Large banks have historically been the rulers of the jumbo market. Economic conditions, however, are opening up space for new entrants eyeing market share. This is because surging mortgage rates, upcoming regulatory changes and regional bank collapses have forced large depositories to pull back. Their retreat opens up opportunities for rival firms to grab market share.In Part II of our two-part series, HousingWire crunched the numbers to reveal which lenders have pulled back or exited the jumbo market, and which nonbank lenders and Wall Street firms are moving into the jumbo space. (Part I explains the jumbo market’s decline.)Our analysis of Home Mortgage Disclosure Act (HMDA) data focuses on conventional, non-conforming first-lien mortgages used to purchase or refinance single-family dwellings. We also sought input from industry experts, lenders and loan officers. Nonbank lenders are positioning themselves to gain some market share left by depositories, though they aren’t expected to make major inroads anytime soon. In the secondary market, Wall Street firms have shown more appetite for these mortgages.Who’s at the top? Wells Fargo was No. 1 when it came to jumbo originations in 2022, with $28.7 billion originated, per HousingWire’s analysis. Wells was followed by First Republic (at $20.5 billion), Bank of America ($20.4 billion), JPMorgan Chase ($17.9 billion), U.S. Bank ($15.9 billion) and Citi ($13.7 billion). PNC Bank ($7.9 billion), Morgan Stanley ($7.5 billion) and MUFG Union Bank ($5.8 billion), later acquired by U.S. Bank, rounded out the banks in the top 10. Pontiac, Michigan-based United Wholesale Mortgage was the only nonbank on the list, in the ninth position with $7 billion in volume in 2022. var divElement = document.getElementById('viz1691515664784'); var vizElement = divElement.getElementsByTagName('object')[0]; vizElement.style.width='100%';vizElement.style.height=(divElement.offsetWidth*0.75)+'px'; var scriptElement = document.createElement('script'); scriptElement.src = 'https://public.tableau.com/javascripts/api/viz_v1.js'; vizElement.parentNode.insertBefore(scriptElement, vizElement); Yet much has changed since the start of the calendar year.Inside Mortgage Finance (IMF) data shows that First Republic held the jumbo crown in the first quarter of 2023, with $3.7 billion in non-agency jumbo mortgages. Its volume declined 37% quarter over quarter and 55.8% year over year. Wells Fargo’s jumbo volume of $3.2 billion in the first quarter was down 43% compared to the previous quarter and 79% compared to the same period in 2022. First Republic’s reign was short-lived, largely because of its unique and risky jumbo mortgage strategy. The regional bank focused heavily on jumbo loans, serving interest-only mortgages at super-low rates to wealthy individuals in Silicon Valley. First Republic went from $6.3 billion in jumbo originations in 2018 to $20.5 billion in 2022. Borrowers last year had a median income of $495,000 and properties had a median value of $2.4 million, per HousingWire analysis. Median rates were at 3.2%, compared to 3.25% for conventional loans. Typically, borrowers didn’t have to start repaying the principal for a decade. The strategy enabled it to grow its assets during the pandemic, but left First Republic severely undercapitalized following the failures of Silicon Valley Bank and Signature Bank. First Republic’s stock bottomed in March in the wake of the bank failures, and depositors rushed to pull their money out. The nation’s biggest banks stepped in to stabilize the lender with $30 billion of their own money, giving the Federal Depository Insurance Corporation time to find a buyer. After a weekend of negotiations, the FDIC sold First Republic to JPMorgan. It was the second-largest bank collapse in U.S. history. JPMorgan quickly said it would kill First Republic’s low-rate jumbo mortgage program. “The loans themselves are… really creditworthy and being marked. They’re obviously going to have a much higher return going forward. But we’re not going to be putting a lot of jumbo, cheap jumbo mortgage loans in our books. And we’ve already incorporated all of our numbers into potential runoff,” the bank’s CEO Jamie Dimon told analysts. JPMorgan itself reduced its jumbo volumes to $2.9 billion in the first quarter of 2023, down 31.6% quarter over quarter and 75.4% year over year. First Republic’s ascendency in the jumbo market also reflects Wells Fargo’s decision to reposition itself, exiting the correspondent channel and focusing on minority homebuyers through its retail operation.Bank of America, which ranked third on HousingWire’s list, said despite competitors reducing their footprint in the jumbo market, it hadn’t seen a significant increase in volume. IMF data suggests BofA’s production in Q1 2023 was $2.8 billion, down 29.5% quarter over quarter, the lowest drop among the country’s top five banks. Its jumbo volume also declined 76% year over year. Bryan Sherman, senior vice president and regional sales executive at Bank of America Home Loans, said the bank, which exited correspondent and broker channels to focus on its retail branches, never targets a particular product or program. BofA, however, recognizes that the current landscape benefits adjustable rate mortgage products, especially in the jumbo market. “In a rising rate environment, ARM products are definitely more popular for clients than fixed-rate products because they’re going to take the lowest rate they can, typically an ARM. They’re going to secure it until the market rebounds, and then potentially, they’ll look at refinancing into a lower rate,” Sherman said. “Some people are still choosing to lock on a 30-year fixed rate, but in a rising rate environment — typically in the jumbo space — ARMs are the preferred option for those clients.”U.S. Bank originated $2.7 billion from January to March, down 34.6% quarter over quarter and 58.8% year over year, per IMF data. The bank closed its wholesale mortgage businesses it inherited through the acquisition of MUFG Union Bank in December 2022 and laid off staffers in July.Citi expects the jumbo market to remain challenging for some time. The bank originated $1.9 billion in jumbos in the first quarter, down 23.6% compared to the previous quarter and 47% than the same quarter in 2022. Liz Bryant, head of retail mortgage sales at Citi, said recent financial sector stresses and tighter liquidity conditions caused lenders to pull back from leveraging their balance sheets. “Rates will likely remain elevated in today’s range in the coming period, regardless of federal monetary policy. If builders are adding more homes, we should continue to see purchase demand hold throughout the buying season,” Bryant said. Customer demand for jumbo loans remains strong, she said, driven by property appreciation, material and labor inflation low inventory in new developments and limited resale listings.  The bank provides a high number of 30-year fixed-rate jumbo products, a good option in a rising interest rate environment, she said, noting that it’s not selling them on the secondary market. “We’ll explore the secondary market as opportunities arise,” Bryant said. Nonbanks enter the field HousingWire’s analysis of 2022 HMDA data shows that two large independent mortgage banks are capitalizing on big-bank pullback from jumbo portfolios, including UWM and Guaranteed Rate.Rocket Mortgage was the top nonbank lender in non-agency jumbo loan production in the first quarter of 2023, per IMF estimates. Rocket originated $1.2 billion in volume, down 59.5% quarter over quarter and 64.7% year over year. UWM was the 9th largest jumbo lender by loan amount in 2022, with $7 billion in volume. The company was the seventh-largest by number of loans, with more than 6,690 loans. IMF estimates that UWM originated $651 million in non-agency jumbo mortgages from January to March 2023, up 70.5% quarter over quarter but down 71% year over year. “Across the board, we’ve seen banks back off of mortgages… which is a great opportunity for us and our brokers,” Alex Elezaj, chief strategy officer at UWM, told HousingWire. “But I still think banks like the jumbo product because of the customer acquisition play.”  