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A group of homeowners filed a class action lawsuit against the largest homebuilding company in the United States and its mortgage lending subsidiary over money they lost in an alleged deceptive mortgage scheme.D.R. Horton and DHI Mortgage targeted prospective homebuyers with affordable monthly payment plans, but the company low-balled the true costs and excluded most of the required property taxes, according to the lawsuit."The lawsuit alleges that D.R. Horton and DHI Mortgage were running a 'monthly payment suppression scheme' to mislead first-time homebuyers into thinking their total monthly housing costs would fit their budgets," said Jennifer Wagner, senior attorney at the National Consumer Law Center, in a press release Wednesday. "They preyed on people's faith in the American Dream of homeownership to lure them into unaffordable, deceptive deals." Many buyers didn't know their payments would be up to nearly $1,000 higher each month until after they had closed on their homes and their loans were sold to a new mortgage servicer, the plaintiffs said.  "The lawsuit claims that the home builder and its mortgage company were working together from their initial sales pitch to deceive buyers into closing on homes and mortgages by presenting artificially low monthly payments, leading to payment shock," said Jeffrey Newsome, attorney at Varnell & Warwick, which represents the group of homeowners with Varnell & Warwick, P.A. and the NCLC.One of the five plaintiffs, Frankie Santiago, was promised a monthly payment of just over $2,100 for a home in Lake County, Florida, and thus chose D.R. Horton and its subsidiary, which ranked 12th in total originations in 2023, because the monthly payment was lower than homes with a similar sales price. It wasn't until almost a year later that Santiago found out he would have to pay roughly $1,000 more per month, as the new servicer conducted an escrow analysis that included all of the property taxes and the money he now had to cover for back taxes.The lawsuit, filed in U.S. District Court for the Middle District of Florida, seeks to stop the companies from tricking future homebuyers and recoup all money the homeowners lost. Homeowners may be entitled to three times their out-of-pocket losses under the Racketeer Influenced and Corrupt Organizations Act (RICO)."Our goal in bringing this class action lawsuit is to recover damages for the many people around the country who've been cheated and to prevent future homeowners from being lured into this predatory scheme," said Kristen Simplicio, partner at Clarkson Law Firm. 

A mixed picture emerged in mortgage rates one day after the start of the U.S. government shutdown, while a release of new jobs data raises concerns about the nation's economic picture. Ten-year Treasury yields, whose movements typically influence the direction of mortgage rates, sat at 4.08% as of Thursday afternoon, tumbling 11 basis points from its close one week ago. The average 30-year mortgage rate, though, moved in different directions over the same time period, according to various industry trackers. Treasurys saw much of their backslide occur after early Tuesday, when they opened at 4.15%, and maintained its decline into today. While the downward momentum picked up on the same day the U.S. government shutdown, a report from payroll processor ADP showing a loss of 32,000 private-sector jobs last month likely played a bigger role in investor activity that drove yields downward, analysts said.   While yields were down, "surprisingly, the mortgage market showed little reaction to the ADP employment report," said Kara Ng, senior economist at Zillow Home Loans in a statement published on Wednesday. Freddie Mac's weekly Primary Mortgage Market Survey showed the average 30-year rate at 6.34% on Thursday, Oct 2. The average increased 4 basis points from a week earlier when it came in at 6.34%. During the same week in 2024, the 30-year average stood at 6.12%.The 15-year fixed rate likewise climbed up 6 basis points week over week to an average of 5.55%. The average increased from 5.49% seven days earlier and finished 30 basis points higher from year-ago levels. On the other hand, Zillow's platform showed the 30-year fixed average at 6.51% on Thursday, which represented an 8 basis point drop from 6.59% reported a week ago. The average rate rose, though, by 3 basis points between Wednesday and Thursday. The 30-year fixed rate according to Lender Price data on the National Mortgage News website was 6.44% as of Thursday, flat on a week-over-week basis. What role the government shutdown could play in rate movementsA variety of factors account for why recent mortgage rate