Luminate Home Loans closed its Neo Home Loans division in October after it fired leaders allegedly funneling trade secrets to the rival.

In multiple 2024 suits filed against mortgage businesses, the plaintiff claims he was never a client, but received messages despite being on the do-not-call list.

Rithm Capital has been teasing an initial public offering of the mortgage banker for some time, and 2025 is likely to be the year, Keefe, Bruyette & Woods said.

Plaintiffs argue that Mr. Cooper’s hefty payment to Alphv hinged on the promise that the criminal organization would delete stolen customer PII.

Because mortgage rates are determined by trading levels in the bond market, when the market is closed, lenders don’t update their rate offerings.  As such, there were no rate updates last Wednesday for the Christmas holiday and the same will be true this week for New Year’s Day. In addition, it’s common practice for the bond market to close early on the day before a major holiday observance (or the day after in the case of Thanksgiving). Most mortgage lenders are still technically open on those half days, but many of them are making more conservative  adjustments to rates.  In fact, lenders often take a more conservative approach to entire Christmas and New Year’s week due to the inconsistent market conditions commonly seen at the end of the year.  While the average lender may be playing it a bit safer than normal today, there has at least been a logical correlation with improvement in the bond market. Simply put, bonds are doing better today, so the average mortgage rate is lower than it was at the end of last week.  The average lender is still over 7% for a top tier 30yr fixed scenario, but just barely.

Feel Free to Enjoy The Rally, But Don’t Read Too Much Into It

Bonds improved somewhat significantly in overnight trading and continued into stronger territory through 10:20am ET.  This morning’s Chicago PMI data was weak enough to deserve consideration as a catalyst for bond buying except for the fact that yields were already 8bps lower by the time the data came out.  To be fair, it did help the rally extend just a bit. After that, the rest of the day was remarkably flat with trading levels right in line with those seen at the very beginning of the previous week.  In other words, today’s gains are “nice,” but they are just a byproduct of the bond market working through the typical end of year illiquidity.  

Econ Data / Events

Chicago PMI

36.9 vs 42.5 f’cast, 40.2 prev

Market Movement Recap

09:49 AM Slightly stronger overnight. More buying early.  MBS up 10 ticks (.31) and 10yr down 8bps at 4.549

01:51 PM Little changed from AM levels.  MBS up 11 ticks (.34) and 10yr down 8bps at 4.549

03:47 PM Effectively unchanged from the last update.  MBS up 10 ticks (.31) and 10yr down 8.2bps at 4.545

The National Association of Realtors (NAR) releases monthly reports on both existing and pending home sales. The latter tracks signed purchase contracts that have not yet closed. As such, it’s seen as a good early indicator of existing home sales in the following month.  The housing market would take any help it can get at the moment and November’s pending sales numbers are actually legitimately encouraging, even if the overall level of activity remains historically low. This is the 4th consecutive month of improvement for the index and it brings it to the highest level since February 2023.  Contract signings were up 2.2% versus last month and 6.9% versus last year, even as mortgage rates remain elevated. That makes the past few months significant because this the first meaningful break into positive year-over-year territory since early 2022. “Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory,” said NAR Chief Economist Lawrence Yun. “Mortgage rates have averaged above 6% for the past 24 months. Buyers are no longer waiting for or expecting mortgage rates to fall substantially. Furthermore, buyers are in a better position to negotiate as the market shifts away from a seller’s market.” Regionally, the South led the charge with a 5.2% increase vs last month.  The Midwest and Western regions advanced less than 1% and the Northeast declined 1.3%.  All 4 regions are stronger in year over year terms.

Stop the presses!  MBS are up almost 3/8ths of a point in early trading and 10yr yields have surged lower by 8bps.  This is a massive and miraculous rally that surely must have some compelling and obvious motivation!  Here’s the motivation: take everything you saw last week and throw it out.  We kept saying different versions of that directive at the time. To be fair, it’s probably a good idea to do the same in the present week.  We’ll all find out where bonds want to trade later this week, but for sure by next week. 
Today’s trading levels are right in line with those seen immediately after Fed day and–therefore–not interesting or indicative of anything new and different. For those who aren’t comfortable with such a dismissive, cavalier approach to market movement, if you’d like to make something up, just tell people that it’s “year end positioning and asset allocation trading driving forced buying of bonds and selling in stocks.”  No one would argue with you.
For those more interested in participating in reality, simply consider that trading levels are right back to where they were at the exact moment that we told you to stop paying attention due to the extreme drop-off in volume and

“What do they call the 4th of July in nursing homes? In Depends Day.” (Another joke at the bottom.) There are plenty of elderly people, year ‘round, and hurricanes, seasonally, in Florida. There are ways to build homes that will survive hurricanes. Wood is not the solution! Here’s a story about Florida resident Amy Hawk who was paid only $8,000 by her insurance company after a hurricane destroyed her house and what she’s doing about it. Damages from weather disasters hit $92.9 billion last year, according to NOAA, and years of increasingly damaging weather events have provoked a reaction in the insurance market, with costs up 13 percent from 2020 to 2023. Those are being driven by premium increases in some of the areas most prone to disasters, and a big driver in turn is the rising cost of reinsurance, which is the insurance bought by insurance companies which itself has increased in costs 100 percent between 2017 and 2023. Home insurance companies are roughing it: for the fifth year in a row, insurers paid out more than they brought in with premiums, and in 2023 they paid out $1.11 in claims for every $1 they made. (Today’s podcast can be found here and this week’s is sponsored by The BIG Point of Sale, which offers a highly configurable, easy to install point of sale solution. Its simplified consumer workflows and web-based portals allow for consumers and loan originators to collaborate with the back-office team to keep everyone informed throughout the loan process. Hear an interview with Nectar’s Derrick Barker on the Federal Housing Finance Agency announcing higher caps that allow Fannie and Freddie to purchase up to $146 billion in multifamily loans.)

Loan officers say the main reasons real estate partnerships fall through are poor communication and mismatched expectations.