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Federal Reserve Chair Jerome Powell and President Donald Trump.Bloomberg News Financial markets breathed a sigh of relief in response to assurances from President Donald Trump that he would not try to remove the head of the Federal Reserve and that ultra-high tariffs against China would be lowered "substantially."Trump's comments, delivered during a press event Tuesday evening, sparked a rally for key indexes and bank stocks in particular in after-hours and early morning trading.The KBW Bank Index surged as much as 5.6% in early trade and was up around 3% by midday Wednesday. The tech-heavy Nasdaq composite was similarly up just under 3%, while the the S&P 500 was up about 2%. Similarly, 10-year Treasury note yields were down slightly. Because bond yields move in the opposite direction as prices, the lower return rates indicate a stronger demand for U.S. debt.In response to reporters' questions, Trump said he had "no intention" of removing Fed Chair Jerome Powell from office. The comment came one day after the president called for "preemptive cuts" to the federal funds rate and less than a week after he posted on social media that "Powell's termination cannot come fast enough!"On Tuesday, Trump dismissed media reports that he and his top economic advisors were exploring whether they could fire Powell — something that the Fed chair has maintained is not permissible under the law. Trump said has no plans of attempting removal."None whatsoever. Never did. The press runs away with things," Trump said. "No, I have no intention of firing him."After endorsing Powell's termination last week, Trump insinuated that Powell's reluctance to cut rates was politically motivated, an idea that was parroted by White House Press Secretary Karoline Leavitt during a Tuesday briefing."Well look, I think the president has made his position on the Fed and on Powell quite clear," Leavitt said. "The president believes that they have been making moves and taking action in the name of politics rather in the name of what's right for the American economy."Trump's comments sent stock and bond prices tumbling amid investor concerns about the independence of the Federal Reserve and the potential loss of Powell, who is viewed as a steady hand on the economy. Yet, despite his assurances against that, the president made clear that he will continue to make his monetary policy preferences known."I would like to see [Powell] be a little more active in terms of his idea to lower interest rates. It's a perfect time to lower interest rates," Trump said. "If he doesn't, is it the end? No, it's not. But it would be good timing. It should have taken place earlier. But no, I have no intention to fire him."Powell and other Fed officials have said they will not adjust monetary policy until they have a clearer view of how new policies — primarily those relating to trade, but also immigration, regulation and government spending — will impact the U.S. economy. Fed independence has been a frequent topic of conversation among policymakers and analysts in recent months, both because of the president's commentary on monetary policy and because of the administration's efforts to curtail agency independence. Officials from the Fed have said repeatedly that their congressional charter protects them from executive oversight and that political commentary has no impact on their decision-making. "Politicians all the time offer their opinions about what they think monetary policy should be," Federal Reserve Bank of Minneapolis President Neel Kashkari said during a Tuesday speaking engagement. "Our job at the Fed is to make the best decisions we can. We're not perfect, but make the best decisions we can based on data and rigorous analysis."Last week, Powell was emphatic that partisan politics will be kept far from monetary policy moves."We're never going to be influenced by any political pressure," he said. "People can say whatever they want. That's fine. That's not a problem. But we will do what we do strictly without consideration of political or any other extraneous factors."During that same event — the swearing of Paul Atkins as chairman of the Securities and Exchange Commission — Trump also attempted to assuage concerns about the budding trade war with China. He said negotiations with the country were being handled "nicely" and will result in a tariff rate against the country that is much below the 145% headline figure. "It will come down substantially, but it won't be zero," he said.Elsewhere in the Trump administration, special advisor Elon Musk said he would spend "significantly" less time on government duties starting next month. Currently, Musk oversees the so-called Department of Government Efficiency, a special audit group tasked with slashing government spending and reducing the federal workforce.Musk made the announcement during the earnings call for Tesla, one of several companies he owns and serves as chief executive. The electric car maker has seen its stock value and profits slide in recent months as Musk's association with the White House has sparked a backlash against the company and its products. Still, Musk told investors he would spend one or two days per week on government work, "for as long as the president would like me to do so."