movements might appear muted despite elevated political and economic volatility. While the Federal Reserve slashed its funds rate at its September governors meeting, some forward-looking investors had priced in a larger reduction and were left "disappointed" the central bank's decision did not align with expectations, Ng said. Rates subsequently jumped, with Freddie Mac's survey showing the 30-year average higher for the second week in a row. The same similar forward-looking sentiment also means investors had factored in the effects of a government shutdown, which many expected to occur. "I wouldn't necessarily say that traders were trading into the shutdown. I think they would have already made those bets in the last week," said Foundation CEO Marc Halpern. If the shutdown extends longer than expected, mortgage rate movements will become difficult to predict, according to Chelsea Wagner, executive vice president of revenue at Lower."When we have uncertainty, it's going to cause volatility. Depending on how long this lasts, I think we can expect some volatility to come in the market. But if we step back in the next couple of days or a week, I think things will remain pretty steady," she said. For potential home buyers, the market holds some opportunity under current conditions, with the current week's 30-year rate still well below its average over the past year, according to Freddie Mac.  "The last few months have brought lower rates and as indicated by the recently reported increase in pending home sales, homebuyers are feeling more confident to get into the market," said Freddie Mac Chief Economist Sam Khater. "Although affordability remains challenging, buyers currently have greater negotiating power than in previous years. Homes are staying on the market longer, giving potential buyers additional time to evaluate their choices," Ng concurred. However, she also raised a note of caution. "Buyers, however, shouldn't assume these conditions will last indefinitely. New listings reached a historic low in August, driven by hesitant sellers amid sluggish demand." 

Some government-sponsored enterprise reform models could add three or four figures to monthly payments, but others could exert some limited downward pressure, a Stanford Institute for Economic Policy Research report finds.Estimated mortgage-rate hikes of 0.2% to 0.8% — an additional $500 to $2,000 for the typical homebuyer — could result in certain scenarios, authors Daniel Hornung and Ben Sampson found. Hornung is a SIEPR fellow. Sampson is a PhD student at Stanford University.The preliminary research models how changes to the GSEs' guarantee fees and mortgage-backed securities market could change home financing costs in a public offering for common shares, a concept the Trump administration officials have been exploring. "I think the challenge it illustrates is that it is going to be very hard to come up with a scenario where there is no impact on mortgage rates," Hornung said of the study.Mortgage rate impacts could play a role in whether or how the reform moves forward because administration officials have been looking to advance a model that does not adversely affect financing costs.A look at which scenario would raise rates the leastSelling shares without removing the enterprises from conservatorship or changing their implicit guarantees could result in lenders paying higher fees, but it minimizes the chance reform would negatively impact the premium paid for mortgage-backed securities above "risk-free" treasuries.Guarantee fees could rise in an offering for new shares or through a "more likely" conversion of some of the government's senior preferred stock because it would be necessary to produce a sufficient return on equity to attract investors, the study concluded.Researchers applied Fannie Mae's recent quarterly g-fee average of 67 basis points to 2023 Urban Institute data. UI found a bank-like return on equity would require an average 89 basis point g-fee increase under GSE capital standards. So a public offering could require a 22 basis point hike.By passing this through to a recent 6.5% 30-year fixed rate with a standard loan-to-value ratio of 80% and then filtering it into Rocket Mortgage's formula for loan payments, the study finds the status quo stock offering would add around $500 or more to consumers' monthly obligations.Other proposals have looked to reduce taxpayer exposure to the GSEs' risks by removing them from the conservatorship or taking away the implicit guarantee. The study also examines these scenarios.President Trump's comments to date have indicated that he plans to keep the guarantee. The director of the GSEs' oversight agency, Bill Pulte, has said he defers to President