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Key insight: Treasury said it will abolish the CDFI Fund in reduction in force notices handed out to employees on Friday. Forward look: The CDFI funding that's already been appropriated could be subject to what's called a "pocket recession," a move likely to be legally challenged. What's at stake: Millions of dollars for banks and other financial firms that lend to customers across the political spectrum could never reach those customers if the program and its staff are gutted. WASHINGTON — The Trump administration is gutting the Community Development Financial Institutions Fund staff as it pursues significant reductions in force on Friday. Russell Vought, head of the Office of Management and Budget, said on social media that the layoffs — which the Trump administration has been threatening since the beginning of the government shutdown Oct. 1 — have begun. That shutdown shows little sign of ending soon as Democrats refuse to pass a continuing resolution to keep the government funded without extending health care subsidies that, if expired, they say would raise health insurance costs for many Americans. The CDFI Fund is wrapped up in the mass layoffs, according to documents viewed by American Banker. "The [Reduction in Force] is necessary to implement the abolishment of the Community Development Financial Institutions (CDFI) which is based upon the Department of Treasury determination that its programs, projects, and activities do not align with the President's priorities," the RIF notices say. The layoffs will be effective in mid-December, they say. The Trump administration earlier this year targeted the CDFI Fund in an executive order that aimed to abolish the fund, to the extent that it would be statutorily allowed, a move that received immediate pushback from both sides of the aisle in Congress because of the bipartisan support that the program has seen throughout its history. In a note to OMB, also obtained by American Banker, Treasury Secretary Scott Bessent said that all the CDFI programs are statutorily mandated. This should mean that the program cannot be abolished by an executive order. Nonetheless, OMB has not allowed the Treasury to begin the process for disbursing the money appropriated to the CDFI, and the RIF notices show that the Trump administration still plans on abolishing the fund. Vought has argued in favor of using "pocket recessions" for funds appropriated by Congress for programs that the executive branch decides it doesn't want. Under current law, a president can propose cuts to a program that has already been funded by making a request to Congress, which in turn has 45 legislative days to respond. A pocket recession is when a president proposes those cuts too late in the fiscal year for Congress to consider them for the required 45 session days.CDFIs thought they received something of a reprieve late last month when OMB told attendees at a meeting that it had committed to disbursing the CDFI funds. The Treasury Department released a supplemental portion for already-submitted applications that would allow institutions to remove climate-focused financing from a list of eligible activities to receive the funds. It also removed definitions of "eligible markets" related to race or ethnicity. CDFIs would not get approved for funds on the basis of those items being on their CDFI application, and it would not count positively toward firms' eligibility. Those supplemental applications are due Oct. 27, but that could be pushed back due to the government shutdown. OMB at the time did not commit to a timeline for awarding the appropriated funds.

Key Insight: A higher volume of litigation necessitates the hiring of more defense and appellate counsel.What's at Stake: A shortage of attorneys could delay rulemakings and weaken the agency's defense in federal courts. Supporting Data: By some estimates, about 500 employees have left the agency since the Trump administration took over and Vought told employees to "stop working and stand down." The Consumer Financial Protection Bureau is hiring attorneys to defend the agency in appellate litigation.The CFPB announced in an internal email last week that it has two job openings for attorney-advisors in the legal division of the bureau's Office of Litigation. The internal email was sent Oct. 1 to the bureau's enforcement staff from Rebecca Gelfond, the bureau's chief of staff for enforcement,.Experts said the CFPB needs to beef up its legal defense staff because the agency faces so many lawsuits and is working to issue rulemakings to reverse existing rules put into place under the Biden administration. The jobs involve providing legal advice and guidance "to Bureau clients on all relevant legal matters," the email states. The internal hiring is unusual because of the ongoing lawsuit with the agency's union and the fact that the majority of staff at the agency are not actually working, but are