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

The National Association of Homebuilders (NAHB) and Wells Fargo released the monthly Housing Market Index (HMI) this week, showing builder confidence falling to the lowest levels since 2023.  This is about as low as the index has been since the housing crisis more than a decade ago. While persistently high interest rates remain a top concern for the housing market, a growing number of builders cited difficulty pricing new homes in light of the rapidly changing outlook for material costs due to tariffs.  With that in mind, it’s important to note that 90% of this month’s responses came in  before the US/China trade announcement.  Not only did that announcement drastically reduce tariffs for 90 days, it also offered a proof of concept that will likely see the outlook improve in the next survey due to lower material costs and a more upbeat consumer. Additional details are available at https://www.nahb.org/news-and-economics/housing-economics/indices/housing-market-index.