Trump when it comes to the enterprises' conservatorship status, and foresees the government retaining a tie to the enterprises.Stanford researchers modeled the rate impact of a common share offering with a conservatorship release while keeping an implicit guarantee by modeling a "commitment fee" Fannie and Freddie Mac would pay Treasury to preserve a form of government supportThat fee would likely add another 10 basis points to the rate increase in the first scenario for a total of 32 basis points and could also disrupt the MBS market in ways that could put further upward pressure on financing costs, according to the study.The researchers calculate that going a step further and removing the implicit guarantee adds a "risk premium" to MBS on top of what's seen in the conservatorship exit model of roughly 50 basis points, pushing the total above 80.Avoiding higher rates may be 'very hard' but not impossibleThe researchers acknowledge their scenarios that examine are limited and that while finding a way to keep rates low or even reduce financing cost could be difficult, options for doing so exist. "There are some levers that they could pull to try to either keep mortgage rates constant or potentially even give them a modest decrease," Sampson said.The report gives a nod to proposals that suggest current portfolio caps could be raised so the enterprises can hold more MBS on their balance sheets as they did pre-crisis. "Increasing those caps would increase demand for MBS and tighten spreads from a technical standpoint," Sampson said.However, it could put the GSEs back in a situation that proved problematic in the past, Hornung said."What led to the financial crisis in the first place was this really substantial risk that Fannie and Freddie were holding on their balance sheet in terms of MBS," Hornung said. Another concept the report references but does not analyze the rate-impact of is a merger of entities or functions at Freddie and Fannie that could produce efficiencies. As other experts have noted, the notion of a merger raises a lot of questions about how it would be structured and whether it would require congressional intervention. This makes it challenging to model its impact on rates immediately. "Our hope is to update this as we get more information about specific policies," Hornung said.

Fair Isaac Corp. is rolling out a new program that lets mortgage resellers bypass the three major credit bureaus Equifax, Experian and Transunion and deliver its FICO credit scores directly to lenders, a shift the company says will bring down costs. The announcement drew cautious optimism from industry trade groups.The move avoids any additional markups the three agencies tacked on and will "drive price transparency and immediate cost savings" to the mortgage lenders, brokers and others who need FICO's score in underwriting, Fair Isaac said. "Today marks a turning point in how credit scores are delivered and priced across the mortgage industry," said FICO CEO Will Lansing in a press release. "This…puts pricing model choice in the hands of those who use FICO scores to drive mortgage decisions." The direct license program will be available to both nonbank lenders and originators at depository institutions, including banks and credit unions, the company said. Home lenders have made no secret of their disdain for FICO's pricing in the past, frustrated by what they perceived as the high cost and the need to repay for the same borrower score multiple times in one loan transaction. They also criticized the expense of obtaining credit scores for consumers, who ultimately might not take out a loan with their company. Some critics called FICO's fee system "price gouging." The new program model will price a FICO score at a base $4.95. A $33 per borrower per score charge will apply if a FICO-scored loan is closed and avoids reissuance charges lenders previously paid when scores were also sent to mortgage insurers, government-sponsored enterprises and for other purposes. Lenders may also choose to continue using the current per-score pricing model, which comes out to an average of $10 for each issuance when obtained through a reseller and reflects no change from current levels, FICO said. The wholesale price of the FICO score for mortgage transactions increased by over 40% between 2024 and 2025, from $3.50 to the current level of $4.95, before credit bureaus added a markup. Prior to 2024, FICO sold its scores in a tiered pricing system. A salvo in the FICO-Vantagescore dispute?FICO's announcement arrives amid its public feud with rival Vantagescore, following the Federal Housing Finance Agency's decision this summer to approve the use of the latter's credit scores for loan submissions