Starting this year, UWM changed its approach related to jumbo offerings, which resulted in the launching of six fixed-rate jumbo products in May. When announcing the new products, UWM said brokers would have access to “more competitive jumbo pricing, along with transparent investor guidelines and loan qualifications.”  “Historically, we’ve kind of gone out to market with basically one product or one price, [and] then we tried to fit with the specific investor guidelines,” Elezaj said. “We took those same investors that are our partners, and we just aligned specific products to them.”The new strategy offers a wider range of products, he noted. Elezaj said the new jumbo offerings are not “a big needle mover for UWM in terms of originations or profitability,” but help put brokers in a position to compete with big banks and retail lenders. UWM can’t beat the banks’ low cost of funds, which is their clients’ deposits, but the wholesale lender has its overall cost structure and competitive margin in its favor, he noted.Meanwhile, Guaranteed Rate, which was the 10th largest lender by number of jumbo loans in 2022, is also looking for a piece of the jumbo pie, with 4,410 loans, according to HousingWire data. IMF estimates bring the company to No. 12 by volume in the first quarter, when it originated $690 million, down 37% quarter over quarter and 72.8% year over year. Kate Amor, senior vice president and head of enterprise products at Guaranteed Rate, said the lender remains “hyper-focused on being the best fintech retail originator in the country,” developing products that meet the needs of jumbo borrowers. “Nonbank jumbo is as competitive as it has ever been,” Amor said. “Guaranteed Rate continues to be a trailblazer in the jumbo market, having issued our own jumbo securitizations, and remains hyper-focused on offering a diverse range of products that serve all jumbo borrowers.”Amor said retail banking failures created uncertainty in the market, with most depositories not active in the loan acquisitions space. Meanwhile, Wells exiting the correspondent channel created volatility in the secondary market, which smoothed out after a couple of months. The trend of retail banks underpricing 30-year fixed jumbos (non-economic pricing) has dissipated as deposits run off or pending capital requirements causing them to pause. However, “relationship pricing” is as strong as ever, Amor said. Do Wall Street firms have an appetite?Large Wall Street firms see market opportunities with jumbo loans. For example, jumbo loans represented 96% of Goldman Sachs‘ total mortgage volume in 2022, the most of any lender.Meanwhile, others taking an interest in the market are Northern Trust Co. (94%), Redwood Residential Acquisition Corp. (90%), BNY Mellon (88.8%), Charles Schwab Bank (87.9%) and defunct Silicon Valley Bank (87.7%). SVB originated $2 billion in jumbos last year, compared to $524.4 million in 2018, per HousingWire’s analysis.Real estate investment trusts have also capitalized on banks’ retreat from the jumbo space.In a recent call with analysts, Christopher Abate, CEO of Redwood, said the REIT will take advantage of Basel III rules by engaging with more banks to acquire their jumbo loans. Abate said the REIT had started conversations with more than 70 banks.  “Over the past few months, we’ve completed onboarding and have already activated a number of regional and mid-sized banks with aggregate assets of over $2 trillion, and we’re in various stages of bringing many more online in the coming weeks and months,” Abate said.  Before the onset of the regional bank crisis this past March, depositories originated two-thirds of all jumbo mortgages in the first quarter of 2023, Abate said. However, with so many changes in the market, including the Basel III proposed rules, Abate believes the future can be different. “We expect that through the benefit of hindsight, these regulatory changes will mark a major turning point in how most non-agency loans are owned and distributed in the United States.”Flávia Furlan Nunes, a Mortgage Reporter at HousingWire, reported this story. Will Robinson, a Data Journalist at HousingWire, analyzed the data and created the visualizations. They can be reached at flavia@hwmedia.com and will@hwmedia.com.

With home sale transactions down, fraudsters are turning to mortgage payoff fraud to secure bigger payouts.Mortgage payoff fraud occurs when a title company mistakenly sends a mortgage payoff to a fraudulent bank account after receiving wiring instructions that appear to be from the mortgage servicer. The instructions, however, are actually from fraudsters.From the first quarter to the second quarter of this year, the market saw a fivefold increase in mortgage payoff fraud, according to a new report from fraud prevention tech firm CertifID.The firm caught $1.9 million in attempted mortgage payoff fraud in Q1 2023. By Q2 of this year, that number rose 532% to $12 million, according to CEO Tyler Adams.Grand Rapids, Michigan-based CertifID, whose identity verification toolset aims to secure mortgage payoffs, first began seeing instances of mortgage payoff fraud three years ago, said Adams, who noted that an increase in fraudulent activity was likely due to a “breakdown of processes and technology”.Adams suggested the stark increase in mortgage payoff fraud was likely the result of a cooler housing market with fewer real estate transactions. Mortgage payoffs, which average more than $236,000, typically yield much higher payouts than wire fraud. They often are initiated through a business email compromise, with the target being the mortgage lender, he said.“Fraudsters are really crafty when it comes to mortgage servicing, because a lot of the time they are able to send an e-fax to a title company and it replaces the current statement they have on file,” he said.In the mortgage servicer environment, minimal communication between title firms and mortgage servicers open up opportunities for fraudsters. It’s also common for mortgage servicers to change the banks they use to receive mortgage payoffs, which, sometimes, can make it difficult to distinguish whether a change in wiring instructions is fraudulent or legitimate.A lack of frequent communication between mortgage servicers and title companies also can mean successful mortgage payoff fraud attempts don’t get caught until the seller receives a late payment notice from their lender on a loan they believed was paid off at closing. The delay in discovery can make it nearly impossible to recover the lost funds.As mortgage payoff fraud increases, CertifID said it’s expecting to see a sizable quarter-over-quarter increase based on preliminary numbers for July.Adams advises that firms be vigilant against anything that appears unusual.“Always be wary of last-minute changes or updates to wiring instructions,” Adams said. “If you end up with two payoff statements and you can’t tell which one is right, make sure to call the lender first, no matter how long you need to wait on the phone to get verification.”

