Under the category of careers that are, or will be, impacted, by artificial intelligence, attorneys are inevitably on it. Here’s a tale of a lawyer caught using AI while explaining to the Court why he used AI. In other legal mortgage news, California mandated forbearances for mortgage borrowers affected by wildfires. Meanwhile, is disaster assistance based on politics? Apparently California is not receiving any disaster assistance from the federal government from the fires nine months ago, and the city of Los Angeles joined a coalition of cities, counties, and local agencies in a lawsuit against the federal government over FEMA funding. Certainly the shutdown, recently begun, is impacting lenders, and in today’s Last Word at 1PM ET, Brian Vieaux, Courtney Thompson, and Christy Soukhamneut discuss how the government shutdown is impacting lenders and the broader housing market, rates hitting new year lows, and Chair Powell’s recent comments signaling a shift toward concerns over labor market weakness. (Today’s podcast can be found here and this week’s are sponsored by Floify, an industry-leading point of sale platform. With Floify’s new Dynamic AI feature, lenders can modify applications with no coding required and rely on AI to autofill key application fields, allowing borrowers to fill out only a few fields relevant to their needs. Hear an interview with Finance of America’s Adam Potafiy on his session tomorrow at NAMB National with his colleagues Jonathan and Jessica about reverse mortgages and how they’re being reengineered for the next generation of clients.)

By process of elimination and ongoing forensic efforts, it’s becoming more and more clear that yesterday’s mystery rally in the short end of the yield curve was a product of liquidity/reserve stress in short-term funding markets. While the regional bank drama may have added fuel to the fire in a roundabout way, it was neither the match nor the flame. Episodes like this happen from time to time, especially in April and October as corporate tax deadlines create large short-term funding needs that can put strain on reserve balances (already a topic of conversation for the Fed recently, as they ponder the timing of the end of QT). In short, the market briefly worried that reserves were going to run too thin and the Fed would be forced to address it in a way that benefited short-term rates. The shortest term rates (like day to day SOFR) couldn’t benefit due to immense short-term borrowing needs and scarce reserves, so any market concern was forced to play out in the slightly longer term (a few months in the future vs a few days). With the more dire fears in the rearview (T, bonds are backing away from the panic trade a bit this morning, but the real catalyst was a 7:12AM newswires citing Trump saying Chinese tariffs will not be sustainable.

The average top tier 30yr fixed rate was unchanged on Friday despite the bond market being slightly weaker. Normally, weaker bonds mean higher rates, but the timing of intraday market movement matters. In today’s case, bonds are still much stronger than the first half of yesterday, and only weaker when compared to closing levels. Because mortgage lenders prefer to set rates once per day (only adjusting after a certain threshold of market volatility), the average lender hadn’t yet fully adjusted to yesterday afternoon’s bond market gains. In plainer terms, mortgage lenders had a bit of a cushion today and it was perfectly soaked up by the modest losses in the bond market. By remaining unchanged, the average rate is officially in line with the lowest levels in just over a month. Apart from that, there are only a handful of days with lower rates going all the way back to late 2022. 

Fathom Holdings acquired START Real Estate to expand its first-time homebuyer program, the company announced Thursday.

The Detroit-based mortgage bank’s announcement trailed competitors’ by over two weeks, but is taking a more aggressive risk-reward stance on the limit.

Observers believe the government shutdown and lack of data is keeping mortgage rates in the same narrow range, as investors have issues reading the tea leaves.

Noninterest income at the Minneapolis-based company jumped more than 10% during the third quarter, while asset quality improved and expenses held steady. “Our focus is very much on organic growth,” said CEO Gunjan Kedia.

Components of the index all rose, including the highest reading for sales expectations in the next six months since the start of the year.

“I was gambling in Las Vegas; I took a little risk. Send lawyers, guns, and money, Dad, get me out of this!” Hopefully, no one heading to LV tomorrow or this weekend runs into that kind of trouble. Did you know… The difference between an American roulette wheel and a European wheel? The American version has “00.” Fans of Lucifer, and numerology, know that, for both, the numbers add up to 666! Homeowners in Las Vegas are not typically big gamblers, unless you consider their housing values which, historically, are subject to big swings. Home prices in Southern Nevada have edged slightly lower in the last year, as the number of properties on the market continued to climb, “signaling a cooling but stabilizing housing market.” Las Vegas has its share of commercial buildings… Do the office markets and residential markets correlate? In Chicago, Walgreen’s is closing its Old Post Office location. In New Orleans, two landmark skyscrapers are in default. In New York, a building was just purchased for $25 million for conversion to residential. Nothing is constant but change. (Today’s podcast can be found here and this week’s are sponsored by Floify, an industry-leading point of sale platform. With Floify’s new Dynamic AI feature, lenders can modify applications with no coding required and rely on AI to autofill key application fields, allowing borrowers to fill out only a few fields relevant to their needs. Hear an interview with Floify’s Sydney Barber on how Dynamic AI is built into its POS to automate tasks like document handling and income verification, speeding up approvals, improving compliance, and enhancing the borrower experience while freeing lenders to focus on relationships.)

Despite a stark absence of any truly inspiring events, interest rates have managed to put in two fairly serious days of movement. In today’s case specifically, there was an obvious intraday surge in the underlying bond market. While that surge wasn’t readily attributable to any data or news headline, it prompted many mortgage lenders to reissue lower rates in the afternoon. As conventional 30yr fixed rates move down from the 6.3’s toward the 6.1’s, this is a zone that can see larger than normal movement for reasons laid out back in early September (A Quick Note on Why Rates Seem to Drop More Quickly as They Approach Certain Thresholds). We’re beginning to see some of that slippery slope behavior in our rate index over the past few days as 6.125% comes closer to be being a more widespread top-tier rate quote. As ever, the real question is whether we continue heading in that direction or if we’re due a bounce. As ever, there’s no way to know ahead of time.  The level of improvement seen over the past week is already arguably surprising.