to Fannie Mae and Freddie Mac. U.S. Mortgage Insurers later followed suit, emphasizing its commitment to work with FHFA to implement the Vantagescore 4.0 model.The FICO Classic score had long been the sole approved system within conventional mortgage lending, with some accusing it of using monopoly pricing power. Vantagescore is co-owned by the three credit bureaus that now stand to miss out on the pipeline of revenue that came with including the FICO score in their reports. The mortgage industry reactsTrade groups cautiously welcomed the FICO announcement, pointing to the possibility of cost savings, with the Mortgage Bankers Association saying it would enhance transparency and deliver lenders more options.  "MBA has led the industry in calling for fixes to the anticompetitive market and increasing costs that lenders and consumers pay for required tri-merge credit reports and other credit reporting products," said President and CEO Bob Broeksmit, in a press release. "While it remains to be seen if this will result in materially lower costs, MBA will monitor the implementation of this new program while continuing to call for reforms that support a better credit reporting system," he added.The Community Home Lenders of America responded in a similar tone, while also throwing barbs at FICO and voicing support for its rival. "CHLA welcomes steps like this direct licensing pricing, to create more options for consumers and lenders — so this appears to be a good first step in addressing our longstanding criticisms about FICO's monopolistic pricing and practices," the group said in a statement. "However, in the long run, CHLA continues to believe that more options are needed. Our lenders are eager to have a second choice with the VantageScore option, and we commend FHFA Director Pulte for his prior comments that even two providers are not enough." CHLA also expressed concern that "Fair Isaac might ultimately squeeze out Vantagescore and the credit bureau model altogether," if there were only two options available. FICO's late Wednesday announcement led to a significant spike in its stock to begin Thursday morning. After closing at a price of $1,512.71 the previous day, FICO value leaped 17% at opening bell on Thursday to $1,769.86

The Mortgage Bankers Association's Chief Operating Officer will retire at the end of the year, the company announced Wednesday.Marcia Davies joined the MBA in 2011 as senior vice president of conference and meetings and chief of staff under former President and CEO David Stevens. She was promoted to chief operating officer in 2014. "Her most vital contribution to MBA was her leadership in restoring financial stability to the association," President and CEO Bob Broeksmit said in a press release. "Her legacy in the industry will be the founding and development of mPower, enhancing the ability of thousands of women in our industry to strengthen their networks, conduct more business, and experience personal and professional growth."In 2016, Davies founded mPower, MBA Promoting Opportunities for Women to Extend their Reach. Under her leadership, the program has expanded to 26,000 members, hosting conferences, webinars, networking events and online opportunities to promote women in the mortgage industry.As chief operating officer, Davies has been responsible for cross-organizational alignment and implementing initiatives. She serves as the company's lead strategist for external activities as well, managing the public affairs and marketing divisions. Davies also directs the MBA's Conferences, Membership, Education, Information Technology and Office Services divisions.Prior to the MBA, Davies worked as a senior advisor to the assistant secretary for housing and federal housing commissioner at the U.S. Department of Housing and Urban Development and spent 21 years at Freddie Mac, which the MBA has opposed a merger with, where she held a variety of senior management positions.In a separate statement, the MBA announced the promotion of three association leaders as part of a restructuring of the functions led by Davies.Peter Grace, previously senior vice president of membership, education, technology and strategy, was promoted to chief administrative officer and senior vice president of industry education and technology.Laura Hopkins was promoted to senior vice president of membership and meetings after serving as vice president of membership.John Mechem, who had been vice president of public affairs, was promoted to senior vice president of public affairs and marketing. "MBA is blessed with a strong bench of up-and-coming proven leaders, allowing us to create upward mobility for these three talented individuals already on staff," Broeksmit said.