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Home prices are going up across the country after slowing for more than a year, according to a new report from data and analytics company Black Knight.The report found that nationally, home prices in June rose by 0.67% month-over-month on a seasonally adjusted basis. Meanwhile, the annual home price increase was 0.8% in June, up from just 0.2% in May. Calling the June price increase an inflection point, Black Knight Vice President of Enterprise Research Andy Walden said the rate of home price increases would have a “lagging, but significant impact on the annual rate of appreciation.” Month-over-month, home prices increased in more than 60% of markets, with notable exceptions in Austin and San Antonio, where prices declined month to month in June on a seasonally adjusted basis. The strongest price growth was in Hartford (+1.2%), Seattle (+1.2%) and San Jose (+1.2%). “At the national level, home prices have now fully erased their 2022 corrections hitting new all-time highs in June on both seasonally adjusted and non-seasonally adjusted bases,” the report said.Annual growth was strongest in the Midwest and Northeast markets, while West Coast and pandemic boom markets continue to see prices run below last year’s levels. Milwaukee (+6.4%), Cincinnati (+5.7%), and Philadelphia (+5.6%) are more than 5% above last year’s price peaks, with a handful of Midwest and Northeast markets, including Kansas City, Virginia Beach, Richmond, Baltimore, Providence, St. Louis and Chicago up more than 4%.Rising home prices also boosted homeowner equity levels. The average mortgage holder now has $199,000 in equity, up from $185,000 in the first quarter, but down from $207,000 at the same time last year. Strong equity positions are one element of today’s historically strong mortgage performance, the report said.The June report also quantifies the savings during the last big wave of refinance activity. Existing homeowners who have benefitted from $42 billion in cumulative savings through refinancing in the past three years are now also benefiting from strong income growth, according to Black Knight. Existing homeowners need 21% of the median household income to make the average monthly principal and interest payment, compared to more than 36% for prospective homebuyers in today’s market. Low interest rates locked in during the pandemic are keeping payments down for existing homeowners and contributing to low delinquency levels. Meanwhile, owing to high interest rates, affordability for prospective homebuyers is at near 37-year lows. For existing homeowners, the relatively low share of income required to meet mortgage obligations along with the strong credit quality are contributing to a 16-year low in seriously delinquent mortgages, the report said.

After failing to achieve its goal of remaining adjusted EBITDA positive in 2022, analysts were unsure if Compass would make good on its most recent financial goal of becoming free cash flow positive in the second quarter of 2023. But the Robert Reffkin-helmed brokerage has proved the naysayers wrong, at least for now.During the second quarter of 2023, Compass recorded a free cash flow of $51 million, compared to a free cash flow loss of $59 million the prior quarter. Kalani Reelitz, the firm’s chief financial officer, also noted that Compass repaid the remaining $150 million draw it had taken out form its revolving credit facility in July.“I am pleased to share that in the second quarter we grew market share, grew agent count and grew margin while delivering positive free cash flow and strengthening our cash position,” Reffkin told investors and analysts listening to Compass’ second quarter earnings call Monday evening. “We achieved strong financial results that were inline with guidance in the midst of a quarter that was impacted by mortgage rates increasing 100 basis points to 7%.”Executives attributed this success to Compass’ commitment to cutting operating expenses, which came in at $1.54 billion for the quarter. A year ago, its Q2 operating expenses were $2.11 billion.Compass’ free cash flow win came despite a 26% annual drop in revenue to $1.5 billion, which the brokerage attributed to a 19% year-over-year decrease in transaction sides to 54,207, combined with a decrease in the average home sale price, as the brokerage’s gross transaction value dropped 26% year over year to $56.8 billion.While Compass may have been free cash flow positive for the quarter, the brokerage still reported a net loss of $46.9 million. However, this is an improvement compared to the $101 million net loss reported a year ago.Compass executives were also pleased that the firm’s free cash flow success came alongside its third consecutive quarter of market share growth, which came in at 4.6% for the quarter, up 13 basis points from Q1 2023. In addition, Compass also reported an increase of 429 principal agents compared to a year ago and a retention rate of over 90%.“We are seeing competitors reduce the financial incentives they were using in attempt to recruit Compass agents and a race to the bottom environment where many traditional brokerages that historically competed on value-add and support services,” Reffkin said. “We are now seeing these firms cut back on these areas and many cases are adding themselves to the already crowded low cost, low value brokerage services landscape. Compass is going the other direction. We are trying to widen our competitive advantage as the high value brokerage space is becoming much less crowded.” Reffkin said that it would not surprise him that in the years to come, Compass being “the only major national brokerage competing to serve agents high value products and services.”Greg Hart, Compass’ chief operating officer, added: “We continue to grow our principal agent count since we eliminated cash and equity sign on incentives last summer. The vast majority of agents tell us the Compass platform is the number one reason for coming to Compass.”Compass will continue looking for expansion opportunities through strategic mergers and acquisitions, executives said.The brokerage’s next goal is to remain free cash flow positive for the full year 2023. Executives said they’ll continue to focus on Compass’ technology offerings, as well as expanding its title and escrow business integration, which recently launched in San Diego. By the end of 2023, Compass plans to expand this integration into all markets where it offers title and escrow including Philadelphia, Washington, D.C., Maryland and Virginia.“We are very strong and we are still investing in growth in the platform,” Reffkin said. “We are excellently positioned for the cyclical upturn that will come when the market normalizes.”  

Encinal Terminals, a 32-acre plot of land that formerly operated as a shipping terminal on the north side of Alameda, California, will be developed into a new housing development in an effort to bolster the supply of one of the most expensive areas in the country. This is according to reporting at the Mercury News and the Alameda Post.In a deal brokered between the State of California’s Lands Commission and the City of Alameda, the 32-acre area situated on Alameda’s north shore is now planned to serve as a location for new communal spaces like parks, as well as 589 housing units — just under 15% of which, or 80 units, will be “affordable,” according to the reporting.Chief sponsor Mia Bonta, a California assemblymember serving the 18th district that includes Alameda, announced the passage of the bill on social media, and presented information about the proposed measure to the Alameda city council in June. Gov. Newsom signed the bill into law on July 27.“AB 1706 is an important bill for the City and the community,” Bonta said. “It’s so great that my first bill signed is one that will deliver for my district. With the signing of the bill, the City can move forward with plans to build 589 housing units, provide access to more than 4 acres of waterfront parks, and turn 13 acres of submerged lands into a marina. This is a win for everyone.”The city itself is also looking forward to developing the land into spaces that have more utility for residents. The once-blighted property sat vacant for over a decade. Other state governments have also engaged in arrangements to acquire more land for housing development. Last week, the State of Nevada entered into an agreement with the U.S. Department of Housing and Urban Development to acquire federal land in the Las Vegas metropolitan area at a per-acre rate well below the land’s market value with the intention of developing it into additional housing units.Within Clark County – the area that contains the Las Vegas metro area – officials say that there is a shortage of approximately 85,000 housing units, echoing issues being faced across the country.

