“If you know someone who has an intense fear of store Santas, would you say they were suffering from Claus-trophobia?” For individuals or companies, do you have a fear of being hacked? Under the heading of “It’s not if, but when…” First American “has experienced a cybersecurity incident. In response, we’ve taken certain systems offline [like the main website above] and working to return to normal business operations as soon as possible.” First American owns First American Title and also owns ACI, one of the largest appraisal software providers. This outage stopped appraisers using ACI from having the ability to upload appraisal reports to FLS. Some lenders acted quickly. Fairway Independent, for example, stated that if a Fairway borrower’s closing was negatively impacted, corporate would cover any hotel, meal, or storage expenses incurred by their clients. (Today’s podcast can be found here, and this week’s is sponsored by Lender Toolkit’s AI-powered AI Underwriter and Prism borrower income automation tools. Get loans approved in under two minutes. By providing lightning-fast underwriting decisions, your market reputation with borrowers and Realtors will soar.) Broker and Correspondent (TPO) Products “AFR Wholesale® is excited to present a unique opportunity that benefits you and your clients: the Jingle Bell Float Down. From now until 12/29/2023, lock your loans with us and enjoy the security of our special offer. With the Jingle Bell Float Down, you can lock your loan for up to 30 days. When the loan goes for final review, we’ll adjust to the current day’s rate – ensuring you get the best deal without falling below your locked price. This offer applies to all AFR’s loan programs and is available through the Correspondent Non-Delegated, Correspondent Table Funded, and Brokered Channels. *Please note, some exclusions do apply. Ready to lock in your loans? Visit the AFR Loan Center now! To learn more about this exciting opportunity, connect with AFR: visit here, email us, or call: 1-800-375-6071. Don’t miss out on this special offer… Contact AFR today!”

The credit grader lowered Brookfield Property’s score by two steps to BB from BBB-, the lowest level of investment grade, and the rating remains on negative outlook.

The title company was also attacked in 2019 and joins Fidelity National and Mr. Cooper among recent victims.

FHA-insured and Department of Veterans Affairs-guaranteed mortgages bear watching next year, according to Intercontinental Exchange.

The American Bankers Association requested that President Joe Biden tell Treasury Secretary Janet Yellen to study the impact of more robust bank regulation.

Recent pullbacks in interest rates have lowered monthly payments, but amounts needed still make home buying unaffordable by most standards, according to new reports.

I like to write at least a small amount every day to recap mortgage rate movement.  After all, they change every day by at least some small amount and on the rare occasions where they’re perfectly flat, there’s usually something interesting to consider on the horizon. This particular week is making it tough to stick to that routine.  Rates have been effectively unchanged on 5 out of the past 5 business days with the average top tier 30yr fixed rate holding in a range of 6.64 to 6.66%.  Notably, we received some feedback that called those rates into question over the past 5 days.  It wasn’t widespread, but it was vitriolic at times.  In cases where people weren’t interested in objectivity, or were unwilling to accept that their own rates were not coming down as quickly as the broader market, I could only advise them to wait and see where Freddie Mac’s weekly survey came out (spoiler alert: 6.67%). What does that rate mean though?  We get that question a lot.  A top tier, index rate is just that: top tier.  There’s nothing above it in terms of qualifications.  It is the rate with the lowest amount of penalization for things like loan-to-value ratio or credit score (or property type, or occupancy, etc.).  It is NOT the lowest rate offered.  In our case, it’s the average offering in the competitive range of lenders.  If our index is at 6.66% as it is today, there will be multiple lenders offering 6.5%, and a few down in the 6.25-6.375% range.  There will also be lenders at 6.875-7.125%.  On scenarios with less than 20% down or credit scores under 780 (or other details that result in pricing “hits”), you would also expect to see a higher rate than seen in the big picture indices.

Was The Fed Pivot a Surprise?

There’s been quite a bit of discussion in the news and on MBS Live surrounding a few interesting questions regarding the Fed’s apparent pivot/shift on the rate outlook.  Does the Fed think about politics?  Was the pivot a surprise?  Was it justified?  If it’s an unjustified surprise, is it therefore political?  etc.  Because today’s trading session offered so very little in terms of market movement to analyze, we’ve instead turned our attention to addressing those more interesting questions in today’s recap.

Econ Data / Events

Jobless Claims

205k vs 215k f’cast, 203k prev

Philly Fed Index

-10.5 vs -3.0 f’cast, -5.9 prev

Q3 Final GDP

4.9 vs 5.2 f’cast
deflator 3.3 vs 3.5 f’cast

Market Movement Recap

08:38 AM unchanged to a hair weaker overnight, but now stronger after data.  10yr down 1.5bps at 3.838.  MBS up 2 ticks (0.06).

10:12 AM Gains turning to losses.  MBS down 3 ticks (.09) and 10yr up 2.8bps at 3.881.

01:26 PM weakest levels of the day.  10yr up 4.8bps at 3.901. MBS down 7 ticks (.22).

02:52 PM Off the weakest levels.  MBS down only 3 ticks (.09) and 10yr up 4bps at 3.894.

Yesterday’s trading session saw bonds improve in the afternoon despite a complete absence of overt justifications.  That’s not to say they don’t exist–simply that they’re not the sort of cut and dried factors like scheduled economic releases, Fed comments, or viral newswires.  Today’s session is seeing the opposite move for reasons that are just as mysterious.  Neither example has been very big, so they’re not worth losing sleep over.  More importantly, this is exactly the sort of random volatility we expect to see in the 2nd half of December.  For many traders, these two days have been the last two days of the year.  The net effect of the past two days is that rates have been coasting along a floor of 3.89% in terms of 10s and haven’t moved more than a few bps in either direction. 

“What do you call a Christmas wreath made out of $100 bills? Aretha Franklins.” It’s cutting-edge humor like this that keeps readers coming back for more, right? Or astronomy tips, as today is the Winter Solstice, with the least amount of sunlight in the Northern Hemisphere and a little music to go along with it. “The winter is here again, oh Lord. Haven’t been home in a year or more.” (Look at that hair!) Lenders and vendors are hoping that the decline in rates keeps the “winter” away from lending, and holds more salary cuts, layoffs, and furloughs at bay. Mortgage banking is not alone in expanding automation and trying to save money. Do you think that you deserve a lower price for checking out of a store yourself and not using a paid clerk? Many do. The number of people who work as cashiers dropped from 1.4 million in 2019 to 1.2 million today, and over the next decade the BLS projects an additional 10 percent decline. (Today’s podcast can be found here, and this week’s is sponsored by Lender Toolkit’s AI-powered AI Underwriter and Prism borrower income automation tools. Get loans approved in under two minutes. By providing lightning-fast underwriting decisions, your market reputation with borrowers and Realtors will soar. Listen to an interview with Hometap’s Dan Burnett on record home equity levels and how Americans can best leverage them.) Lender and Broker Products, Programs, and Services “With increased regulatory focus on property-valuation bias, lenders need robust risk-management processes in place. The recently released interagency proposals on AVM-quality control and ROV-process guidance are designed to prevent valuation bias and help ensure industry stakeholders follow fair-lending practices. Watch our complimentary on-demand webinar to learn how you can prepare, and implement the tools needed to support the proposed changes.* Our experts discuss how to identify potential bias in valuations, ways to mitigate bias risk, how to monitor AVM and appraisal compliance with fair-lending requirements, and more. Watch this timely and important webinar here. *Check with your compliance or legal department for information on complying with applicable law.”