The group represents the fourth class of startups in the history of the program and the first since the home lender’s merger with New York Community Bank late last year.

Denver-based Proprietary Capital, who offers a platform for institutional investors seeking returns from mortgage-related assets, agreed to purchase the New Jersey-based lender as it seeks to increase the number of opportunities it offers.

Negotiations are ongoing, but the legal move ends the restraining order trial in federal court scheduled for Aug. 14.

The real estate investment trust declined to comment on its bid to buy Western Asset Mortgage Capital, a company that received a sweetened competing offer from Terra Property Trust last week.

Lender Toolkit provides services to support ICE Mortgage Technology’s Encompass platform, along with artificial intelligence software.

Lenders including Goldman Sachs Group Inc. and JPMorgan Chase & Co. have been trying to sell debt backed by offices, hotels and even apartments in recent months, but many are finding that tidying up loan books is no easy feat when concerns about commercial real estate have surged.

Uneventful Monday as Traders Keep Options Open

Bonds traders are keeping options open, both literally and figuratively.  Open interest in Treasury options increased to start the new week, but that’s neither a surprise, nor particularly relevant for our purposes.  We’re more interested in the relatively flat performance to begin the new week.  Granted, bonds lost a bit of ground versus Friday’s latest levels, but managed to retain most of the day’s gains.  Today’s trading was very flat after the initial pull-back, tacitly suggesting rates are open to suggestions from this week’s data and events. 

Market Movement Recap

09:48 AM Bonds pushing back against overnight weakness at 8:20am CME open. Leveling off now with MBS down an eighth and 10yr up 2.4bps at 4.066.

01:33 PM perfectly flat all morning after initial rally.  MBS down 3 ticks (.09) and 10yr yields up 4.4bps at 4.086.

Mortgage rates are starting out the new week at modestly higher levels compared to last Friday afternoon.  The average change is very small.  Many borrowers would see no difference in today’s rate quotes.  A few lenders are marginally improved from Friday, but they generally hadn’t improved as much as other lenders on Friday itself. Top tier conventional 30yr fixed scenarios are still over 7% either way.  Discount points (extra money paid by the borrower upfront in exchange for a lower rate) continue to be a common part of many loan quotes as a single point can be worth nearly half a percent in rate.   Unlike Friday, when the market was clearly reacting to the release of the jobs report, there were no major sources of inspiration in play today and no abrupt market movement that required explanation.  This will likely change as the week progresses.  Thursday’s release of the Consumer Price Index (CPI) is this week’s highest risk/reward event.  

Jordan Peele met his famous comedy partner Keegan-Michael Key around 2002 at Second City in Chicago, and eventually performed this classic routine that every air traveler should see. This morning I head to Chicago, and from there to the MMLA event in Mt. Pleasant, Michigan. Given my time with originators last week, the email traffic over the weekend, lenders are very concerned about overcapacity and therefore overhead. On a micro level, staff that may have been held onto “just in case” volume picked up are being reviewed. On a bigger scale, owners of lenders and vendors have seen their values decline and mergers and acquisitions are definitely a topic. The latest example of this is Denver’s Proprietary Capital announcing plans to buy 100 percent of New Jersey’s American Financial Resources (AFR); employees and counterparties were told Friday. And on a macro level, this week the economic calendar features fresh updates on inflation, with both the July Consumer Price Index and the Producer Price Index reports. We also have auctions of three- and 10-year notes and 30-year bonds going off at higher amounts than originally forecast and yields generally on the rise. Lots going on! (Today’s podcast can be found here and is sponsored by SimpleNexus, an nCino Company, developer of mortgage technology uniting the people, systems, and stages of the mortgage process into one seamless, end-to-end solution. Listen to an interview with STRATMOR’s Brett McCracken on how mortgage companies can utilize secret shopping.)

Bonds gave back a bit less than half of Friday’s gains in the overnight session with most of the losses seen after the start of European trading.  That said, there wasn’t any clear connection between data/events and the selling.  It began right after the EU open and accelerated into 6am ET, pulling Treasuries along for the ride.  Two Fed speakers were out over the weekend commenting on the prospects for additional rate hikes.  We have to wonder how much the market cares about such things given the fact that longer term yields are underperforming (opposite would be true if rate expectations were changing much).
Oil prices were among the scapegoats conjured up by reporters in search of concrete correlations.  Since fuel prices are one of the best places that a majority of the population can witness price changes, the connection between oil and inflation/rates resonates with many market watchers.  But when those claims are thrown around, it always makes sense to check the actual market movement.  While there’s no doubt that oil broadly impacts global price pressures, it often fails to justify the intraday movement it’s often credited with.  Today is just such a day with oil generally FALLING at the same time it was being credited as an underlying cause of higher yields.

All of the trading seen so far today can’t help but be relegated to the “noise” category as there are much bigger fish to fry in the coming days.  The opening act will be the newly larger Treasury auctions starting tomorrow afternoon.  We’ll make it through 2 of the 3 before getting the week’s obvious headliner: CPI data on Thursday morning.