Things are continuing to heat up in Zillow Group’s legal battle with discount brokerage REX Homes, as the September 18, 2023, trial date looms ever closer.On Friday, Judge Thomas Zilly, the U.S. District Court judge in Seattle overseeing the lawsuit, issued a minute order denying in part and deferring in part Zillow’s motion for summary judgement in the case.In mid-June, the three parties involved in the suit, Zillow, REX and the National Association of Realtors (NAR), all filed motions for summary judgment on at least some issues, if not the entire lawsuit.Three of REX’s claims Zillow filed motions for summary judgement on were denied by Zilly, while Zillow’s motion for summary judgement on REX’s antitrust claim was deferred.Originally filed by REX in March 2021, the lawsuit alleges that changes made to Zillow’s website “unfairly hides certain listings, shrinking their exposure and diminishing competition among real estate brokers.”Two months prior, in January 2021, Zillow began moving homes out of its initial search results for sellers who chose not to use agents adhering to the NAR and local multiple listing service (MLS) practices.In January 2022, NAR filed a countersuit claiming that REX uses false advertising and misleading claims to deceive consumers in violation of the Lanham Act, but the countersuit was dismissed in late April 2022.In mid-May 2022, REX ceased its brokerage operations. Since then, REX, Zillow and NAR have gone back and forth with filing various motions to compel during the discovery phase of the trial.In his minute order filed on Friday, Zilly denied Zillow’s motion for summary judgement on REX’s Lanham Act claim, REX’s claim for unfair and deceptive trade practices and REX’s defamation claim.In regards to REX’s Lanham Act claim, Zillow contended that REX cannot prove that the allegedly false statements in question were made in “commercial advertising or promotion,” and that REX cannot establish injury or damages. However, Zilly felt that Zillow had not demonstrated that REX is unable to satisfy the test for commercial advertising or promotion.In its motion for summary judgement, Zillow also claimed that REX’s unfair or deceptive trade practices claim should fail if the Lanham Act claim fails. However, according to Zilly’s order, REX has pleaded “both the “unfair” and “deceptive” prongs” of a consumer protection act (CPA) violation.“Zillow has not demonstrated that it is entitled to judgment as a matter of law with respect to REX’s CPA claim,” Zilly wrote.Finally, Zillow’s motion for summary judgement on REX’s defamation claim also was also denied. In the motion, Zillow argued that REX’s defamation claim fails as a matter of law as REX cannot prove damages, however, during oral arguments REX noted that it only seeks nominal damages. Zilly denied the motion as he felt that given the record on this claim, “the Court cannot determine as a matter of law whether REX can prove the actual malice necessary to be entitled to nominal or presumed damages.”NAR and REX also filed motions for summary judgement on the case in June, but rulings have not yet been issued. “We continue to maintain the claims made in REX’s lawsuit are without merit. REX chose to use Zillow’s services to advertise their for-sale properties on Zillow – for free. Zillow has consistently advocated for outdated rules to be changed to allow the broader display of all listings on all platforms, including For Sale By Owner and listings from other companies like REX.  Zillow’s business decisions were squarely focused on improving the data on our site and the experience for customers,” Will Lemke, Zillow’s corporate communications manager, wrote in an email. “We hope the court sees this suit for what it is: REX seized upon Zillow’s website design change to hide its own business failings.”NAR also believes its side will succeed in the lawsuit.“While NAR was not a party in Zillow’s filing, we still believe the law is on our side and we remain confident we will ultimately prevail,” Mantill Williams, NAR’s vice president of communications, wrote in an email. “NAR guidelines and local broker marketplaces create highly competitive markets, empower small businesses and ensure equitable home ownership opportunities, superior customer service and greater cost options for all buyers and sellers”Lawyers for REX did not offer comment on the ruling at this time.

Computer vision and AI solutions provider Restb.ai and Bradford Technologies announced their partnership at the Valuation Expo in Las Vegas on Monday. As part of the partnership, Restb.ai’s AI technology will be integrated into Bradford Technologies’ report quality control processes. By leveraging Restb.ai’s advanced computer vision and machine learning technology, Bradford aims to automate and strengthen quality control processes, including the detection of image issues such as out-of-focus images and other problematic content.Tony Pistilli, general manager of valuations for Restb.ai, expressed his enthusiasm about the collaboration: “Working with Bradford, we are providing the newest and most advanced AI technology to accelerate the modernization of the appraisal process.”Modernizing the appraisal process has been a significant focus of Fannie Mae and Freddie Mac, and in March Fannie Mae updated its Selling Guide to include more options than traditional full appraisals on some properties. Those options include value acceptance (formerly appraisal waivers), value acceptance plus property data and hybrid appraisals. Key to the new options are Fannie Mae’s Property Data API, by which Fannie “has established a property data standard and API to collect data and images consistently,” according to its website. “The process encourages the use of emerging technologies to capture property information, imagery, and floor plans.” Jeff Bradford, CEO of Bradford Technologies, highlighted the value of Restb.ai’s Visual Insights AI technology. “Restb.ai’s Visual Insights artificial intelligence technology takes a photo and converts it into detailed information. This is a service every appraiser needs to improve their inspection efficiency.”Restb.ai’s quality control solution, a key component of its new Valuation Product Suite, is tailored for the appraisal industry. The suite incorporates advanced technology for comparable properties, data collection, form pre-population/validation, and Restb.ai’s proprietary appraisal complexity score.