With home prices out of reach for many today, an obvious question has been when will the housing market crash?To be honest, this question gets asked pretty much every year, and it is a certain cohort of the population that always seems to want it to happen.I get it – homeownership should be within reach for everyone in this country, but lately prices and elevated mortgage rates have made it a bridge too far for many.Despite this, I do believe it will get better as time goes on, thanks to moderating home price gains (even some losses) along with more attractive mortgage rates.Maybe even wages will catch up while we’re at it. But a housing crash? Probably not with the current mortgage stock.Today’s Mortgages Just Aren’t the Early 2000s OnesAs such as some folks want to believe that today’s mortgages are just like the ones we saw in the early 2000s, they simply aren’t.And I’m actually sick and tired of people trying to make that argument. I was there. I originated loans in 2004, 2005, 2006, 2007, etc.I saw the toxic loans that were getting approved on a daily basis, which eventually led to the worst mortgage crisis in modern history.It’s just not that way today, despite the widespread availability of stated income and even no-doc mortgage products.First off, those loans are now niche, offered by so-called non-QM lenders that aren’t the default (no pun intended) option for home buyers today.The ATR/QM rule made it much more difficult for lenders to offer loans with limited documentation or exotic features like negative amortization or 40-year loan terms.So while this stuff is available, it’s just not as common, and represents a fraction of the overall lending universe.In 2004-2007, your typical mortgage was stated or no doc and it had zero down payment. Different days.It Continues to Be an LTV Story in the Mortgage WorldOf course, life happens, and with it comes mortgage delinquencies. Those have been on the rise lately, with FHA loans one area of concern.There are also non-QM loans and DSCR loans, which have seen mortgage lates increase in recent years.Despite this, the housing market is holding up really well today. But why? Shouldn’t prices crash if people can’t make their payments or afford to take out new mortgages?The answer is actually pretty simple: LTVs. Low ones. Unlike in the early 2000s when you could get a no-doc loan at 100% LTV/CLTV.The national loan-to-value ratio (LTV) is very low today, at around 28% at last glance, per First American. In 2008, it was hovering near 55%.You can thank larger down payments, lower maximum LTV limits, and surging home prices, which have led to record high home equity.Oh, and homeowners aren’t even touching that home equity in most cases, with HELOCs and home equity loans still untapped by most.And those risky no-doc and stated income loans that resurged in recent years? Well, most lenders require massive down payments, such as 30% down or more.This explains why aren’t we seeing foreclosures and short sales despite rising delinquencies on DSCR and non-QM loans that require no income documentation.Distressed Home Sellers Can Sell without a LossToday, these distressed borrowers are able to “sell the property, extract equity, and satisfy the loan obligation,” per a new analysis from S&P credit analysts.In 2008, if you fell behind on the mortgage, you often had zero equity because you put nothing down, which meant either a short sale or foreclosure were the only options.Clearly this wreaked havoc on home prices and led to one of the worst downturns in history.The good news is because of that event, mortgage underwriting guidelines improved tremendously.If you want something outside the norm of Fannie, Freddie, the FHA, or a VA loan, you’ll need a lot of skin in the game.It helps to have 30% equity or down payment when you get a mortgage. Because if you have a loss of income or insufficient cash flow to service the mortgage payment, you can sell the property without taking a loss.This is good for lenders and the borrowers, and the housing market overall. It buffers home prices.Speaking of, the “housing stock nationally continues to be supply constrained (due in large part to mortgagors’ reluctance to sell homes and give up historically low fixed rates), which has been a factor in preventing price declines at the national level.”So the majority of the outstanding homeowner universe is unwilling to sell because their mortgage rate is fixed at 2-4%.This further buffers the housing market and keeps supply tight, limiting downside to home prices. And as noted, we have much lower LTV maximums than we had in the early 2000s.That wasn’t the case in the early 2000s, when you could get a no-doc investment property mortgage with zero down!Obviously having zero skin in the game made it very easy for the property to become a short sale or foreclosure once the borrower couldn’t make payments. Not so anymore.Taken together, yes, it is actually different today. But if lenders were handing out stated income and no doc loans at 100% LTV again, I’d join the doomer camp immediately.Fortunately, you still need a massive down payment to get a stated/no-doc DSCR loan or non-QM loan.If/when that changes, I’ll worry.Read on: Will the housing market crash in 2025? 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)

