The lender has shed over $1 billion in annualized expenses and said it retains enough capital to sustain operations for the next several years.

The program helped more than 23,000 consumers establish credit scores in its first year through partnerships with three fintechs, all of which were chosen to renew their participation.

If a federal budget impasse re-emerges, it may increase insurance concerns and jack up financing costs that are already straining lenders.

Higher expenses pushed per-loan losses further into the red for the first time in three quarters and with lower production expected through the first three months of next year, the picture remains bleak.

Another Big November Rally After CPI

There’s something about CPI releases in November.  Last year’s example prompted one of the biggest single-day, data-driven bond market rallies on record.  This year’s isn’t far off–a fact made all the more stunning by the mere 0.1% beat (Core monthly CPI 0.2 vs 0.3 f’cast).  There are a few ways to try to explain the size of the reaction. On a nitty gritty note, the problematic housing component fell from 0.6 to 0.3.  On a more general note, it’s possible the bond market was more interested in “no whammies” than a sweeping reversal of inflationary pressures.

Econ Data / Events

m/m Core CPI

0.2 vs 0.3 f’cast, 0.3 prev

m/m Headline CPI

0.0 vs 0.1 f’cast, 0.4 prev

Market Movement Recap

08:38 AM Slightly stronger overnight and much stronger after CPI data.  10yr down 12.6bps at 4.512.  MBS up 14 ticks (.44).

10:02 AM 10s bottomed at 4.434 and are still down 18bps on the day at 4.457. MBS are up 26 ticks (.81).

12:40 PM Off the best levels, but not by much.  MBS still up 27 ticks (.84).  10yr down 17.3bps at 4.465.

04:02 PM Briefly in line with best levels and now slightly lower in MBS, currently up just shy of a full point.  10yr down 19bps at 4.447.

November 3rd’s jobs report brought an outstanding week for Treasuries and mortgage rates to an outstanding conclusion.  From there, the following week (last week) was sorely lacking in inspiration.  Markets were anxiously awaiting today’s release of the Consumer Price Index (CPI) and it did not disappoint.   If we had to pick the single, biggest consideration for interest rates these days, it would surely be inflation. CPI is the biggest market mover among the inflation reports and this one left no doubt.  By merely coming in 0.1% lower than expected for the month, CPI sparked one of the biggest single-day bond market rallies since last year (incidentally also due to a CPI report in November 2022). While this is important confirmation of the prospective shift away from the recent rate ceiling, there are other economic reports and other factors that could make for a bumpy road on the way down.  In fact, we should keep in mind that there have been a few “false starts” in rates that have looked quite a lot like the past few weeks only to give way to another surge toward higher highs.   Either way, it will be the balance of economic data and the Fed’s response to that data that will do the most to dictate the broader trends in rates.  On that note, tomorrow morning brings more important reports.  The Producer Price Index and Retail Sales are certainly not on the same level as today’s CPI, but if they speak loudly enough and in unison, they could add momentum to today’s improvement or make a case for more consolidation before rates move any lower (equivocal, but accurate). 

Ever since the jobs report on November 3rd, today’s CPI report was in focus as the next major fundamental focal point for the bond market.  As 10yr yields bounced in a range of 4.5 to 4.65, any major deviation from expectations in CPI was likely to elicit a break of that range.  Breaking the ceiling would have been unfortunate, but boring (considering the recent 5%+ levels would likely require more data).  Breaking the 4.5% floor is far more interesting, and thanks to CPI coming in a mere 0.1% lower than expected, that’s what we have.

As for the extreme relevance and importance of today’s data, let it never be doubted.  A mere 0.1% deviation from the forecast is all it took for bonds to have an even bigger move (both in terms of volume and outright yield) than seen after this month’s jobs report.  The only caveat would be that NFP hit at the end of what was already a very big move for the week–a fact that likely sapped some of the volume and buying that might have otherwise been seen.

This morning I head to Kansas, greeted by the news that Southwest is raising drink fees for the holidays. Has the “Let’s circle back after the holidays” season officially begun in your office or in your meetings with vendors? Chortles aside, one of the discussion topics in KC will certainly be the impending move in credit prices as lenders everywhere move toward charging borrowers up front. Whether the cost change is driven by Fair Isacc or the credit bureaus, and then being passed along by the CRAs, it doesn’t matter. It’s coming, and the jungle drums are saying the price changes will impact soft credit pulls, which (or course) many lenders implemented to reduce their costs with the amount of credit reports run as it’s cheaper than the full hard credit pull. Some lenders may use Freddie or Fannie AUS. (Today’s podcast can be found here, sponsored by LoanCare, the mortgage subservicer known for delivering superior customer experience through personalization and convenience. Its award-winning portfolio management tool, LoanCare Analytics, supports MSR investors with a focus on customer engagement, liquidity, and credit risk. Hear an interview with Polunsky Beitel Green’s Peter Idziak on the direction of mortgage interest rates in the months and year ahead, and what to make of the NAR case verdict’s impact on the home buying process.) Lender and Broker Software, Products, and Services Housing authorities rolled out 54 down payment assistance (DPA) programs in Q3 and are funding buydowns, and certain loan fees to offset the home affordability crisis. That’s according to Down Payment Resource’s (DPR) Q3 2023 HPI Report. In fact, 50 new agencies began offering programs last quarter alone. Prospective homebuyers are being hammered with news about affordability being in the dumps, but what they aren’t hearing is that there are thousands of DPA programs to help. With DPR, you can be the bearer of good news, while using DPA to salvage DTI ratios as interest rates go up. As the industry authority on DPA solutions, DPR tracks the eligibility, benefit, and guideline data of the nation’s 2,200+ assistance programs. Learn how DPR’s integrated toolset makes it easy to operationalize DPA across departments and geographies. Schedule a demo today.

The decision removes any possibility that the Chicago-based firm would recapitalize or peddle Republic Mortgage Insurance to an outside entity.

The Consumer Financial Protection Bureau, Federal Reserve and other banking regulators rolled out their annual adjustments for the thresholds that determine whether activities are eligible for enhanced standards.