I am going to be controversial here. The GSEs have become more aggressive in their levels of buybacks with lenders. I say this without the benefit of the specific data, and I would love to see some from Fannie Mae and Freddie Mac, or the FHFA, but in the absence of that, I have interviewed a wide variety of lenders, all IMBs, and the feedback is consistent.Lenders are mad. They feel like the GSEs are not being consistent with commitments made in recent years about materiality and options for remediation. And they fear retribution if they make these points, so instead they simply engage with their respective GSE each month to try to get them to take back the repurchase requirement on this loan or that loan. It’s a loan-by-loan drudgery that takes staff time and adds costs to a lender’s bottom line.At a time when the customers of Fannie Mae and Freddie Mac are losing money, or barely breaking even, the GSEs are having a heyday. As was reported last week in Inside Mortgage Finance for example, “Freddie Mac racked up $2.94 billion in net income in the second quarter, up 41.0% from the first quarter and 20.0% from the same period last year. This marks the enterprise’s fourth consecutive quarter of increasing profits, which reached their highest level since the first quarter of 2022.”When considering the buyback frustration, it is unsettling when it is stated in the earnings press coverage that, “The resulting increase in homeowner equity allowed Freddie to release $537 million in loss reserves in 2Q23. That’s compared to a $395 million provision for credit losses in the prior quarter and a $307 million provision a year ago.” In other words, the portfolio is stronger but they are kicking back more loans to lenders — more than has been seen in many years.In speaking to lenders, the feedback was consistent. They believe that both GSEs changed their sampling methodology for quality control review earlier this year with specific focus on nonbank originators. Why would the GSEs focus on IMBs? It’s rumored that this more aggressive posture is because they are concerned about potential failures of some of their customers during these tough times and therefore they would lose their counterparty to warranty defects on loans should they go to default. Banks, in their view, are less risky and therefore the need to force buybacks on them is less. In fact, it is rumored that some banks are given options to simply indemnify defective loans found in the QC process, where for nonbanks the only option is repurchase.If true, the unfairness of this entire scheme is disconcerting. The GSEs are posting ever-increasing profits in the billions of dollars while their customers are struggling to make it through this higher-rate environment. That environment was driven entirely by actions of the federal government by first overstimulating the economy during the COVID crisis and then correcting for it, or perhaps over-correcting, in the current time frame.What’s even more incredible is that approximately 80% of loans being sold to the GSEs, which are driving their massive profit surge, is coming from the IMB community. But by their own actions the GSEs are only contributing to the financial burden that these companies face. Nonbanks that try to re-sell the repurchased loans are faced with massive discounted pricing as the loans are not only “scratch and dent” but most are at far discounted rates compared to today’s market. This is like a king in a castle robbing the farmers who toil the soil to bring them food and taxes. At face value, it appears aggressive.Years ago, the MBA, lenders, and other groups reached terms with the GSEs and FHFA about the rep and warrant challenges. It was agreed that lenders that intentionally commit fraud or misrepresentation should not be spared. It added that “fat finger” defects, mistakes that seem to happen over and over again regardless of intent, would also not be forgiven. Even violations of materiality, meaning the loan would never have been made if these defects had been disclosed, might cause repurchase.But there was also an acceptance of what the lender knew or could have known at time of origination. There were alternatives to repurchase for less egregious defects other than repurchase. But all of this seems to have been forgotten.Lenders tell me they are seeing repurchase demands for appraisal errors, for miscalculation of income (usually self-employed or variable income over time) and more. But whatever the reason there is one common reality: The volume of repurchase demands is up and this is adding financial stress and increasing counterparty risk to the GSEs at a time when their earnings say that credit risk is declining, in fact it was the key contributor to Q2 earnings.Jaret Seiberg of TD Cowen released a report this week that leads with, “Housing: could Washington trigger a mortgage credit crunch?” Never was there a more timely report from Seiberg. His opening statement says it all, “Our worry is that Washington policy changes could contribute to a mortgage credit crunch in the coming years as banks face capital challenges and a tougher economic environment, while the government appears unlikely to take key steps to ensure non-banks will remain key providers of mortgage credit.” In his report he calls for expansion of Federal Home Loan Bank (FHLB) access for IMBs, which would improve their liquidity.The irony here is extraordinary. The GSEs, with the assumed support of FHFA, is increasing risk to their IMB customers by implementing what appears to be a far more non-negotiable buyback policy while at the same time reaping massive profits in the billions — billions — from these same customers.The irony continues in that a key contributor to earnings was reducing loan loss reserves due to higher equity and loan quality, yet they are saddling lenders — their customers — with repurchase demands.Finally, as Seiberg points out, the GSEs and FHFA may be unintentionally piling onto the credit contraction that may get worse due to the list of items in his report combined with the lack of solutions such as FHLB membership modifications.I come at this issue with the benefit of having run the single family business at Freddie Mac, being on the President’s Housing Team during the Great Recession where we looked at GSE policies that could help or hurt the market, and as the former CEO of the MBA. I have interviewed a large number of customers of the GSEs who want to remain nameless as they fear retribution from these critically important companies. And while I am certain that groups like the MBA and others are approaching this with the usual decorum that helps them succeed on key policy issues, I think there is a time when voices of dissent are critically needed.We are literally squeezing the life out of many institutions who are needed to keep the housing market functioning. More importantly perhaps, the trust deficit between this power duopoly of Fannie Mae and Freddie Mac, each reaping billions in profits in a market where almost all others are struggling, is only widening. Saddling the IMBs with ever-increasing financial risk, unless the defects are intentional, material, or repeated consistently, appears to violate the integrity of all the great work done between industry and the GSEs years ago.This is at least a time to consider the implications and fairness here. I would hope these companies and their regulator listen to the voices of concern.David Stevens has held various positions in real estate finance, including serving as senior vice president of single family at Freddie Mac, executive vice president at Wells Fargo Home Mortgage, assistant secretary of Housing and FHA Commissioner, and CEO of the Mortgage Bankers Association.This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.To contact the author of this story:Dave Stevens at dave@davidhstevens.comTo contact the editor responsible for this story:Sarah Wheeler at sarah@hwmedia.com

The strongest agents are constantly analyzing their return on investment regarding how they’re spending both their time and their money. This includes money spent on their business as well as their personal lives. Below are the top 10 powerful secrets that strong agents use to stay motivated and keep the right mindset for success.    If they’re not getting more out than they’re spending in return, the expenditure isn’t worth it. ‘Breaking even’ doesn’t count, because of the time lost and effort expended to get the results. Results mean trackable, profitable, closed business. Not just leads, impressions or likes. They are actively and aggressively isolating themselves from the media, both online and off. They are making their world smaller regarding who is influencing them. Following a  media-free morning or media-free life is a good start. Eliminating negative feeds from social media is another good strategy to ‘build a moat’ around your mindset! They are constantly monitoring their own internal dialog. Has negative thinking entered their mindset? Strong agents are self-aware of the unintended consequences of allowing one negative thought to manifest. They are hyper-aware of their own market conditions. They study what’s selling, what’s not and what the hot price ranges and zip codes are. Strong agents know where the new construction is being built and they know what’s happening with mortgages. They’re not hiding out waiting for the market to lift them up. Their mantra is ‘If it’s meant to be, it’s up to me!’ They are very proactive in their lead generation, having more conversations with more prospects. They’re not reliant on lucking into repeat or referral business, and they’re not addicted to buying leads. They are working with multiple sources of business at once. They are aware that when they’re feeling out of control, they’ll subconsciously look for things to control. This sometimes manifests in overeating, substance abuse, and wrecking relationships. That gives them the feeling of control, but it’s destructive. Powerful agents (and people) are introspective before they make those mistakes. They recognize their own ‘early warning signs’ as the trigger to the bad behavior and take a step back before causing more drama to themselves, their prospects, clients or family. They are empathetic to the fact that other people don’t have the mechanisms to adapt quickly to the forced changes happening in the economy.Strong agents forgive easily and quickly because they understand that others are stressed. They offer a positive light backed by facts and thoughtful solutions, rather than jumping in the moshpit of negativity or drama.Because they’re rooted in a mindset of service, they are genuinely excited and appreciative of the opportunities in the market.They are focused on the many people who genuinely need help and they are there to be of service.   They know that knowledge leads to confidence and ignorance leads to fear. Thus they are constantly increasing their skillset so they can increase their confidence. They’re seeking out new ways to be able to help more people in a variety of circumstances. An example of this is knowing how to explain different types of mortgage loan programs that get the interest rates down and make the payment more attractive. They’re involved in Premier Coaching. They actively get overwhelming value from the daily, semi-private coaching sessions! Tim and Julie Harris host a podcast for real estate professionals. Tim and Julie of Premier Coaching have been real estate coaches for more than two decades, coaching the top agents in the country through different types of markets.