Adriana Kugler, member of the Federal Reserve's board of governorsAl Drago/Bloomberg Private credit markets were less responsive to higher interest rates than banks and other more traditional lenders during the Federal Reserve's most recent round of policy tightening.During a speech on the transmission of monetary policy, Fed Gov. Adriana Kugler said the growth of private lending in the wake of the global financial crisis created a market that was relatively immune to the central bank's restrictive policy stance."One implication of this strong growth during this past policy tightening is that monetary policy transmission to private credit markets appeared more muted relative to financing through public credit markets or bank commercial and industrial lending," Kugler said in remarks delivered Tuesday night at the University of Minnesota. Kugler attributed the proliferation of private credit to structural advantages such lenders have over banks, including their ability to offer "higher customization" to borrowers and investors alike.The resilience of nonbank lenders was not the Fed's only takeaway from its post-pandemic tightening cycle. Kugler said the central bank also learned about the impact of excess savings on monetary policy transmission. She noted that the combination of government stimulus and curtailed spending as a result of COVID-19 social distancing "led the personal savings rate to soar." The saving glut, she said, effectively created a buffer between consumers and higher borrowing costs."If households are flush with excess cash, they are less likely to respond to elevated interest rates by curtailing demand," Kugler said. "Instead, they may have funds to avoid financing or may feel they are able to afford higher monthly payments."Those excess savings have largely evaporated, Kugler said, allowing monetary policy to impact the economy in a more typical fashion. But, she added, the effects have been more pronounced for less creditworthy borrowers, pointing to credit card and auto loan delinquencies, which have risen above pre-pandemic levels. Kugler said the disparate impacts between prime and subprime borrowers could play out in the inverse, once the Fed resumes lowering interest rates."For these [lower credit] households, easing monetary policy may have larger effects," she said.Earlier in her remarks, Kugler said she was not ready to support changing interest rates in either direction. Instead, she said, she would like greater clarity on how a variety of policy developments — not only trade, but also immigration, government spending and regulation — impact the economy. Unlike other central bank officials who have spoken in recent weeks, who have said inflation appears to be moving toward the Fed's 2% target, Kugler expressed concerns about certain price dynamics. Specifically, she pointed to a three-month streak of modestly rising goods prices and persistently high nonhousing services inflation as reason for concern."I am also monitoring any risks to the outlook, especially upside risks on inflation or downside risks to employment. Still, I think our monetary policy is well positioned for changes in the macroeconomic environment," she said. "Thus, I will support maintaining the current policy rate for as long as these upside risks to inflation continue, while economic activity and employment remain stable."Kugler said financial conditions — namely the willingness of banks to provide credit — have front-run some of the Fed's monetary decisions. She noted that conditions began easing last year even before the Fed began cutting interest rates in September, which corresponded with an increased demand for loans by households and businesses.But, overall, she said banks have only reduced the interest rates they charge modestly from their post-pandemic peaks and stopped doing so early this year in accordance with the Fed's pause on policy adjustments. "Banks stopped tightening lending standards after nine consecutive quarters, but they left standards unchanged in January," she said. "These financial conditions helped to moderate aggregate demand and aid in moving inflation sustainably toward our 2% target."Kugler made clear that her comments about financial conditions did not apply to the past few weeks, in which markets have been roiled by prospect of a global trade war. But, she said the uncertainty has raised the prospects of both higher inflation and a weakening economy, potentially running afoul of the Fed's two mandates: maintaining stable prices and maximum employment.Kugler said monetary policy transmission is one of several factors she will incorporate into her policy considerations. "It is important for monetary policymakers to broadly examine all available information, including market-based measures, surveys and anecdotal reports, to understand what is happening in the economy as early as possible because, as I discussed, it takes time for policy to have an impact," she said. "As the direction of the economy changes, it is critical to pay close attention to real-time data and to consider the lags and asymmetries of policy transmission to ensure we respond not only to the actual movements on both sides of the mandate, but also to the risks to the economic outlook."

