If you haven’t signed up for the Mortgage Action Alliance, do so. It’s free, has good advocacy information, and there’s strength in numbers. Recent conference chatter includes suggesting that removing politics from the mortgage conversation would be a good thing to attempt, wondering if there’s enough regulatory manpower muscle to take the existing LO comp rules and re-jigger them, some believing that the recent credit score announcements are lacking leave much to be desired, asking why the Fed’s useful Twitter account (Financial Sentiment Index, TFSI) vanished, and suggestions that Southern California’s hottest nightclub was the main ballroom at Mortgage Innovators with its extensive techno play list. (Today’s podcast can be found here and this week’s ‘casts are sponsored by FirstClose, which provides fintech solutions to HELOC and mortgage lenders nationwide. Their home equity lending platform accelerates the home equity lending process, reducing application to closing times from 45 days to less than ten. Today we have an interview with Digital Risk’s Kim Lanham on how the Iran conflict and broader geopolitical uncertainty are influencing mortgage rates, borrower decision-making, servicing retention strategies, borrower assistance programs, and emerging credit and fraud risks across both Agency and non-QM lending.)

Lender and Broker Products, Software, and Services

Why Partnering with MSF as Your Sub-Servicer Is a Strategic Advantage: Built for Speed, Service, and Retention. In today's mortgage servicing landscape, smaller institutions often find themselves working with sub-servicers built for scale, not responsiveness. The result: delayed borrower support, missed engagement opportunities, and lost relationships. MSF Servicing was built to solve that problem. MSF delivers a level of attention larger providers cannot match. Every borrower inquiry, issue, and client request is handled on a same-day or 24-hour basis, because in servicing, speed drives retention. Timely, empathetic responses keep borrowers engaged and relationships intact. Delays create friction; responsiveness builds trust. Led by an industry veteran with deep expertise in customer service and loss mitigation, MSF brings proactive engagement and retention-focused outcomes to every portfolio it manages. The result: a sub-servicing partner who moves at the speed your borrowers expect and delivers the care your brand demands. Contact Rick Smith at 860-989-9006.

Accelerate Funding with Embedded Fraud Intelligence! Warehouse lending moves fast, and your risk strategy needs to keep pace. FraudGuard® is now integrated into Forta Solutions’ Agility™ platform, giving warehouse lenders direct access to purpose-built fraud intelligence within their existing workflow. Powered by advanced analytics, FraudGuard helps identify meaningful risk signals, including borrower identity fraud, undisclosed liabilities, occupancy misrepresentation, counterparty exclusions, and valuation anomalies, so you can assess loans quickly and confidently. No noise. No added friction. No need for multiple systems. Just streamlined workflows, real-time visibility, and the insight you need to fund faster while reducing downstream salability risk. Read the full press release or call 800-333-4510 to learn more.

Ever had a 55+ borrower say, "I don't qualify for another mortgage" and watch the deal stall? There's an estimated $15–19 trillion in equity tied up in homes today, much of it held by homeowners who'd love to downsize but can't be served with traditional products. With the Flyhomes Buy Before You Sell DREAM Solution, your 55+ borrowers can leverage their home equity to move mortgage-free and transition just once. Flyhomes has helped 5,000+ buyers over the past 10 years, and LOs using this program close an average of 1.2 more loans per month. Flyhomes is hosting two live sessions on Retire & Downsize. Save your spot for the May 13 or May 20 (Wednesday) session, or book a call to review a borrower scenario today.

The Chrisman Marketplace is a centralized hub for vendors and service providers across the mortgage industry to be viewed by lenders in a very cost-effective manner. We’re adding new providers daily, so check back often to see what’s new. To reserve your place or learn more, contact us at info@chrismancommentary.com.

Capital Markets

Yes, interest rates are driven by inflation, and thoughts of future inflation, neither of which help fixed-income securities. After a brief pause in hostilities, the U.S. and Iran resumed exchanging fire yesterday as Washington pressed Tehran to accept a proposed framework to end the conflict, reopen the Strait of Hormuz, and ease energy market disruptions, though Iran continues to resist key U.S. demands surrounding its nuclear program, all of which contributed to a slight rise in bond yields.

Economic data released yesterday revealed first-quarter productivity growth slowed to 0.8 percent, well below expectations, but the deceleration in unit labor costs to 2.3 percent helped ease concerns that inflation pressures are reaccelerating enough to force the Fed toward additional tightening. More on the Fed in a second. March construction spending was boosted by strength in residential and single-family building activity, while consumer credit posted its largest increase in a year, potentially signaling that households are leaning more heavily on borrowing amid elevated living and energy costs. No investor wants to pay 104 for a loan that pays off five months later. April’s prepayment data showed Agency mortgage speeds cooling meaningfully, with aggregate Fannie Mae 30-year CPRs falling 16 percent month-over-month to 9.2 as seasonal slowdown, unchanged refinancing incentive, and relatively stable mortgage rates combined to suppress turnover activity.