The decision to allow the ICE – Black Knight merger to proceed announces the digital integration of the real estate value chain anticipated for over 25 years. Digitization redraws industry boundaries and changes how the value of information is expressed, enriched and exchanged. The capital, capability and content are present to make all real estate markets smarter, faster, safer and connected. Consumers, communities and taxpayers are major beneficiaries.Residential property transactions are manufactured with data components assembled from disconnected and diverse sources.  Many industries began to deploy electronic supply chains in the 1980’s. Real estate still relies on a “system” unable to integrate production across the silos of media, brokerage, lending, insurance and trading. The result is higher costs, lower productivity, unmeasured quality, and systemic exposure as government monopolies take most of the risk and make most of the money. The GSE’s $8B profit in 2Q could buy most of the brokerage industry.Technology and the trust modelReal estate is too vital to our economy to be so financially concentrated and functionally outdated. Technology hasn’t been the barrier since 1998 when Equifax, and later other firms, developed systems to secure complex, multi-party transactions over the Internet.  Lenders began to define the “trust model” of standards, contracts and shared services necessary to achieve cross industry interoperability.  Conflicts among special interests and then the GFC prevented full adoption.  Low interest rates and purchases of Agency securities helped to foster a – don’t fix what’s not broken mindset. The reckoning has brought staff reductions, loan repurchases, higher reserves and mass consolidation.Behind the headlines of locked-in supply and tighter credit is the start of a new real estate cycle driven by the urbanization of the suburbs. Information deficits are a feature of secular shifts until new insights fill the knowledge gaps.  Geographically aware marketplaces that link listings, lending and liquidity will unlock actionable information.ICE is best known as the owner of global marketplaces including the New York Stock Exchange. It entered real estate in 2012 after buying DebtMarket, an exchange for distressed home debt. A sequence of acquisitions followed that targeted the control points of a next generation operating system.  MERS provided a trusted “golden record” of the owner of the mortgage loan asset, Simplifile reaches the county recording end-points, IDC integrated $5.2B of data services, Ellie Mae added $11B of origination processing, risQ made location risk visible and now Black Knight delivers another $11B of MLS capability, public data and consumer payments.  This massive bet on a digital future delivers trusted connections to verify parts (data), eliminates rework, assures quality and collapses the cycle time of a loan.The power of innovationICE’s network, data and trading system architecture can power innovation to transform fixed income capital markets.  A “Housing Capital Cloud” would unify the fragmented ecosystem to package, evaluate and distribute information based “durable goods.” Lenders should expect to redesign workflows and business rules to determine if a loan is “Fit 4 Sale.” Homebuyers and other investors will gain better views of risk and return as hyper local “Forward” projections inform valuations and pricing for a range of assets. A “Lens” that creates a shared understanding of all property sub-markets may enable the private and public sectors to effectively target capital that meets the challenges of housing affordability, struggling downtowns, fiscal imbalances and social inequities that unevenly affect every community.      The basis of competition is shifting as ICE, CoStar, Zillow, and the GSEs after release, contend for consumer attention, top producer loyalty and data supremacy.  ICE has previewed a Consumer Engagement Suite which could deliver a list-to-loan-to-servicing experience.  Realtors have a structural advantage as the listing event is the signal to downstream transactions.  Will they ever share in the value of their data to profit beyond the first point of sale?ICE promises a systemwide upgrade where everyone wins except the unstable status quo. Digitization will enable industry efficiency, new choices for consumers and communities, reliable liquidity for capital markets and risk aware pricing of guarantees.  The “on platform” first movers will grow profit margins, gain market share and build brand equity by controlling their digital rights, adopting interoperability standards and creating greater value from local networks. Success means zero defect loans, costing $2K to manufacture, for 5M new homes, built in the right places.This merger means modernization that advances real estate toward an adaptive, sustainable and connected future.  Stuart McFarland is the former EVP Operations and CFO at Fannie Mae, EVP General Manager at GE Capital Mortgage Services, and CEO at GE Capital Asset Management. He is a current public companies board member and cofounder of Places Platform LLC.  This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.To contact the author of this story:Stuart McFarland at info@placesplatform.netTo contact the editor responsible for this story:Sarah Wheeler at sarah@hwmedia.com

Here’s one for you: How many fintech companies does it take to reduce the cost to originate a loan? There’s no great punchline to throw in here — only the sobering fact that it cost a record high of $13,171 to originate a loan in the first quarter of 2023, according to Fannie Mae’s recent lender sentiment survey. Still, the FHFA set out to answer this question by gathering more than 60 companies together in Washington, D.C. for the inaugural Velocity TechSprint in July. This hackathon of sorts had a single goal: determine the best solution to effectively use data to reduce loan cost and make lending more attainable and fair for consumers.I was one of 80 participants assembled together in 10 different teams. Each team contained a cross section of lenders, fintechs, consultants and others united by a common goal. We had three days to engineer a viable solution to some of the biggest challenges in lending — oh, and boil down those three days of solutioning into a five-minute pitch in front of industry judges. No pressure there.This was very much an exercise for optimists, innovators and maybe even dreamers. Loan costs have risen every quarter since the first of 2020. So what could really be done in three days that hasn’t been tried in three years? We have watched the record rise and fall of investment in technology solutions over the past few years amidst record loan volumes, many of which promised to automate a better borrower experience and deliver shorter loan closing times. But the stubborn fact remains that transformative change has yet to materialize.Still, that evidence made the idea of locking arms with industry leaders and working with competitors even more compelling. People arrived ready to ideate, compete and cooperate.A few things became apparent within our team on the first day of working together, and we were ready to attack every aspect of the loan lifecycle to make it better. From consumer financial readiness to loan servicing years after close, everything was on the table. Our knowledge of how the whole thing fits together was exciting. To make a big impact, we have to have a big solution, right?It wasn’t until the second day that the truth finally became clear: We only had time to flesh out and describe one good idea, not the more than five we had packaged into one big solution. As the team debated and consumed an intense amount of coffee, it became clear that every solution idea we wanted to build upon was lacking one key component that had yet to be solved for the industry. There was a lack of data trust.Lenders and other stakeholders spend countless