Long-maturity Treasury yields tumbled Wednesday as part of a broader rally in dollar-denominated risk assets, after US President Donald Trump said he wasn't inclined to fire the head of the Federal Reserve and suggested tariffs on Chinese imports could drop.Yields on 30-year bonds — the longest-maturity Treasury security — fell 13 basis points to just under 4.75%, among their biggest declines this year, while 10-year yields fell 10 basis points. Shorter-maturity yields, more closely tied to the interest rate set by the Fed, rose from little-changed levels after March new home sales data were stronger than economists estimated despite rising US mortgage rates."It's a clear tone shift, short-term, both around Powell and China," said Gregory Faranello, head of US rates trading and strategy for AmeriVet Securities. "It still remains to be seen how long a broad relief-rally plays out," with markets reversing their recent trades of higher long-end rates, a steeper Treasury yield curve and lower stock prices.Yields — which had already fallen at least 10 basis points on the day in the 10- to 30-year tenors based on Trump's comments late Tuesday — reached new lows after the Wall Street Journal reported that the White House was considering cutting tariffs on Chinese imports to de-escalate the trade war it launched April 2. While Treasury debt historically has been a haven asset that benefits when investors flee the stock market, steep declines for US equities in recent weeks were accompanied by rising long-term yields. Concern that Trump's trade policies and threats to the Fed's independence would erode foreign demand for US assets hurt bonds as well as stocks, particularly long-dated bonds, which carry the most risk of price declines. Stock benchmarks also rebounded sharply Wednesday, with the S&P 500 Index rising more than 3%.Widely-watched yield-curve segments such as the gaps between two- and 10-year and between five- and 30-year yields reached historically wide levels this week as investors dumped long-maturity Treasuries. In particular, the five- to 30-year spread topped 96 basis points for the first time since 2021. On Wednesday it contracted back to around 80 basis points.A dearth of top-tier US economic data this week has created a near-vacuum into which White House pronouncements on trade negotiations and Fed policy have become the principal driver of daily swings, said Jack McIntyre, portfolio manager at Brandywine Global Investment Management."The market's kind of taking a collective side of relief, and that's why the curve is flattening, but that's today's story," McIntyre said. "The bond market always looks at economic data, but you can't really draw a significant conclusion from the economic data right now." The rally lowered the expected yield for the second of this week's three Treasury note auctions — $70 billion of new five-year notes — at 1 p.m. New York time. The yield was about 3.96% in pre-auction trading, about four basis points lower on the day. It peaked at about 4.01% on Tuesday.Wednesday's auction is a particularly strong indicator of non-US demand for Treasuries because more than 60% of foreign holdings mature in five years or less, according to the latest data from the Treasury and Federal Reserve. A sale of seven-year notes follows on Thursday; two-year notes were sold Tuesday."If you're a non-US investor, and you take Trump's last comments as his word, then you're probably supposed to buy some five-year Treasuries," McIntyre said.Indirect bidders — the category that includes foreign central banks bidding through the Fed — were awarded 75.8% of last month's five-year auction, close to a record high in data going back to 2004. 

Sales of new homes in the US jumped last month on a welcome dip in mortgage rates and ongoing sales incentives to kick off the crucial spring selling season.Purchases of new single-family homes increased 7.4% in March to an annualized rate of 724,000, mostly driven by a surge in the South, according to government data released Wednesday. That exceeded all estimates in a Bloomberg survey of economists.READ MORE: Who made housing unaffordable? Survey says…Sales in the South rose to the fastest pace in nearly four years, building on a smaller gain in the prior month after a weather-stricken start to the year. Sales in the Midwest also climbed, while they fell in the West and Northeast. The median sale price, meantime, fell 7.5% to $403,600, mostly reflecting greater sales activity at lower price points. That could also reflect the fact that builders are also sitting on a growing pile of unsold inventory.The supply of new homes for sale at any stage of construction in March edged up to 503,000, still the highest since 2007. The number of completed homes awaiting purchase ticked up as well, remaining at levels last seen in 2009.Despite the stronger March results, when mortgage rates dipped, the outlook for housing is more tenuous with home financing rates rebounding to 6.9% as President Donald Trump's tariff policies have spurred a retreat from US assets. That's pushing up borrowing costs and depressing sentiment among consumers and homebuilders, who've already been grappling with affordability challenges for years in the aftermath of the pandemic.Builders have been leaning on generous sales incentives to boost demand, but it's unclear how long that can continue as Trump's tariffs raise the cost of materials. A homebuilder industry group projects that will boost the cost on contractors by nearly $11,000 per home.As such, some of the nation's biggest builders have signaled they would slow their pace of construction. Earlier this month, the chief executive of homebuilding giant DR Horton Inc. cited a "slower than expected" start to the spring home-selling season, and said the company's net sales orders slipped 15% in its just-finished quarter.New-home sales are seen as a more timely measurement than purchases of previously owned homes, which are calculated when contracts close. However, the data are volatile. The government report showed 90% confidence that the change in new-home sales ranged from a 13.1% decline to a 27.9% gain.The National Association of Realtors will release March data on existing-home sales on Thursday.