While speeds remain above year-ago levels, extending a nearly two-year streak of annual growth, the broader trend suggests the refinance wave is stabilizing rather than accelerating, with the MBA refinance index also losing momentum amid sideways rate movement. Higher-coupon production pools, particularly 5.5 percent and 6.0 percent securities, experienced the sharpest slowdown in prepays, though lower loan balance and New York specified pools continued to demonstrate resilient call protection characteristics despite the broader decline. Meanwhile, only about 11.5 percent of outstanding 30-year borrowers retain refinance incentive, effectively unchanged from March, supporting expectations that prepayment activity should remain range-bound through the summer even as investors continue watching deeply discounted low-coupon pools for signs of eventual turnover normalization. For some good news for lenders, Agency MBS has quietly become one of the best performing sectors in fixed income, which comes down to excess return. Mortgages have optionality because any American homeowner can refinance or prepay at any time, and the taxpayer backing means investors will get their money back. The real question is when, and that uncertainty has to be hedged out relative to Treasuries. Volatility matters enormously in mortgage math, and banks have become much more comfortable stepping back into the sector as deposit growth outpaces commercial lending growth. Put another way, they’ve got excess cash to deploy, and while they remain overweight Treasuries historically, they’ve been increasingly putting money into Agency MBS.

Mortgage-related fund flows have also been very strong, especially from index buyers, while supply remains historically muted. Net issuance is running well below the levels seen over the last several years, and even more importantly, actual loan creation remains depressed when viewed in unit terms rather than inflated dollar figures. The composition of issuance has shifted materially as well, with Ginnie Mae now accounting for more than 40 percent of production compared to roughly a quarter during QE4, which says a lot about affordability stress and the growing role of government-backed borrowers in the market. When you combine strong fund flows, returning bank demand, and restrained supply, Agency MBS has had powerful technical backup, although valuations are beginning to look stretched. There’s definitely been a pickup in refinancing activity among more recent borrowers sitting in higher coupons, but the reality is that nearly 90 percent of borrowers remain deeply “out of the money” after locking historically low rates earlier this decade. Only around 12 percent of conventional borrowers have refinance incentive, with similar figures across FHA and VA. Speeds have responded accordingly, with temporary bumps that quickly fade as rates stabilize or drift back higher. What’s more concerning longer term is the underlying health of housing affordability and the increasing risk layering occurring in portions of the market, particularly within Ginnie Mae collateral.

Down payment assistance usage among FHA borrowers has surged dramatically, bringing lower FICO scores, higher debt-to-income ratios, and materially higher delinquency rates with it. That’s where the real concern sits, because affordability has been pushed to uncomfortable extremes. Housing itself has become a tale of two markets: Existing home sales remain severely constrained by inventory lock-in while builders have managed to keep new home sales moving through incentives, giveaways, and price cuts. In many parts of the country prices are finally beginning to soften, especially in formerly red-hot states like Texas, Florida, and Colorado, and while people instinctively fear falling home prices, price corrections are often what restore balance to a distorted market.

Longer term, the structural shortage of single-family housing remains enormous because the U.S. simply has not built enough homes for more than a decade. Overlay all of that with a Federal Reserve that continues cutting rates despite inflation remaining well above target, and you get a market increasingly skeptical that monetary easing will meaningfully lower long-term borrowing costs. The Fed can cut the front end all it wants, but as recent history has shown, the bond market ultimately decides where longer-term rates settle, especially in an environment where inflation pressures remain embedded in the system. Recent comments from Fed officials signal a growing shift in focus toward inflation risks, with an emphasis that elevated energy prices are more of an inflationary shock than a stagflationary threat. The acknowledgment that persistent inflation is becoming increasingly concerning despite a stable labor market reinforces the likelihood that the June FOMC statement will adopt a more balanced tone around the risks to future rate policy rather than leaning clearly dovish.

The Fed doesn’t set mortgage rates, but… At the same time, debate around the Fed’s balance sheet is intensifying, with Fitch Ratings cautioning that any aggressive reduction could destabilize overnight funding markets and recreate liquidity stresses similar to the 2019 repo disruption. Incoming Fed Chair Warsh has expressed the view that any meaningful balance-sheet normalization must be gradual, deliberate, and carefully communicated, underscoring the broader challenge policymakers face in tightening financial conditions without triggering unintended market volatility. Ahead of April Payrolls that were released just a couple of minutes ago, labor market data reinforced the view that employment conditions are cooling gradually rather than deteriorating sharply, with initial jobless claims rising modestly to 200k and continuing claims edging lower. The labor market overall remains in a “low-hire, low-fire” state, while tech-sector layoffs continue to mount. Today brought April Nonfarm Payrolls (which came in at 115k versus 67k estimates and 178k prior), the Unemployment Rate (4.3 percent versus consensus and prior 4.3 percent), and April Hourly Earnings. Later today brings March Wholesale Inventories and preliminary May University of Michigan Consumer Sentiment. After the job data we find Agency MBS prices improved versus Thursday’s close, the 2-year yielding 3.89, and the 10-year yielding 4.37 after closing yesterday at 4.39 percent.