hours checking, verifying, rechecking and reverifying the same data over and over again. That data usually comes in the form of a document, which gets sent around to various stakeholders, sometimes with accompanying structured data, sometimes not. Data gets re-extracted over and over again. There’s an industry-wide inability to easily understand whether the data or document has changed since the last time it was checked, and to understand if that data is from the original, direct source.The mortgage industry loves using the phrase “checking the checker,” because this is common practice even when GSE automated underwriting systems are fully in use. Our team set out to solve this data trust issue and give lenders a way to check an authoritative source to verify if data has changed since last delivery, instead of having to reverify all the data from scratch again.It turns out we were not the only team that arrived at this conclusion — at least half of the pitches featured some aspect of data trust. Whether the focus was on providing better ways for consumers to control and securely share their own financial data, or on enabling lenders to more efficiently consume new alternative sources of credit data, data trust was a central theme.There were some strong cases made for the use of blockchain and NFTs to provide a tokenized way of securely sharing and trusting consumer data, but in the end it wasn’t the lack of technology that was identified as the biggest speed bump, it was the lack of standardization and central authority.Which leads us to one of the most surprising themes of the week: fintechs asking for government involvement. There seemed to be a common realization that a healthy cooperation between the public and private sector was needed to create a major change to the status quo.Yes, I realize that the event was hosted by the FHFA, so maybe this isn’t surprising. The cold hard truth is this: The need for centralized data trust in an ecosystem as complex and regulated as the mortgage industry is beyond what any one innovator can bring about quickly. Some sprint teams proposed cooperatives with public and private organizations, while others asked for outright government agency and mandates.I was reminded of the recent plea from generative AI companies asking for government regulation. Interestingly enough, reducing the risk of bias in generative AI models comes down to data trust as well, so it appears we are onto something here.I came away from the event encouraged once again in the mortgage industry’s willingness to work together to solve big problems, but the real test is what happens next.

Since 2008, the number of private secondary mortgage providers has reduced dramatically, and those that remain in the market generally purchase jumbo loans from more affluent borrowers. Fannie Mae and Freddie Mac have been under government conservatorship since the beginning of 2008. Ginnie Mae is wholly owned by the federal government. This is important to note because most people believe that the government has no business competing with private enterprises unless it is there to serve segments of the market that are not being adequately served by the private sector. While banks also have the capacity to make loans and hold them on their balance sheets, the majority sell most or all of their loans to secondary providers. They do this to reduce their risk and to free up their capital to process more loans. Independent mortgage bankers use lines of credit to fund all of their loans and therefore must sell them promptly on the secondary mortgage market. The bottom line is that the secondary mortgage market is the platform that powers the entire mortgage ecosystem in the U.S. The benefit of a system with a robust secondary mortgage market is that borrowers can access competitively priced mortgages in almost every market in the country, and because the secondary market is limited to a handful of providers, the mortgage approval process is widely standardized. In other words, the process and criteria to qualify for a mortgage are very much the same throughout the country. Without a strong secondary mortgage market supported by the federal government, lenders would be able to fund far fewer loans, and would likely flock to the most affluent areas in the country, leaving less-affluent markets with fewer options to finance a home. The drawback to having a uniform secondary mortgage market is that there isn’t much differentiation in the market. Because mortgage lenders need to underwrite their loans to satisfy either Fannie Mae, Freddie Mac or Ginnie Mae guidelines, every mortgage lender in every market offers much the same products and follows the same underwriting guidelines, making it difficult for mortgage lenders to serve borrowers who fall outside the narrow underwriting box. Incentivize lenders to service more minority borrowersBecause Hispanic and Black borrowers typically have less wealth and are primarily first-time homebuyers, processing loans for minority borrowers can require more time and work.Additionally, loans made to first-time buyers with small down payments are considered riskier and have higher rates and fees to compensate for the additional risk. Loans made to minority borrowers also tend to be smaller, so the commissions are lower. Essentially, loans made to Hispanic and Black borrowers frequently make less money, cost more to produce and carry more risk. The financial incentives are simply not there for mortgage companies that want to do more minority lending; therefore, it shouldn’t be a surprise that most banks and mortgage lenders do just enough minority lending to stay out of regulatory trouble but secretly have no desire to do much beyond that.Fannie Mae and Freddie Mac have had affordable lending goals for years, but the impact of closing the minority homeownership gap has not been that significant. If the federal government was serious about closing the minority homeownership gap, they would require Fannie, Freddie and Ginnie Mae to provide financial incentives to lenders that outperform the market in lending to minority, first-time buyers. Today, a handful of companies make a disproportionate percentage of loans to minorities. They do it despite the financial sacrifices, but their success proves that it can be done. Minority lending goals without financial incentives will continue to have modest outcomes, but if the financial incentives are aligned with the goals, lenders will respond accordingly and the impact on minority lending would be substantial. How to safely qualify more minority borrowersThe U.S. is one of the few places in the world where you can get a fixed-rate mortgage amortized over 30 years. It is also a great product that would not be possible without our secondary market. Fixed-rate mortgages provide stability and predictability. The criteria to qualify for a fixed-rate mortgage has not changed much in the last 60 years. Lenders use systems called automated underwriting systems (AUS) that are accessed by Fannie Mae and Freddie Mac. Income and credit information are inputted into the AUS. Then, it makes a decision based on three primary factors: debt-to-income ratio (DTI), credit score and loan-to-value ratio (LTV). Credit and loan-to-value ratios are fairly easy to determine for most people, but evaluating income is where judgment is sometimes involved. Today, for borrowers who do not get all of their income from fixed wages, their income is averaged over the most recent two-year span, making it more difficult for self-employed and part-time workers to qualify for a mortgage. Latinos and other minorities are almost twice as likely to have self-employment or part-time income as the overall population. The emergence of the “gig economy,” where more people earn their money by working multiple part-time or temporary jobs, presents challenges for underwriters who are bound by a process that was designed when 90% of