Mr. Cooper's first quarter net income was affected by a $82 million mark-to-market hit on its mortgage servicing portfolio driven by falling interest rates through the period.The average earnings per share estimate was $2.92, with a high of $3.24 and a low of $2.58, according to Yahoo Finance. Using the non-GAAP measurement of operating earnings per share at $2.97, the company beat Keefe, Bruyette & Wood's estimate of $2.91But the company was well below that on a GAAP basis at $1.38 per share for the first quarter because of the servicing-related reduction.Still, KBW analyst Bose George expected investors to have a neutral reaction to these results when it comes to the company's stock price.The stock opened at $116.89 per share on Wednesday morning after closing at $112.07 the previous afternoon.Mr. Cooper reported first quarter net income of $88 million as a result of the MSR value write-down, compared with net income of $204 million in the fourth quarter and $181 million for the first quarter of 2024.Because of the pending merger with Rocket, the company posted prerecorded remarks on its website.Mr. Cooper is seeing the benefits from the Flagstar servicing acquisition start to flow through to its results, Chairman and CEO Jay Bray said. Its operating return on average tangible common shareholders' equity increased to 16.8% from 15.8% in the fourth quarter."I'm really pleased that we've moved so quickly into the 16% to 20% guidance range we shared with you just last quarter," Bray said. "The key things behind this performance remain the same, operating leverage, fee income and strong execution in our origination segment, all of this reflecting the investments we've made in technology and operations over many years."On the servicing side, without the mark-to-market reduction, Mr. Cooper made $332 million as its portfolio grew by 33% from the first quarter last year to $1.51 trillion.Flagstar was the biggest servicing acquisition in Mr. Cooper's history and it has now completed the onboarding of the loans as well as any team members from the seller, Bray said.In February, Mr. Cooper disclosed it was not going to bring aboard approximately 400 employees which were expected to make the transition.However, when compared with the fourth quarter of last year, the servicing portfolio was down from $1.56 trillion. Its subservicing fell to $780 billion as of March 31 from $820 billion three months prior."As we pointed out last quarter, we shifted about $60 billion in subserviced loans to other servicers, as was contemplated in the Flagstar transaction," said Mike Weinbach, Mr. Cooper's president. "Outside of these deboardings, our subservicing portfolio grew organically by 2% quarter over quarter."Weinbach added Mr. Cooper is expecting its subservicing business to continue to grow, organically from existing clients, as well as from new customers it is in discussions with.What he did not mention was any impact from the decision at the start of the second quarter by United Wholesale Mortgage to terminate its subservicing and servicing sales relationship with Mr. Cooper because of the Rocket merger.UWM has a $240 billion MSR portfolio but it is unknown what percentage of that was handled by Mr. Cooper."We estimate servicing segment earnings missed us by 5 cents per share as lower fees, lower other income and higher expenses were partially offset by a lower amortization rate and $36 million of adjustments," George said in a flash note on the results. "The servicing hedge offset 72% of the negative MSR mark in the quarter, roughly in line with the company's 75% hedge target."Those hedge gains totaled $209 million, Kurt Johnson, executive vice president and chief financial officer, said on the call.On the origination side, George surmised that Mr. Cooper might have gained market share as volume, while down 11% from the fourth quarter, was better than industry estimates of an approximate 20% reduction. The Mortgage Bankers Association's April forecast expects $384 billion in industry-wide production for the first quarter, versus $494 