With the U.S. government shutdown in effect and little progress made on an eventual reopening, mortgage lenders are busy measuring operational impacts while introducing strategies drawn on past experience to keep business flowing. As of Wednesday, many questions remain about the full extent of the impact on support provided to lenders, with most federal services coming to a halt. The disruption of services provided by government offices essential to home finance, particularly the Federal Housing Agency and U.S. Department of Agriculture, stands to affect many home finance companies and the processes they use to originate and close loans. While many say delays are to be expected, they also caution against overreaction. "This does not mean we should stop showing homes or stop writing offers and those kinds of things. Don't do that," advised Randell Gillespie, president of LeaderOne Financial. "That would be misinformation and mischaracterization of the impact. But know that there are some things that we will see."At a time when systems aren't operating as usual, mortgage leaders underscore that regular updates between top leadership and loan officers need to be prioritized. LOs, in turn, have the responsibility to transmit what they learn to inform borrowers and real estate partners. "It's critical that we just keep very clear communication and constant communication to our customers," said Gillespie, whose company has been providing a daily update to staff in the days leading up to the shutdown.  Previous shutdowns in 2013 and one between 2018 to 2019, which lasted 35 days, gave the mortgage industry some clues on how to navigate the current funding crisis. Those experiences helped alleviate some concerns even as Congress came to an impasse. Still, leaders also need to be mindful that today's borrowers might be approaching the shutdown with more anxiety than they currently have."We may, as an industry, have experienced this before, but as clients looking to navigate first-time home buying or new home purchase or even just a refinance of their current loan, they don't have those experiences to draw on. We are very mindful of how this impacts our clients and our communities," said Kristin Broadley, senior vice president of operations at Sage Home Loans. The effect on government-backed financingAs signs in Washington pointed to the likelihood of a congressional impasse, many companies said they engaged in advanced planning that mitigated any negative effect. "We really kicked into high gear about a week ago, seeing that there wasn't progress being made," Gillespie said. "We started trying to make sure we were getting loan commitments on anything that could be affected." It meant focusing on checking off the list of items needed to close government-backed loans sponsored by the FHA, USDA or Department of Veterans Affairs sooner, rather than later.  "We gave those priority, because as long as we've had those commitments, we can close them," he added. Lenders ought to continue taking the same approach with each loan currently in process to identify potential "problem" files as the shutdown continues, leaders say. The government lending segment, in particular, poses the greatest likelihood for slow turnaround times. In previous shutdowns, USDA ceased operations entirely, while both the FHA and VA ran on limited staff.   "We literally went through and listed every possible entity that we could have issues with —  what that looked like before when we went through this last time, and what it could look like now," said Ryan Ellis, executive vice president of sales at Citywide Home Loans, about his company's preparation. Although impacts on conventional lending, which make up the majority of originations, and non-qualified mortgages will be less severe or maybe unnoticeable in many cases, slow response times in verifications from the Social Security Administration and Internal Revenue Service can impact how quickly any type of loan gets processed. "The last time this happened, Social Security Administration did not process any requests or any verifications during the shutdown. Things like that could obviously cause a delay," Ellis said.  The risks the mortgage industry has its eyes onWhile many lenders already knew what to expect, any prolonged shutdown will likely raise worries among borrowers, and some businesses have put into place alternative strategies to address potential headwinds. Ongoing communication will continue to be part of the lender playbook in easing concerns of not just borrowers, but also their partners. "Who is asking questions is real estate agents. A lot of agents think that this is really going to affect FHA, and FHA loans are going to come to a halt. That's been really interesting, and we hadn't seen that in the past. But it's become really prevalent this week," said Chelsea Wagner, executive vice president of revenue at Lower.The suspension of the National Flood Insurance Program, which is mandatory for many loans to be sold on the main secondary markets, also regularly comes up as a pain point in any government closure.  Whether the shutdown causes the NFIP to lapse for an extended period or slows turnaround times that affect loan approval, "we basically set up different pathways for those loans to be going down in different pipelines, and we have additional resources that we'll put behind them," Wagner said. "If we need to get creative on product and pivot so that people can use programs that aren't necessarily reliant on any of these government agencies, that's also a route that we can take."How tech advances might help lenders through the shutdownLenders are in better shape to handle a shutdown today than they were in 2019, though, thanks to improvements in technology that allow them to obtain documentation or verifications manually, even when an agency is running on limited staff or closed altogether.Lenders still have access to tax forms on other information they might need through various software platforms, even if government staff is unavailable. Similarly, work on FHA-backed loans, including mortgage insurance payments, can continue thanks to access to the agency's technology platform. "Having those technologies still definitely helps us not be completely in the dark or not be able to do something," Ellis said. A sense of deja vu may have played a role in industry sentiment on day one of the shutdown, with liquidity levels and activity surrounding mortgage-backed securities stable, even as market investors sent Treasury yields lower on Wednesday following the news. "Today's business as usual, and I'm sure that everyone got their trades off that they needed to sell in anticipation of this, so that they have liquidity," said Foundation Mortgage CEO Marc Halpern."Currently there's liquidity for people to be purchasing the MBS-backed securities. People are looking to purchase bonds," Halpern said.   Industry leaders are also giving credit to how different agencies and organizations, including government-sponsored enterprises Fannie Mae and Freddie Mac, prepared the industry to meet the challenge initially. "Overarchingly, the industry as a whole, be it the lenders, insurers the GSEs, they've all kind of rallied and said, 'Here are the things that we can do.' I think everybody prepared," Broadley said. 