the population earned a standard paycheck. A borrower’s income should always be evaluated as part of the underwriting process, but closing the minority homeownership gap will require more innovation in determining income and the ability of a borrower to repay a mortgage. Thin credit, when a borrower does not have enough established credit to generate a dependable credit score, is also an issue that tends to affect minority borrowers more frequently. Recently, Fannie Mae and Freddie Mac have allowed lenders to use rental history to build a credit profile. This is an important development because the data shows that a borrower’s history of paying rent or a previous mortgage is the single best indicator of a borrower’s ability to repay.The consequences of risk-based pricing for mortgagesFor the most part, interest rates for mortgages are determined by market forces; however, risk is also a factor. Ironically, higher interest rates and fees are assigned to the borrowers that can least afford them. This practice is called risk-based pricing. Borrowers with high loan-to-value ratios and lower credit scores are required to pay higher rates and fees for mortgages. This practice disproportionately affects minority first-time homebuyers. The most prominent exceptions to this practice are FHA and VA loans, in which everyone pays the same price and fees regardless of LTV or credit score. Recently, the Federal Housing Finance Agency (FHFA), the regulator for Fannie Mae and Freddie Mac, made adjustments to their policies that reduced the pricing for loans that were previously deemed riskier. The policy initially received criticism from people who believed it penalized people with good credit. However, FHFA understands that homeownership rates, especially for minorities, won’t improve without addressing mortgage affordability for first-time buyers.Diversity in the industryIf the industry was given one silver bullet to reduce the minority homeownership gap, it might be to substantially improve diversity in the mortgage industry. The process of purchasing a home is complicated and intimidating, especially for someone who has no experience with it. Having a mortgage professional who comes from your community, understands the cultural nuances and speaks your preferred language makes a huge difference. The mortgage companies that service the highest percentage of minority borrowers also have the most diverse teams — up and down their organization, from the C-suite to their operations and sales teams. Every year NAHREP surveys the top Latino mortgage originators in the nation. When asked why they chose the company for which they currently work, the No. 1 answer has been, “They understand my borrowers and know how to close my loans.” Translation: my company employs people who look and sound like my clients and me.Final words on access to mortgage creditAs our nation becomes a majority-minority country, our long-term prosperity depends on our ability to close ethnic wealth and prosperity gaps. Because home equity is the primary source of wealth for most Americans, closing the minority homeownership gap is the first step toward that goal. Closing the homeownership gap will require improving housing affordability, closing knowledge gaps, increasing diversity in the housing industry, and improving access to affordable mortgage credit. The latter can be accomplished by 1) Incentivizing mortgage lenders who originate a high percentage of their loans to minority borrowers, 2) Developing new metrics to determine the ability to repay, 3) Continuing to find solutions for borrowers with thin credit files, 4) Improve loan pricing for first-time homebuyers with average credit scores and small down payments, and 5) Dramatically improving diversity in the mortgage industry.Gary Acosta is the co-founder and CEO of NAHREP.This piece was originally published in the August/September 2023 issue of HousingWire Magazine. To read the full issue, click here.

The housing inventory data from last week makes me wonder if we are starting the seasonal decline in active listings in August. Mortgage rates also had a crazy week and purchase apps fell once again.Weekly active listings rose by only 2,939Mortgage rates went from 7.04% to 7.20% and back to 7.03%Purchase apps were down 3% from week to weekWeekly housing inventoryTraditionally, we would see a seasonal decline of active listings for single-family homes going into the fall, but seeing less than 3,000 homes added to the active listings data last week makes me wonder if we are going to see that decline early this year. Saying that the housing inventory growth in 2023 has been disappointing is an understatement. It took the longest time in history to find the seasonal bottom, which happened on April 14. We usually see this in January or maybe February. Then the growth rate was so slow that we had weeks of negative year-over-year inventory data. Last week was another slow week of active listings.Weekly inventory change (July 28-August 4): Inventory rose from 484,599 to 487,870Same week last year (July 29-August 5): Inventory rose from 538,908 to 543,898The inventory bottom for 2022 was 240,194The inventory peak for 2023 so far is 487,870For context, active listings for this week in 2015 were 1,195,634As we can see in the chart below, active listings have been negative year over year for some time now. Demand isn’t booming for the existing home sales market, but it’s not crashing like it did in 2022. Last week, I talked about the stable, not booming, housing demand on CNBC. That stabilization in demand has slowed inventory growth down this year.New listing data has been trending at the lowest levels recorded in history for the last 12 months. However, on a positive note, we haven’t seen another new leg lower, meaning that if this trend continues, we should see some flat to higher year-over-year numbers this year. As we can see in the chart below, new listing data is very seasonal and running into its seasonal decline period now. However, the decline is orderly, unlike last year.Here’s how new listings this week compare to the same week in past years:2023: 61,4902022: 74,1952021: 79,106Mortgage rates and bond yieldsLast week was wild for the 10-year yield and mortgage rates as we came close to testing my peak 10-year yield call of 4.25%, hitting 4.20% on jobs Friday, only to fall back toward 4.04%. Mortgage rates started the day at 7.20% and ended the day at 7.03%. We need the 10-year yield to stay below 4% to see mortgage rates drop below 7%, into the 6%-6.875% range.My 2023 forecast range for the 10-year yield was 3.21%-4.25%, meaning mortgage rates between 5.75%-7.25%. Rates got worse after the banking crisis but are behaving better lately; hopefully, this trend will improve with time. As we can see in the chart below, the forecast range has stuck for 100% of the year.Purchase application dataPurchase application data was down again by 3% last week, making the count year-to-date at 14 positive and 15 negative prints. If we start from Nov. 9, 2022, it’s been 21 positive prints versus 15 negative prints. Mortgage rates near or above 7% are making it difficult to get any traction on the demand side of housing. The best data we had here recently was from Nov. 9 until the first week of February, giving us three months of positive data. However, after that, it’s been a flat year with apps.The week ahead: Inflation week is here! It’s Inflation week, so get ready for two key reports: the Consumer Price Index on Thursday and the Producer Price Index on Friday. It is key for the housing market and the economy that core inflation continues to see lower growth. The Federal Reserve is very focused on core inflation, not headline inflation, so that’s what I will be focusing on with the two inflation reports. And of course, every Thursday we also have the jobless claims report to be mindful of.

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