billion three months prior.Mr. Cooper's gain on sale of 129 basis points beat George's expectations by 9 basis points."We estimate the origination segment beat us by 11 cents, as higher gain on loans held for sale and higher other fee income more than offset higher expenses and lower other income," George said.On a pretax basis, the origination business made $53 million for Mr. Cooper, versus $47 million in the fourth quarter and $32 million for the first quarter last year.Johnson added Mr. Cooper had a "slight operating loss" from the Flagstar third-party originations business which it flipped to A&D Mortgage at the end of the quarter.Mr. Cooper originated $8.3 billion in period, down from $9.3 billion in the prior quarter but up from $2.9 billion the previous year.The correspondent channel was responsible for $6.4 billion and direct-to-consumer $1.9 billion.Almost half of the DTC production, 46%, were cash-out refinance transactions, while another 21% were second lien mortgages. Purchases were 20% of the volume, while rate-and-term refis made up 14%.Speaking of refinance opportunities, Johnson pointed out that Mr. Cooper has a long runway, with 94% of its servicing customers having at least 20% equity in their properties. Its first quarter recapture rate was just above 50%, he added.

Pacific Investment Management Co. is starting to see opportunity in Treasuries after a selloff spurred by concerns over US President Donald Trump's policies.Markets are focusing on the risk that "foreigners might reduce allocation to US holdings but not assigning as much probability to a scenario that growth will be weak," Mohit Mittal, Pimco's chief investment officer for core strategies, said in a Bloomberg TV interview. Given the US economy is likely to slow longer term, there is value in US bonds at these levels, he added. Mohit Mittal Photographer: Chris Ratcliffe/BloombergChris Ratcliffe/Bloomberg The Pimco call indicates some investors may be beginning to see the worst of the rout as over, after a "sell America" trade took markets by storm over the past month and threw the haven status of Treasuries into question. The US bond market is starting to get some relief, with long-maturity yields falling on Wednesday after Trump indicated a willingness to strike a trade deal with China.READ MORE: How Trump's wild tariff ride has changed mortgages"Treasuries start to look quite attractive in the five to 10-year point," Mittal said. Earlier this month, 10-year yields jumped more than 70 basis points in a matter of days to near 4.6%, after plunging below 4%.Pimco last week likened the turmoil in US assets to the dynamics of emerging markets, with the $2 trillion bond manager warning that rapid US policy changes are proving challenging.Recent volatility has "created opportunities to add exposure for patient investors like ourselves," said Mittal. "If you think about it in the next six months to one-year horizon, chances are growth will be lower than what it is today."

US mortgage rates rose again last week, reaching the highest level since mid-February and further depressing the appetite to buy homes or refinance loans.The contract rate on a 30-year mortgage climbed 9 basis points to 6.90% in the week ended April 18, according to Mortgage Bankers Association data released Wednesday. That followed a 20 basis-point jump in the prior week, marking the biggest back-to-back increase since early November. Mortgage rates track US Treasury yields, which have risen recently as they lose their appeal as a safe haven. The Trump administration's tariffs and threats to fire Federal Reserve Chair Jerome Powell are causing a reappraisal of US assets and damaging investor confidence in the central bank's independence.MBA's index applications for home purchases fell for a second week to the lowest level also since February. The refinancing gauge plunged 20%, the most this year.Data on March new-home sales will be released later Wednesday, while figures on the previously owned homes market are due Thursday.The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.