A message on the Department of Housing and Urban Development's website blaming "the Radical Left" for the government shutdown has prompted legal complaints and accusations of a Hatch Act violation.HUD officials Wednesday pushed back on criticism of the pop-up window and banner on their home page stating "The Radical Left in Congress shut down the government." The Department, which also said it would use available resources to help Americans in need, promoted a similar message Tuesday on the eve of the shutdown. While certain government functions like Social Security payments remain intact during the impasse on Capitol Hill, it's unclear to what specific extent HUD operations are impacted. Attorneys and a former HUD official said Wednesday the message violates the Hatch Act, a law barring federal employees from engaging in partisan activity, meant to ensure government programs are administered in a nonpartisan fashion. Nonprofit group Public Citizen filed a Hatch Act complaint Tuesday with the U.S. Office of Special Counsel; that office is also currently shuttered. Penalties for Hatch Act violations range from a maximum $1,000 fine up to removal from federal service. ​A former HUD official who spoke with National Mortgage News on the condition of anonymity called the web posts an "obvious" violation, recalling training every public servant receives. "I've been in this field for a long time, and going back many years I've never seen anything this egregious," the former official said. HUD defends its shutdown messageWhile the Department of State and Department of Justice feature similar banners blaming Democrats for the shutdown, HUD appears the sole department to refer to a "Radical Left." HUD officials said Wednesday the message was carefully worded as to not name a specific party or politician, but rather an ideology. "The Far Left barreled our country into a shut down, hurting all Americans," a HUD spokesperson said in a statement. "At HUD, we are using available resources to continue supporting our most vulnerable. Why is the media more focused on a banner than reporting on the impact of a shutdown on the American people?"Department officials said the message did not allude to an election or anything inherently political but rather to an official process on Capitol Hill, and that objections wouldn't have been raised for similar messaging on social media or television.HUD Secretary Scott Turner shared a screenshot of the banner in question on X shortly after midnight Wednesday. He doubled down Wednesday afternoon, stating the shutdown by the "Far-Left" would impact housing and rental assistance, public housing programs and funding for services for homeless individuals. Attorneys who say it's a violationWhile officials' frequent social media and television comments can be debated, attorneys said the HUD homepage message is a more extreme violation of the Hatch Act. Those legal experts countered HUD's argument that the message doesn't refer to a political party. "Anybody who has been following this for the past decade would understand that the radical left in this context is, according to members of the Trump administration, closely aligned if not completely aligned with the Democratic Party," said Tom Spiggle of the DMV-based Spiggle Law Firm. The department would have been better suited to post a message explaining why the government should remain open and describing how it will be impacted, said Richard Gottlieb, partner and co-chair of the banking and financial services practice at Los Angeles-based Glaser Weil."I think we all ought to be appalled by the use of government websites to attack the opposition party," he said. Richard Horn, co-managing partner of Garris Horn LLP, said there's a "very reasonable" argument the message counts as political activity under the Hatch Act, and said it serves none of the agency's statutory functions."(The Federal Housing Administration) is supposed to serve Americans on both the right and left," he said. "So having a statement from the agency blaming the left's politics, I don't think is a good way to run the agency." Will there be any repercussions?Public Citizen in a press release suggested OSC staff tasked with handling their complaint would either be intimidated by, or loyal to, the Trump administration. Attorneys said they did not expect serious scrutiny. "I do not expect there will be any kind of real investigation," said Spiggle. "The administration has not been shy about putting a heavy thumb on the federal government and kind of shattering norms, if not law, separating partisan interest from the federal government." The OSC in August launched a probe into former special counsel Jack Smith for investigating President Donald Trump prior to the 2024 election. Gottlieb said he thinks the HUD messaging is the beginning of a larger campaign to convert federal websites into propaganda vehicles for the administration. "It's not a minor story when government agencies become pure propaganda vehicles on their websites and you use that to try to persuade the American public that the other side is the enemy of the people," said Gottlieb.