being paid, despite the government shutdown. The CFPB's acting Director Russell Vought was sued by the National Employee Treasury Union in February over Vought's efforts to fire up to 90% of the bureau's staff. For now, the agency has been enjoined by a court order from firing employees or engaging in any reduction-in-force, or RIFs.So many CFPB employees have left the CFPB that it now is offering jobs within the bureau to enforcement attorneys. Some suggest that because Vought has said enforcement and supervision are not core functions, jobs in the legal division could be shielded from RIFs. The legal and enforcement divisions at the CFPB are two separate entities that perform different functions and require different skillsets. The legal division handles all litigation and advises the rest of the agency, including enforcement and rulemaking divisions, on what is legal and permissible. Enforcement, by contrast, builds cases against supervised financial institutions.Both divisions have lost staff since Vought took over in February, with some estimating that at least 500 employees have departed since that time. Of those, roughly 90 attorneys have left the enforcement division, which has roughly 160 staffers, a 35% drop. That brain drain that has made it more difficult for Vought to accomplish his regulatory objectives, even if they are deregulatory in nature. The email described the attorney-advisor jobs as providing "legal representation for the CFPB in all phases of litigation and trial and an appellate fora." The attorney-advisors' duties involve drafting and responding to motions, pleadings and other legal filings, handling all aspects of discovery, conducting negotiations and representing the CFPB at oral argument, the email states. Attorneys also counsel clients, including the bureau's leadership and senior staff, "with respect to legal compliance, litigation risk and other issues," the email states, including "collaborating with the Justice Department, Federal Trade Commission, and prudential regulators and others in the litigation of cases relative to the bureau's consumer protection mission."The jobs involve providing legal advice and collaborating with other agencies on consumer protection cases. Many former and current CFPB employees think Vought has engaged in a prolonged campaign to alienate the bureau's staff. Vought, who also serves as the director of the Office of Management and Budget, has said that he wants federal workers — who used to be called civil servants but now are referred to as "the deep state" — to be "traumatically affected." He also has said that when federal workers wake up in the morning "we want them to not want to go to work." Last week President Trump posted on X a montage of Vought depicted as the mythological Grim Reaper, in a black cap and scythe, to lyrics mimicking Blue Oyster Cult's 1976 hit "The Reaper," while federal employees are depicted as zombies in an unemployment line. The CFPB did not respond to a request for comment. CFPB legal attorneys also file amicus briefs to help courts decide significant questions of federal consumer financial law and review records of lawsuits by or against the CFPB in which the decision was unfavorable to the agency. The attorneys would then determine whether to recommend an appeal to a higher court. In addition, the email states that the attorneys research and draft final appellate determinations of administrative Freedom of Information Act appeals, and facilitate consideration of and responses to subpoenas seeking confidential CFPB materials.

It’s now been 10 days since the government shutdown began and mortgage rates appear to be moving lower.They were already near three-year lows heading into the shutdown, and now with it dragging on, bond yields are falling as well.The 10-year bond yield, which serves as a bellwether to 30-year fixed mortgage rates, was down nearly 10 basis points (bps) this morning.It’s nearing the all-important 4% threshold, which if broken could lead to another leg down for mortgage rates.But the more ominous takeaway here is that the economy doesn’t look so good anymore.Bond Yields Drop as Gov Shutdown Hits Day 10As noted, the 10-year bond yield was down nearly 10 bps this morning despite the release of any government data.We missed what is arguably the most important data point last Friday, the monthly jobs report from the Bureau of Labor Statistics.And a slew of other reports, but the BLS is reportedly “bringing some furloughed workers back in” to get the CPI report for September released.While it likely will be delayed (since the release date is October 15th), the hope is apparently to get it out before the Fed’s next meeting on October 28th.Of course, the odds of another 25-bp cut in the federal funds rate is still at nearly 95%, per CME FedWatch.So it’s doubtful any piece of data released between now and then will make much of a difference.There’s just a general vibe that the economy has kind