2bps on the day at 3.811.  MBS down just over an eighth.

12:36 PM Broadly sideways ahead of 7yr auction.  10yr up 4bps at 3.829, but MBS still down just over an eighth.

03:04 PM Weaker after 7yr auction, but stabilizing now.  MBS down 7 ticks (.22).  10yr up 5.9bps at 3.848.

Yesterday was the most interesting day of the past 2 weeks, but that’s not saying much.  The past 2 weeks have been the calmest for mortgage rates in more than a year with the average lender essentially unchanged since December 14th.  Yesterday’s excitement came in the form of a more normal level of volatility.  It didn’t hurt that the volatility happened to be in the direction of lower rates. With that moderate improvement, the average lender was just barely at the lowest levels since May 2023.   Today saw a push back in the other direction, but not nearly as “normal” in size as yesterday’s drop.  As such, apart from yesterday, the average lender is still in line with 7-month lows.  

Wednesday’s session saw the only meaningful movement of the past two weeks.  Now Thursday is pushing back modestly, thus keeping the sleepy, year-end vibes intact.  What are sleepy, year-end vibes?  In the second half of December, we tend to see less volume, less liquidity, and less correlation between economic data and market movement.  Lower volatility isn’t necessarily a part of year-end vibes, but it is a higher probability bet.  With this morning’s economic data out of the way, the only scheduled event with any hope of causing a response in bonds is the 7yr Treasury auction at 1pm.  Even if it causes a reaction, it’s likely impossible that the reaction would be extreme.

The National Association of Realtors (NAR) releases two widely followed home sales reports.  Existing Home Sales measure transactions of homes other than new construction (i.e. previously owned and occupied homes).  The Pending Sales index is an advance indicator for Existing Homes.  It measures contract signings but not closed sales. Through a combination of historically low affordability and inventory, both metrics have been operating at the lowest levels in more than a decade (not including the temporary drop in pending sales seen at the onset of pandemic lockdowns). Today’s pending sales update kept the index perfectly unchanged at those long term lows. There were small regional variations as follows:
Northeast… +0.8% versus last month (down 6.4% from last year)
Midwest …. +0.5% versus last month (down 2.2% from last year)
South……… -2.3% versus last month (down 6.5% from last year)
West………. +4.2% versus last month (down 4.9% from last year)
As seen in the chart above, the sharpest deceleration in the pace of sales is likely behind us.  Recent changes have been much smaller by comparison.  NAR is hopeful for 2024, citing the recent decline in mortgage rates. Additionally, NAR’s Chief Economist Lawrence Yun noted “a lthough declining mortgage rates did not induce more homebuyers to submit formal contracts in November, it has sparked a surge in interest, as evidenced by a higher number of lockbox openings.”

If someone reports their company for tax evasion in the U.S., he or she will receive 30 percent of the amount collected. Have you ever loaned someone money and had them not pay you back? Here’s one thing that you can do to them (IRS’ 1099-C). While we’re on the general topic, despite strong retirement savings, Fidelity Investments’ Q3 2023 analysis reveals a surge in hardship withdrawals and 401(k) loans, addressing short-term financial challenges. By the numbers: 3 percent took hardship withdrawals (up from 1.8 percent in 2022). 8 percent tapped into 401(k) loans (compared to 2.4 percent last year). The silver lining? Retirement balances are on the rise, and savings rates remain steadfast. For those planning retirement, consider suggesting reverse mortgages as a game-changer. They offer an alternative, allowing access to funds without swiftly depleting hard-earned savings. If you haven’t set up reverse division at your shop, well, 10,000 people a day turn 62. Today’s podcast can be found here, and this week’s is sponsored by Gallus Insights. Mortgage KPIs, automated at your fingertips. Gallus allows you to go from data to actionable insights. If you can use Google, you can use Gallus. Hear an Interview with attorney Brian Levy on the NAR lawsuits and the implications for housing finance moving forward. Broker and Lender Software, Products, and Programs Are you a compliance nerd? A group of mortgage industry veterans has launched a software company for loan servicing that is getting a lot of attention. Keep your eyes and ears open for MESH software (Mortgage Enterprise Servicing Hub), which is their brand name for a series of software products aimed at loan servicers. The first product runs hundreds of compliance rules on loan portfolios daily, so servicers have a daily review of all loans against everything the CFPB, Agencies and States can throw at them. Look up “MESH Auditor”.

The pool is well seasoned with a weighted-average seasoning of over 10 years for almost the full pool, according to S&P Global Ratings.

A competitor is accusing the lending giant of operating a “transition desk” dedicated to poaching loan officers and stealing trade secrets.