My cat Myrtle (she/her/hers) doesn’t have a lot of financial savvy, and to the best of my knowledge has no 401(k). In another reminder not to put all of your net worth, or retirement money, in one place, Tesla has seen around $720B of shareholder value vaporize this year. Rivian truck stock, generally viewed as over-valued when it went public (sound familiar?), is down 89 percent. Rivian had a goal of manufacturing 50,000 electric pickup trucks this year, maybe hitting 25,000. Speaking of manufacturing, in our biz, a few times a year someone wakes up to the fact that manufactured housing, like that built in a factory under controlled conditions and a stable workforce, is a viable alternative to “regular” onsite construction. This time around it was Time Magazine to highlight this, a method that makes so much sense. (Ken S. reports that “We finance Modulars, but it is very tricky with the factory to foundation process. We only fund after installation whereas the factory expects payment when the house is on the truck.) We need something to spark things and was reminded by Barron’s that 2023 might bring economic pain more pronounced than that in 2022. Inflation and interest rates are expected to remain elevated, and the sustained strength of consumer finances is expected to wane. However, economists say that any recession likely would be short-lived and that positive economic trends, such as increased productivity and industrial investment, could emerge. (Today’s podcast is coming from Candor Technology. Home of the One Touch Underwrite, supporting lenders from Point of Sale to Post Close QC, to reduce repurchase risk, increase underwriter productivity by 400 percent, and decrease turn-times by 10 days.

Broker Tools

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Consumer Finance Protection Bureau: What Holidays?

The CFPB recently addressed mortgage financing options in view of the current higher mortgage loan interest rate environment. The CFPB comments on adjustable-rate mortgage (ARM) loans, temporary buydowns, home equity lines of credit (HELOCs) and home equity loans, loan assumptions, and alternative financing options. While the CFPB notes the availability and features of the different financing options, it also warns consumers of potential risks. The CFPB notes that consumers may be “wary of ARMs because of their role in the housing crisis and 2008 recession.” However, the CFPB states that, while ARM loans are not risk-free, “ARMs today look very different than those of the earlier era. Before the 2008 recession, many ARMs had fixed-rate periods of three years or less. Today most ARMs have fixed periods of five, seven, or even 10 years.”

Weiner Brodsky Kider reports that the CFPB issued a Notice of Intent to Make TILA Preemption Determinations. The CFPB recently published a notice of intent to determine whether certain New York commercial financial law provisions are preempted by TILA, after receiving a request to do so from a business trade association.

The Consumer Financial Protection Bureau has issued a final rule amending the official interpretations for Regulation Z, which implements the Truth in Lending Act (TILA). The Bureau is required to calculate annually the dollar amounts for several provisions in Regulation Z. This final rule reviews dollar amounts for certain provisions implementing TILA and amendments to TILA impacting HOEPA loans and qualified mortgages. These adjustments are applicable January 1, 2023, consistent with relevant statutory or regulatory provisions.

Capital Markets

Yesterday saw some imbalanced behavior between the front and back ends of the yield curve, influencing adjustable rate versus 30-year fixed rate mortgage pricing. The front end faced some light selling pressure while the back end attracted buyers, leaving the 2s10s spread now inverted by 54-basis points. Yesterday's trade involved a $35 billion 7-year note auction that was met with average demand. This week’s Primary Mortgage Market Survey from Freddie Mac saw the 30-year mortgage rate rising for the first time since the week ending November 10. For the week ending December 29, the average 30-year rate rose to 6.42 percent.

As mentioned yesterday in the commentary, the labor market continues to prove resilient despite other measures of weakness. Initial Jobless claims ticked up 9k to 225k last week. Continuing jobless claims increased by 41k to 1.71 million, the highest since February and up noticeably since September when continuing claims were hovering around 1.35 million. The latest report suggests that the tight labor market is showing some signs of loosening based on the time it is taking for displaced employees to find new positions.

Today’s lone economic data point of note before the early close is Chicago PMI for December. We begin the last trading day of 2022 with Agency MBS prices unchanged from Thursday evening and the 10-year yielding 3.84 after closing yesterday at 3.83 percent.

Employment and Transitions

“It’s a New Year and a new start! To compete in 2023, Loan Officers will need to increase their efficiency and lower their costs by using D1C, SSV, DVS, and CU scores in their loan workflow. Don’t know those acronyms? Your competition does! Contact MegaStar to see how our high-tech and high touch assists our successful Loan Officers. Competitive rates rely on having a low cost-to-produce. We want to show you how we can help you grow your business in 2023. MegaStar is actively recruiting Loan Officers and Branch Managers. We don’t have any recruiting gimmicks; we just want to empower you to compete and grow your business! If you want the best tech, competitive pricing, and unique programs, contact us or visit us.”

From Seattle comes news that Flyhomes has appointed Andrea Collins as Chief Marketing Officer and Dan Richards as Executive Vice President of Mortgage. Richards will “lead the Flyhomes Mortgage and Closing businesses, overseeing products and services including the Flyhomes Cash Offer, which turns everyday consumers into all-cash buyers, and Buy Before You Sell, which allows consumers to buy their next home before selling their current house, saving time, energy and money.”