of turned, even though the stock market is ripping higher without a care in the world.But given stocks are trading near all-time highs, a pullback could be in store soon and that could lead to a rally in bonds.Investors typically flee the stock market when times get tough and pile into safe-haven bonds, which increases the price of bonds but lowers with associated yield.When that happens, interest rates on mortgages tend to move lower.So there’s a decent thesis here that mortgage rates could move markedly lower in the fourth quarter of the year.For reference, back in December 2024 I predicted a 30-year fixed in the high 5s by the end of the year, and we aren’t far off at the moment.I’ve also explained that mortgage rates tend to move lower during government shutdowns, so between that fact and the very weak labor data as of late, there’s a lot of downward pressure on mortgage rates.Mortgage Rates Slip Below Year-Ago Levels (Again)Meanwhile, mortgage rates are already beating their year-ago levels, per the latest weekly survey from Freddie Mac.The mortgage financier said the 30-year fixed hit 6.30% this week, down from 6.34% a week ago and 6.32% this time last year.The lowest reading for the 30-year fixed in 2024 was 6.08% last September, but it was very short-lived as an errant hot jobs report and subsequent election caused rates to shoot higher.However, it doesn’t seem there is much standing in the way of lower mortgage rates this year, with economic data decidedly poor and much of Trump’s policy baked in.That doesn’t mean we won’t see pullbacks or surprises, but it does feel like the “trend is our friend” right now for mortgage rates.Meaning there’s a decent chance they could move lower and beat all the readings for 2024 at some point this year.And dare I say dip below 6%, which would be the lowest reading since very early February 2023.In the meantime, even if mortgage rates are kind of stuck due to a data blackout, they’re in a pretty good spot.Given they were flirting with 7% on multiple occasions this year, entering a government shutdown at around 6.25% seems pretty fortuitous.Read on: How to track mortgage rates with ease. Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.Latest posts by Colin Robertson (see all)

When it comes to learning about today's housing market, a majority of potential buyers are going digital, turning toward artificial intelligence and social media for information, according to Realtor.com.A majority of potential buyers said they are excited about how AI can help personalize their home search experience, and 82% are using it in their research, according to the real estate platform's summer survey. ChatGPT and Gemini rank at the top of the AI platforms they feel comfortable utilizing, with respondent shares of 67% and 54%, respectively. Social media also plays an important role in how buyers learn about housing trends, with an overwhelming majority of 90% finding value in it. Youtube and Facebook are the most commonly used platforms, with shares of 73% and 57%. Among Generation Z specifically, though, 76% said they relied on Tiktok. "From AI platforms to social media, consumers are expanding where they turn for insights. This shift shows that the future of real estate will be shaped not only by market conditions, but also by how quickly people adopt fresh tools and perspectives to navigate them," said Realtor.com Chief Economist Danielle Hale in a press release.  As artificial intelligence tools have improved and expanded throughout finance and business services, including in the mortgage industry, consumers have shown greater willingness to go digital. Distrust from all sides of the housing transaction remains about potential AI flaws and the accuracy of some of the content generated.  Where does the real estate agent fit in?Yet despite the acceleration and adoption of technology among the homebuying public, consumers still prioritize the value of professional expertise. Real estate agents outranked artificial intelligence and social media when buyers considered the resources that made them "smarter" about the housing market. Agents just edged out artificial intelligence by a share of 62% to 61%, the survey showed. More buyers also considered the real estate agent community the most valuable use of their time in their home-search plans above all other resources. Almost two-thirds, or 65.6%, deemed agent consultations and correspondence as a positive use of their time in their home search. The share outpaced the 61.9% who thought as highly of artificial intelligence tools. AI, though, ranked ahead of buyers' friends, families and neighbors when it came to positive time usage, which came in at 57.8%. Television, social media and news lagged, but a majority still consider them valuable resources. "The housing market remains a challenge for both buyers and sellers, and Americans are responding by embracing new ways to get smarter about their decisions," Hale noted. 

