US states from Florida to North Carolina and Texas would likely hold onto top-notch credit scores from Moody’s Ratings, mostly because they’re in better fiscal shape than the federal government itself.

Investors face yet another bumpy start to the trading week, although it’s mounting concern over US debt rather than tariffs likely generating the volatility this time.

Firing 90% of the Consumer Financial Protection Bureau’s staff and stripping it down to “the statutory studs” is lawful, an attorney for the CFPB told an appeals court.

Servicing profit offset origination losses for some companies, but more than 40% were unprofitable, according to the Mortgage Bankers Association.

The Virginia man filed a false tax return in 2021 claiming an $18.3 million refund, working with a co-conspirator to defraud a real estate agent.

Rocktop Management anticipates rising loan origination volume and increasing borrower distress, driving more servicing sales — key reasons behind its acquisition of Incenter Capital Advisors.

The rule rescission, one of many the Consumer Financial Protection Bureau is planning, would officially remove temporary steps for mortgages added in 2021.

Lenders using an automated process can save up to $1,500 per loan but do they have the capacity to pass those through to applicants as the FHFA director asks?

Moody’s Pulls Pin And Walks Away With 10 Minutes Left to Trade

Bonds began the day stronger after a gentle overnight rally. Selling commenced at 9:30am for the 4th day in a row and picked up slightly after the highest reading on inflation expectations since 1981. Even then, losses were modest at best and bonds were generally flat/unchanged until the very end of the day. With carefully considered timing, Moody’s pulled the pin and walked away with 10 minutes left to trade. The grenade in this case was a downgrade of the US credit rating.  This move is certainly in the ratings agencies’ playbooks amid congressional budget battles, but most notably all the way back in 2011. Also of note, Moody’s was the last of the big 3 to have the US at a triple A rating, so while it’s not the craziest thing that ever happened to bonds, the timing made for some last minute selling ahead of the 5pm cut-off. 

Econ Data / Events

Housing Starts

1.361m vs 1.37m f’cast

Import Prices

0.1 vs -0.4 f’cast, -0.4 prev

Consumer Sentiment

50.8 vs 53.4 f’cast, 52.2 prev

1yr inflation expectations

7.3 vs 6.5 prev

Market Movement Recap

10:04 AM modestly stronger overnight and slowly eroding so far.  MBS up 2 ticks (.06) and 10yr down 2.8bps at 4.403

02:06 PM Sideways at weakest levels.  MBS down 1 tick (.03) and 10yr up about half a bp at 4.437

05:03 PM additional weakness after Moody’s downgrade.  MBS down a quarter point on the day and 10yr up roughly 5bps at 4.479

Home purchase demand improved improved last week according to the MBA mortgage application survey. The improvement over the previous week was fairly modest, but the index was already the 4th highest reading of the past 2 years.  Now it’s the 5th highest and the latest update takes its place, moving within striking distance of longer term highs. It’s no secret that most measures of mortgage and housing activity have been operating in a low, narrow range compared to where they were a few years ago. The mortgage rate spike of 2022 gets most of the credit for that, and a longer term chart of refinance demand helps contextualize shorter term trends. All that to say, we have to zoom in if we hope to see changes in application demand. In so doing, we find refinance activity still elevated relative to most of the past few years, but not in the ‘boomlet’ territory seen last Fall. The absence of significant week-over-week movement in refi demand makes good sense in light of minimally-changed mortgage rates. MBA logged a 0.02% increase in the average 30yr fixed rate from the previous week which aligns fairly well with our daily rate tracking.   Since then, rates moved a bit higher through mid-week, but have dropped heading into the weekend. The net effect shouldn’t be massive for application demand. Here’s the MBA’s surveyed changes in various rates and points (difference from last week in parentheses):

30yr Fixed:

6.86% (+0.02) 

Points: 0.68 (no change)

Jumbo 30yr:

6.85% (−0.01)

Points: 0.49 (+0.03)

FHA:

6.59% (+0.03)

Points: 0.89 (+0.02)

15yr Fixed:

6.12% (−0.05)

Points: 0.59 (−0.06)

5/1 ARM:

6.09% (+0.12)

Points: 0.74 (+0.43)