Change is constant. Soon I head to Austin, in the Great State of Texas, for the TMBA’s star-studded Housing Summit where “change” will certainly be studied. JPMorgan is embracing block chain. Tired of your cleaning supplies smelling like lemon? How about pumpkin, or birthday cake? “Rob, are you hearing from other brokers or LOs that their borrowers are demanding lower rates on their ‘lock’ since the Fed changed?” I am, and it is a great opportunity to be a knowledgeable human (instead of a robot) and explain why it isn’t the case: that overnight rates are not the same as 30-year rates. The Fed intends to change its policy of balance sheet runoff, ending it but still letting the portfolio of mortgage-backed securities mature without replenishing them. Change may happen with the 2026 mid-term elections approaching, the industry can expect significant stakes tied to a potential shift in congressional power. Register for MAA's Next Quarterly Webinar on Tuesday, November 4, from 3:00-4:00 PM ET to hear updates on major efforts like the bipartisan ROAD to Housing Act, the possible re-privatization and release from conservatorship of Fannie Mae and Freddie Mac, the future of credit score pricing, the regulation of Artificial Intelligence (AI), and more. (Today’s podcast can be found here and this week’s are sponsored by Optimal Blue, the only end-to-end capital markets platform built to power performance, precision, and profitability, helping lenders of all sizes operate more efficiently, manage risk more effectively, and maximize results. Today’s has an interview with dataqollab’s Adam Quinones on how Fed actions and rhetoric have been influencing bond movement and MBS spreads.)
Services, Products, Software, and Tools for Lenders and Brokers
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“HomeEQ by Arc Home is a digital HELOC built for brokers. Go from app to funding in as few as 5 days and get paid up to 2 percent broker compensation. Based on feedback, we made upgrades that make this most efficient broker HELOC on the market. Our new Quick Pricer allows for a soft credit pull and AVM so you can check fit in minutes. If it fits, you can even start the application for your borrower. We’ve also expanded our income types allowed to align with your borrower needs. Check out our 30-day marketing playbook today or contact Lee Malone if you’d prefer a live walkthrough and strategy session on how you can add HELOCs to your 2026 business plan.”
Join Cenlar and Richey May for a Webinar on Navigating the Servicing Strategy Decision. Mortgage lenders face an important decision about their servicing strategy. Should you keep servicing in-house, partner with a subservicer or take a hybrid approach? Join Cenlar and Richey May on Thursday, Nov. 6 at 12 p.m. MT/ 2 p.m. ET for a webinar on what’s driving change in the servicing landscape. Director of Consulting Services Seth Sprague, CMB, and Director of Risk Assurance Mignonne Davis, MBA, CIA, AMP, at Richey May and Cenlar Senior Vice President of Business Development Andrew Pohlmann will cover market trends, compliance pressures and shifting homeowner expectations. You’ll also get a sneak peek into Richey May’s upcoming white paper, Servicing Strategy Vol. 1: The Servicing Decision. Register here to gain valuable insights on this important topic.
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.
Assumable GSE Loans
It’s been a moment since we last heard from attorney and Mortgage Musings author Brian Levy. Perhaps Brian is waiting for a particularly good reason to publish the 100th edition of his Musings, but he had the following insights after hearing Robbie Chrisman’s recent interview with Bob Simpson in which they discussed whether the FHFA and the GSEs could expand opportunities for loan assumptions as a way to help housing affordability to keep existing low rate loans in place.
“The legality of making existing GSE loans fully assumable might be challenging, but to achieve a similar result, the GSEs could simply tell its servicers through a Guide update to relax the need to strictly enforce the “Due on Sale” clause in their mortgages. This could enable “wrap around” mortgages to keep existing low rate loans in place as seller financing. Of course, while this may help somewhat with today’s home affordability issues, as with most policy changes, there would be winners and losers.
“Specifically, while servicers might be happy to have more ways to keep their servicing revenues in place with such a proposal, originators and homebuilders might squawk about reduced opportunities. Perhaps the most interesting question is how MBS investors might react. Investors owning securities at low rates (e.g., 3 percent) hope that voluntary prepayments will enable them to reinvest their principal today at a higher rate (e.g., 6 percent). Those investors might claim that the GSEs breached a contractual obligation to strictly enforce due on sale, but I don’t know if that’s a specific contractual requirement or whether that requirement is even enforceable against the GSEs as government actors.
“Meanwhile, any claim that MBS securities holders have some kind of reasonable reliance interest in strict GSE Guide/loan document enforcement, seems extremely dicey, especially while the GSEs remain under complete federal government control while in conservatorship. One needs only look at how FHFA and the GSEs responded to the COVID pandemic in 2020 with forbearance to further the federal government’s policy goals as an example of how policy matters can trump contracts when it comes to GSE loans. So, if the FHFA (particularly in a muscular unitary executive administration) believes that enabling wrap around mortgages would be good for the housing market generally and that its contracts do not limit their ability to change servicing obligations, it could enable wrap-arounds with the stroke of a pen.” Thank you, Brian.
Capital Markets
This week we learned that any funds from MBS maturities, or early payoffs from refinancing, will be invested in risk-free Treasuries, allowing the Federal Reserve to maintain its assets at current levels while allowing it to reduce its exposure to MBS.
It was a quiet day yesterday as we were reminded that when bond prices go down, rates go up. U.S. Treasuries extended their post-FOMC price decline, with longer maturities leading the losses amid optimism following President Trump’s meeting with China’s Xi Jinping, where both sides agreed to ease certain tariffs and trade tensions. Bonds finally found support later in the day yesterday as equities faltered, while key economic data releases were delayed due to the government shutdown.
In news more specific to the mortgage sector, for the second straight week, mortgage rates fell to new YTD lows in Freddie Mac’s Primary Mortgage Market Survey: for the week ending October 30, the 30-year and 15-year mortgage rates declined 2-basis points and 3-basis points to 6.17 percent and 5.41 percent, respectively and are 55-basis points and 58-basis points lower from a year ago. Since Freddie's survey, markets have changed course and actual rates today are a bit higher. For the most current mortgage rate info, please visit https://www.mortgagenewsdaily.com/mortgage-rates.
The September Personal Consumption Expenditure (PCE) report and Q3 Employment Cost Index that were due out today will have to be rescheduled due to the government shutdown. That leaves Chicago PMI for October, which will be released later this morning, as the only data point. Markets will receive remarks from Dallas Fed President Logan, Atlanta Fed President Bostic, and Cleveland Fed President Hammack. We begin Halloween with Agency MBS prices unchanged from yesterday’s close, the 2-year yielding 3.61, and the 10-year yielding 4.10 after closing yesterday at 4.09 percent.
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