New York Attorney General Letitia James was indicted by a federal grand jury in Virginia, making her the second of President Donald Trump's perceived political enemies to be criminally charged in two weeks.James was charged with one count of alleged bank fraud and one count of making false statements to a financial institution. The indictment made public on Thursday follows allegations from Trump administration officials that James engaged in mortgage fraud. READ MORE: Feds accuse Trump adversary Letitia James of loan fraud"These charges are baseless, and the president's own public statements make clear that his only goal is political retribution at any cost," James said in a statement. "He is forcing federal law enforcement agencies to do his bidding, all because I did my job as the New York State Attorney General." James, who won a civil case against Trump two years before he won a second term as president, has denied committing mortgage fraud. Her attorney, Abbe Lowell, said in a statement James would "fight these charges in every process allowed in the law."Loan ApplicationsThe Justice Department's probe into James stemmed from claims by Federal Housing Finance Agency Director Bill Pulte that she may have committed mortgage fraud based on the residence status she listed on loan applications. The indictment alleges that to get favorable mortgage terms James falsely represented that a Norfolk, Virginia property she bought in 2020 would be used as a secondary residence. Prosecutors claim that James actually used it as an investment property that she rented to a family, and didn't intend to occupy it.  Trump had called for legal action against James in a message to Attorney General Pam Bondi on social media last month. "We can't delay any longer, it's killing our reputation and credibility," Trump wrote in a Truth Social post. "JUSTICE MUST BE SERVED, NOW!!!"READ MORE: Cook allegations suggest new mortgage fraud prioritiesJames had campaigned on promises to investigate Trump. In 2022, her office sued Trump and his real estate company, alleging he reaped hundreds of millions of dollars in "illegal profit" by inflating the value of assets, including his Mar-a-Lago estate and Trump Tower penthouse. The complaint alleged Trump and his two eldest sons carried out the scheme for years so he could get better loan terms from Deutsche Bank AG and other lenders.James won after a trial in which Trump took the witness stand and denied wrongdoing. A judge set the penalty at $464 million. But a New York appeals court in August vacated the fine, ruling it was unconstitutionally "excessive," while upholding the judge's finding that Trump and his company were liable for fraud. Both sides have appealed, escalating the case to the state's highest court.Trump's defense team blasted James during the trial, saying the case was politically motivated. The judge who oversaw the case declined to toss it out on those grounds, but a dissenting appeals court judge who disagreed with the liability verdict agreed with Trump.The White House didn't immediately respond to a request for comment.'Criminal Acts'The US Attorney's Office in the Eastern District of Virginia, now headed by Lindsey Halligan, also recently secured a grand jury indictment against former FBI Director James Comey, whose prosecution the president also publicly called for. Comey has said he's innocent and is fighting the charges in court."The charges as alleged in this case represent intentional, criminal acts and tremendous breaches of the public's trust," Halligan said in a statement. The charges carry potential penalties of as much as 30 years in prison per count and a $1 million fine on each count, as well as forfeiture, according to the statement. James' initial appearance in US District Court in Norfolk, Virginia, is set for Oct. 24.The push by some Trump officials to pursue charges against James had appeared to be stalled until recently. Erik Siebert, who had been leading the Virginia US attorney's office, resigned his post last month amid pressure. Siebert had determined there wasn't enough evidence to support charges against James, Bloomberg News had reported.However, Trump then installed Halligan as interim US attorney. Previously, Halligan was a senior aide at the White House and was tasked with leading an initiative to review exhibits at the Smithsonian's museums to ensure that they reflect American "excellence" as laid out in an executive order.Halligan also represented Trump against charges of mishandling classified documents after his first term. She previously was an insurance lawyer in Florida and graduated from the University of Miami School of Law.The charges against James — coming on the heels of Comey's arraignment this week — immediately fueled allegations that prosecutors were improperly using the office to punish the president's perceived enemies.New York Democratic Senator Charles Schumer accused Trump of using the Justice Department "as his personal attack dog" and going after James for pursuing charges against the president."This isn't justice," he said. "It's revenge."

Left to right: Kevin Ryan, Shiva Iyer National lender and servicer Pennymac announced the appointment of veteran mortgage leader Kevin Ryan as senior managing director, chief strategy officer. Ryan will soon join the company upon his exit from the role of president and chief financial officer at Better following a brief transitional period at his former employer. Ryan held his leadership positions at Better for the past five years, joining the company after serving as a managing director at Morgan Stanley, where he worked for over two decades.  Alongside Ryan's new appointment, the Westlake Village, California-based home finance firm made two other key c-suite promotions, elevating Marshall Sebring to chief investment officer. In the role, Sebring will maintain oversight of enterprise investment strategy and market and interest-rate risk management. Prior to joining Pennymac in 2024, Sebring held roles at JPMorgan Chase and Blackrock. Ascending to the position of Chief Enterprise Risk Officer, Shiva Iyer will take responsibility for audit and corporate finance activities, ensuring sound business practices to maintain compliance. He first joined Pennymac in 2016 after previously holding roles at Mitsubishi UFJ Financial Group and Bank of America.