Frank Gargano A federal judge has ordered a top staffer to Elon Musk and the chief legal officer at the Consumer Financial Protection Bureau to explain mass firings at the CFPB that appear to be in defiance of a court order.U.S. District Court Judge Amy Berman Jackson on Monday ordered Mark Paoletta, the CFPB's chief legal officer, and Gavin Kliger, a staff member at the Department of Government Efficiency who is on a detail to the CFPB, to testify about reductions in force notices that were sent to 90% of the CFPB's staff last week. On Friday, Jackson temporarily blocked the Trump administration from firing the employees and scheduled an evidentiary hearing on April 28 to determine whether the firings comply with an existing injunction. The employees who received the RIF notices have been placed on administrative leave pending the outcome of the litigation.  A union representative said the employees are "shell shocked." In the past week alone, the Trump administration has fired 1,250 employees at the Federal Deposit Insurance Corp.; fired the two Democratic members of the three-member board of the National Credit Union Administration (leaving only a Republican appointee in place); and threatened to fire Federal Reserve Chair Jerome Powell. The Trump administration and the CFPB's union have been locked in contentious litigation since February when the National Treasury Employees Union union sued acting CFPB Director Russell Vought to stop the agency from being dismantled. The latest court orders could create a conflict. "This is a real test of executive power," said Scott Pearson, a partner at the law firm Manatt, Phelps & Phillips LLP. "The administration is trying to take on the bureaucracy dramatically — not just at the CFPB, but across the entire government."Many legal experts, including Pearson, have noted that the Trump administration is also seeking to overturn a nearly century-old precedent — Humphrey's Executor v. United States — that holds that independent agency appointees can only be fired for cause. Some experts suggest the CFPB could have conducted mass layoffs legally by adhering to the union's collective bargaining agreement and notifying employees at least 90 days in advance that an RIF was being considered. Unlike other agencies, the CFPB has not offered early retirement and severance to foster attrition and lessen the blow of a substantial reduction in force, a union representative said. The mass layoffs on Friday mark the third round of firings at the CFPB. In March, acting CFPB Director Russell Vought first fired temporary and then fired term employees, but was forced to rehire them again under a court order. The key issue before the U.S. District Court for the District of Columbia is whether the administration has the discretion to reduce the CFPB's headcount to roughly 200 employees, and if doing so adheres to the specific statutory requirements of the Dodd-Frank Act. On Friday, Paoletta submitted a declaration with the court stating that the bureau's new leadership had undertaken a review of the CFPB's activities and staffing, in compliance with an appeals court panel, before sending RIF notices to 1,483 employees. The appeals panel had issued a partial stay of a preliminary injunction that prohibited the agency from issuing RIFs. The judges allowed the CFPB to terminate individual employees and issue stop-work orders, but only after conducting a "particularized assessment" of whether the workers are "unnecessary" to perform the bureau's legally mandated duties. Paoletta claimed the assessment took place. Jackson did not appear confident that his assessment met the standard set forth by the appeals court, experts said. For example, the CFPB's enforcement division would be reduced to a staff of 50, down from 248. Supervision would drop from 487 employees to 50. And the Consumer Response unit would retain just 16 employees, down from 128.Last week, Paoletta sent a sweeping memo to the bureau's staff stating that the bureau will no longer supervise nonbanks, and will have most enforcement and supervision conducted by the states. Lawyers are questioning how the CFPB plans to rescind and reissue rules if the CFPB's regulations unit has just 10 employees, down from 66 currently. "The decision to stop supervision of and enforcement against nonbank lenders has opened the door for abuses just as, 20 years ago, Congress, bank regulators and the Fed's refusal to regulatory predatory lenders spawned a worldwide financial crisis," said Kathleen C. Engel, a research professor at Suffolk University Law School.Paoletta wrote that the Trump administration has "a much more limited vision for enforcement and supervision activities.""Over the course of this review, leadership has determined to take the Bureau in a new direction that would perform statutory duties, better align with Administration policy, and right-size the Bureau," he wrote. Adding to the mix is an anonymous CFPB employee referred to in the litigation as Alex Doe, who claimed that DOGE employee Kliger kept a CFPB team up for 36 hours to ensure that the firing notices went out on April 17. The sworn declaration states: "Gavin was screaming at people he did not believe were working fast enough to ensure they could go out on this compressed timeline, calling them incompetent."It is unclear if the Trump administration will describe the layoffs as part of the normal changeover in administrations, as they have in the past, or how the court will determine what work is legally required. "Now you've got courts coming in in response to lawsuits and, arguably, micromanaging what the executive is permitted to do," said Pearson. "There are real constitutional questions about to what extent when Congress says there needs to be an Office of Consumer Response, what does the Office of Consumer Response needs to do and how well do they need to do it?"Since Jan. 20, the Trump administration has been sued 203 times, which includes four closed cases, according to litigation tracking site Just Security.

