“My friend showed me a photo of a famous meteor crater in Arizona. It’s amazing how close it landed to the Visitor’s Center!” Here in Tucson, the weather is fine but “tornado season” has hit with a vengeance in other parts of the United States. Anyone who thinks that the severity of storms is declining should reconsider. (Catastrophe and disaster updates below.) For some good news, call it “kicking the can down the road” or a “budget plan,” but Congress passed the budget appropriations bill, and it was signed by President Trump over the weekend. In six months we’ll get to watch it all over again. But for lenders, kicking the can down the road is not an option. Our MBA presented the IMB profit figures: tepid at best, and some would say indicate that there will be no easy sledding ahead. “Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a pre-tax net loss of $40 on each loan they originated in the fourth quarter of 2024, a decrease from the reported net profit of $701 per loan in the third quarter of 2024… (lots of stats below). (Today’s podcast can be found here and this week’s is sponsored by CoreLogic. Whether it’s using cash to purchase a home, debt consolidation, or a straight cash-out refinance, CoreLogic’s Precision Marketing’s data-driven insights pinpoint your best opportunities to retain and recapture your clients. Today’s has an interview with CMG and WIMIN’s Sharon Barney on experiences, challenges, and successes of women in the mortgage industry.)

An executive order issued late Friday cut the Treasury Department Community Development Financial Institution Fund and other federal programs to their legal minimum.

The provisionally approved rate hike would provide financial relief to State Farm’s California subsidiary, which has said it needs to shore up confidence with solvency regulators and ratings agencies.

A Maryland judge temporarily halted mass layoffs of probationary employees at multiple agencies, citing legal violations and harm to states’ ability to respond to unemployment needs.

Issuances fell in January for residential and multifamily segments, as concerns over available workers and future tariffs came to the fore.

After two consecutive quarters of profits, independent mortgage bankers lost money in the most recent period, for the ninth time in the last three years.

A federal judge in Maryland ruled against the City of Baltimore’s attempt to block cuts to Consumer Financial Protection Bureau program funding on procedural grounds.

Uneventful Friday, Even if Slightly Weaker

Friday’s trading session was the most uneventful of the week.  It began with moderate losses in the overnight session in concert with stock market gains.  Some traders attributed this to improved odds of avoiding a government shutdown by tonight’s deadline.  The only scheduled economic data was the Consumer Sentiment report which has fallen by the wayside to some extent as the results are increasingly discounted as being clouded by political affiliations of respondents. Nonetheless, the uptick in inflation expectations was notable and worth a bit of extra weakness in bonds at the time.  Even so, bonds remains well within the range set by yesterday’s trading.  The result is an “inside day” in market jargon, which one could either read as “indecisive” or “boring.”  We’d lean toward the latter.

Econ Data / Events

Consumer Sentiment

57.9 vs 63.1 f’cast, 64.7 prev

1yr inflation expectations

up 0.6%

5yr inflation expectations

up 0.6%

Market Movement Recap

09:30 AM Moderately weaker overnight in concert with stock market gains.  MBS down 3 ticks (.09) and 10yr up 3.4bps at 4.303

10:03 AM Some weakness following uptick in consumer inflation expectations.  MBS down 5 ticks (.16) and 10yr up 4.8bps at 4.317

12:27 PM Calm and sideways.  10yr up 2.6bps at 4.296.   MBS down 2 ticks (.06)

03:20 PM Losing some ground in PM hours.  MBS down 5 ticks (.16) and 10yr up 4.3bps at 4.313

04:49 PM Just a hair weaker.  MBS down 6 ticks (.19) and 10yr up 4.8bps and 4.318.

Despite some ups and downs on a small scale, mortgage rates have been sideways in the bigger picture.  That’s a good thing if the latest refi application data is any indication.  Demand is at the highest levels since October as rates have generally been holding near mid-October levels. Today was just another day in that regard.  Bonds (which dictate rates) were slightly weaker overnight (bond weakness implies higher rates). As as often been the case recently, stocks played a role in the rate movement. Prospects for a debt ceiling deal may have contributed to market optimism.  With that, mortgage rates were just a few tenths of a percent higher than yesterday, but to reiterate, not too far from yesterday’s latest levels.

Time flies. We’re at “pi day” (3.14), two weeks until the end of the quarter, one month before our taxes are due. Tax returns for individuals are private (I think) but those filed by nonprofit organizations are public records. The Mortgage Bankers Association of America taxes, for example, are here. Speaking of which, our MBA has a lot on its plate. Setting up relationships with Scott Turner (HUD) and Bill Pulte (confirmed for FHFA this week) is important since having a say in ending the conservatorship of the GSEs (Fannie Mae and Freddie Mac) matters greatly. (Would they still be government sponsored?) “16 years of hands-on conservatorship by FHFA has created inefficiencies, blunted some of their competitiveness, and led to challenges in retaining and attracting the best talent in the housing finance space.” The MBA has identified four over-arching principles it believes should frame the release of Fannie and Freddie: an explicit backstop via a federal guarantee, the two maintaining a level playing field for lenders of all shapes and sizes, a “Bright Line” between primary and secondary mortgage functions that must be clearly defined and rigorously enforced by FHFA to ensure a stable and competitive market, and, lastly, FHFA regulatory enhancements to regulate the GSEs’ rate of return and market conduct. Go MBA! (Today’s podcast can be found here and this week’s is sponsored by TransUnion. TransUnion offers thousands of B2B solutions designed to address the unique needs of mortgage lenders, especially for their identity-focused, data-driven mortgage insights and solutions. Hear an Interview with Milo’s Josip Rupena on the latest happenings at the intersection of crypto and mortgage lending.)