The National Fair Housing Alliance and a top Democrat are criticizing the new leader of a federal fair housing office over his alleged troubling record regarding civil rights.Craig Trainor was confirmed Wednesday as the assistant secretary for the Office of Fair Housing and Equal Opportunity at the Department of Housing and Urban Development. Senators confirmed Trainor and over 100 other Trump administration nominees in a partisan line vote conducted despite the government shutdown. Republicans of the Senate Banking Committee congratulated Trainor, stating he'll head HUD's efforts to "ensure that all Americans have access to housing nationwide." The Department, whose website still touts a controversial shutdown message, said it was working on a comment Thursday afternoon with its public affairs office operating in a limited capacity. Trainor comes from the Department of Education, where his actions as the acting assistant secretary for civil rights, particularly regarding a decree regarding diversity, equity, and inclusion, have drawn scrutiny. Before Trainor's arrival, the FHEO last month realigned its enforcement priorities, with HUD erasing many Biden and Obama-era guidelines. The office has also apparently reduced its staff by hundreds of employees this year, according to federal documents. Criticism echoes larger complaints about Trump administrationThe new fair housing boss is a licensed attorney and GOP official, having worked at the America First Policy Institute under then-Florida attorney general Pam Bondi. In February Trainor penned a "Dear Colleague" letter suggesting the withholding of funding for institutions over their diversity, equity and inclusion practices. The National Association for the Advancement of Colored People sued the DOE and Trainor over that decree, and a federal court in April prevented the department from enforcing the letter. The National Fair Housing Alliance in a statement Wednesday accused Trainor of weaponizing the DOE's civil rights authorities."It is deeply concerning that the Senate confirmed Craig Trainor to be the administration's top fair housing official without even holding an individualized vote, much less scrutinizing his troubling record," said NFHA Executive Vice President Nikitra Bailey in a press release. Sen. Elizabeth Warren, D-Mass., the ranking member of the Senate Banking Committee, in a statement said HUD Secretary Scott Turner and Trainor must answer for the administration's "attempts to dismantle civil rights protection in housing."The NFHA claimed HUD announced it would not fully enforce the Fair Housing Act. In a memo September 16 by a FHEO official the regulator reiterated its enforcement efforts, but removed 21 guidance issuances from 2009 to 2023. The memo suggested Democrat administrations prioritized "novel and tenuous" theories of discrimination on topics like appraisal bias.The fair housing group also accused the administration of eliminating "much" of the staff at FHEO. A recent Politico report pointed to a recent HUD shutdown plan indicating 315 full-time employees at the office, down from the 572 described in a 2023 plan. Another archived HUD document states there were 647 full-time employees at FHEO in 2024. HUD has not publicly confirmed whether it's laid off swaths of employees as other areas of the administration have planned. The Department of Government Efficiency earlier this year touted widespread terminations of vendor contracts at the regulator. 

Total mortgage origination volume is projected to surpass $2 trillion by the end of the year for the first time since 2022, according to a recent forecast.The milestone is driven by a 48% jump in refinance dollars and 12% spike in purchase dollars, an overall 20% increase from last year, according to iEmergent's 2025–2027 U.S. Mortgage Origination Forecast. "Crossing back above $2 trillion in 2025 signals renewed strength in the mortgage market," iEmergent Chief of Forecasting Mark Watson said in a press release Wednesday. "By 2026, lower rates and moderating home prices should support activity, though affordability challenges will persist – especially for first-time buyers."The forecast also estimated total origination volume to reach $2.27 trillion next year, a 13% climb from 2025. The company expects refinance units to rise 24% as lower rates boost activity and purchase units to grow 2.3% to push total loan count up nearly 10% year over year.The 2026 outlook reflects the changing economic landscape, Watson said. As tariff impacts deepen, consumer confidence falls off and the labor market slows, iEmergent anticipates GDP growth to cool and interest rates to lower. Long-term interest rates are expected to rise slightly by the end of the year but fall again in 2026 as growth weakens, the forecast said. That drop should bring more activity to the market.Origination volume is forecasted to marginally increase to $2.32 trillion in 2027, backed by a 3.6% increase in purchase units, while refinance units are expected to dip a bit."These national trends tell an important story, but they don't tell the whole story," said Laird Nossuli, CEO of iEmergent. "Every market will experience the next wave of recovery differently."Fannie Mae's most recent origination forecast in late September pegged total volume below iEmergent's at $1.85 trillion, while its 2026 projection came in slightly higher at $2.32 trillion.