Is it too soon to be talking about the end of the trade war?Perhaps, but there have been rumblings of a closed-door meeting to get a deal done, along with a softer stance from President Trump.The man who tends to get bond yields to calm down, Treasury Secretary Scott Bessent, was a speaker at said meeting.He reportedly called the current situation unsustainable with the two largest trade partners effectively frozen thanks to heavy reciprocal tariffs.So if/when some sort of resolution springs up, could it get mortgage rates back on their downward trajectory?The Current Trade War Is UnsustainableDuring the private investor summit that took place in Washington D.C., which happened to be hosted by none other than JPMorgan Chase, Bessent expressed that the current impasse between the U.S. and China wasn’t viable long term.And added that a de-escalation was expected in the “very near future.”After all, China’s largest trading partner is the United States. And by a wide margin.Whereas our largest trading partners are Canada and Mexico, which we made deals with after initially threatening larger tariffs, followed by China.So clearly there’s a lot at stake and an ongoing trade war would likely lead to a lot of unintended consequences neither side may actually want.There’s also the thought that dialing things back after going further might be just the right amount of tariffs to appease both parties.A sort of Goldilocks level of tariffs might work, allowing both countries to feel as if they have won, or at least not lost.And that could prevent bigger problems, such as China selling its Treasuries and MBS, which could further increase bond yields and mortgage rates.Many also expect tariffs to be inflationary and simply passed onto consumers, at a time when inflation finally seems to be under control.Simply put, if the pair can find a solution, we can put this behind us and get back on track.If you recall, things weren’t so bad a few months ago, and many are now wishing we could just put the past couple months behind us and move on.Will It Really Be That Simple Though?If I’ve learned anything from this ongoing trade war, it’s that not all is what it seems. One day President Trump is talking about firing Fed Chair Jerome Powell.And the next day he says he’d never do such a thing. Oh, and last week he mentioned that Chinese tariffs would “come down substantially.”“I think that we will make a deal with China,” Trump told reporters at the Oval Office. Though he added “I think we have plenty of time.”Huh? But I thought it was pedal to the metal on tariffs and Jerome’s got to go?I guess that was yesterday and last week, and Tuesday is a different ballgame. Does make you wonder what Wednesday will bring though, eh?That’s kind of the point I’m trying to make here. It would be pretty naïve to think this is it, the trade war’s over.No way. There’s definitely going to be another twist in this tale. Heck, I wouldn’t be surprised if Trump threatens Powell’s job again. Or if tariffs on China go even higher, somehow.It is this very uncertainty that has led to so much volatility in the markets, whether it’s stocks or bonds.The stock market has gotten pummeled and mortgage rates, very recently trending down to the low 6s, are back to basically 7%.And they’re there at the worst possible time, the spring home buying season. Not great with inventory beginning to pile up as affordability remains out of reach for many.I Still Expect Lower Mortgage Rates in the Third Quarter and OnwardWhile it’s next to impossible to know what’s next in this trade war saga, chances are it’ll go on a bit longer.As Trump said, there’s still time and apparently no rush to make a deal. But the more important piece is that a deal will come.So it might be best to just zoom out and ignore all the short-term noise while this evolves (and devolves) and hopefully gets better again.How long might that take? Well, perhaps we should just throw out the second quarter, which ends on June 30th.Just be patient and wait for a resolution. Of course, prospective home buyers can’t just sit around and wait if they happen to find a property they like.They might have to settle for a higher mortgage rate. The same goes for existing homeowners looking for rate relief from a rate and term refinance. Might have to hold out a little longer.But I do still think relief is coming in the second half of the year. And that would align with my 2025 mortgage rate prediction, which has the 30-year rising in the second quarter before falling in Q3 and Q4.In fact, I have the 30-year dropping to 6.25% in the third quarter, then to 5.875% by the fourth quarter.It just might be (probably will be) choppy along the way. And while I’m hopeful my prediction comes true, we can’t rule anything out with this administration.Things might get worse before they get better. 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)