Mortgage fraud risk ended the second quarter at its highest level in over three years as issues related to undisclosed real estate debt and transaction misrepresentations had significant annual increases, according to Cotality.When compared with the first quarter, the Cotality Mortgage Application Fraud Risk Index rose by 1.4%, while jumping by 6.1% compared to the second quarter of 2024.On average one of every 116 mortgage applications had indications of fraud in the second quarter, or 0.86%. Purchase applications, which made up 70% of the market for the period, had a one in 106 rate; refinancings had a 1 in 142 rate, the Cotality 2025 Annual Fraud report said.Why fraud risk is on the riseBut purchase had a much smaller increase in fraud risk, 5%, versus 22% annual growth for refinancings. Cotality attributed the difference to growth in multifamily, cash-out and investment refi activity."The increase in the fraud risk can partly be attributed to the volatility starting to be seen in the real estate market," said Matt Seguin, senior principal, fraud solutions, in the report. "Interest rate cuts haven't come at the rate expected over the last year, so purchase transactions, which historically speaking have higher fraud risk, continue to represent almost 70% of the applications seen by Cotality."The Index ended the second quarter at 135.3, compared with 133.4 for the first quarter and 127.5 for the same period last year. This is the highest the index has been at since the first quarter of 2022, when it was at 140.6.The volume of investment property mortgages rose 36%, while multifamily grew by 43%."Historically, and again in 2025, these are the two highest fraud risk segments," said Josh Wilson, primary fraud risk modeler, science and analytics. "They have driven the National Fraud Index up 6.1% year over year."But the fraud risk related to multifamily loans declined for the first time since 2020, falling 2% compared with one year ago.Investment property risk increased 5%.Why most types of fraud risk increased annuallyAcross all types of fraud, only occupancy fraud risk declined, by 0.9% compared with the second quarter of 2024. This data is not indicative of the prevalence of each form of risk."There has been a lot of news in 2025 about occupancy fraud and it's still one of the highest confirmed fraud categories according to Fannie Mae published data," Seguin said.Given that Cotality takes its data from applications, which is often a leading indicator of a change in risk, this drop is a good sign for the future."In this case, occupancy fraud risk, while still prevalent, seems to have leveled off and even begun dropping slightly," he continued.But the growth in undisclosed real estate debt and transaction fraud risks are likely results of the state of the current housing market in general.Factors behind the 12% year-over-year rise are higher insurance costs, softening home prices in some markets, elevated mortgage rates compared with the past five years and the growing popularity of non-qualified mortgages, Cotality said. It pointed out that fraud detection programs may lag those being pursued by conventional lenders.When it comes to transaction fraud risk, while it declined 7.7% versus the first quarter, it was still up 6.2% year-over-year. This follows a 4.9% annual increase in the second quarter of 2024 versus the same period in 2023."The rise is tied to borrowers with multiple real estate purchases, transactions in areas with a high concentration of private lenders, and sales with multiple high-risk flags," Cotality said.Income misrepresentation remains the leading fraud finding in Fannie Mae investigations, accounting for 46% of the cases through 2024, the report claimed. This risk rose 2.1% annually.Slowing price growth contributed to a 6.3% quarter-to-quarter rise in property risk, although versus the second quarter last year, it was only 1.5% higher.Identity fraud risk grew just 0.4% this year, after annual increases of 5.6% for 2024 and 12% for 2023.