What was long thought impossible might now be probable; mortgage rates in the 5s in 2025.I’ve actually been expecting it, and penciled a 5.875% 30-year fixed for the fourth quarter nearly a year ago in my annual mortgage rate predictions post.So it’s not a big surprise to me, but many folks out there couldn’t even fathom a rate in the low-6s this year, let alone the 5s.Now with labor appearing to crack badly and a government shutdown underway, the thought of much lower mortgage rates doesn’t seem so far-fetched.But it will depend on the duration and severity of the shutdown, along with the economic data that is released, perhaps only via private channels.More Weak Jobs Data and a Government Shutdown Push Mortgage Rates LowerToday was a bit of a double-whammy for the economy, with both a weak jobs report delivered and the start of a government shutdown.Let’s start with the shutdown. It’s the first government shutdown since 2019, which also took place under the Trump administration.That also happened to be the longest government shutdown in U.S. history, a full 35 days, from late 2018 to early 2019.Given the current state of things, it would not shock me for this shutdown to last even longer, though it could equally end at any given moment.It’s just that we seem to be living in a much more contentious time than 2018/2019, with much more division among parties.So it’s not hard to envision this impasse going on for an extended period of time and causing some serious disruptions.As I wrote a couple years ago, government shutdowns tend to be accompanied by bond rallies.That is to say that investors seek the safety of bonds, thereby pushing their associated yields lower.The 10-year bond yield in particular has fallen an average of 59 basis points (0.59%) during shutdowns dating back to 1976.If yields do happen to fall by that amount, it would put the 30-year fixed at around 5.75%, assuming spreads stay constant.But again, it depends how severe the shutdown is and how long it persists. And also what else happens in the wider economy during that time.ADP Jobs Report Comes in Negative as New Government Data Placed on HoldSpeaking of what happens in the economy, jobs data came out this morning from the private sector and it wasn’t pretty.The September 2025 ADP National Employment Report revealed that the private sector lost 32,000 jobs, well below the forecast of 45,000 jobs created.In addition, the number of jobs created in August 2025 was revised down from 54,000 to -3,000 (yes, negative).The ADP data is basically mirroring what we’ve been seeing in the public sector with the BLS jobs report, which has been very weak the past couple months.However, assuming the shutdown isn’t resolved this week, we won’t get the government jobs report for September.Given ADP seems to be showing more of the same though, it wouldn’t shock me if the government jobs report is also bad again whenever it comes.So it might not matter much if it’s delayed. Bond yields could continue to trickle lower as the shutdown persists.How Mortgages Will Be Impacted by a ShutdownOne last thing. If this shutdown goes on for a while, and mortgage rates fall as expected, it might create a weird dynamic.We could see a little refinance boom (and uptick in home buying) at a time when mortgage staffing is light, notably at the FHA and USDA.For example, the FHA already said it won’t endorse HECM loans (reverse mortgages) or Title I loans, which include loans on manufactured homes and home renovation projects.In addition, they won’t approve condo complexes for FHA financing via their most commonly used HRAP system.When it comes to USDA loans, the whole system kind of shuts down and you basically can’t move forward with a new loan or a loan in progress.However, VA loans and conventional loans, such as conforming loans backed by Fannie Mae and Freddie Mac, can continue albeit with possible delays related to the IRS or National Flood Insurance Program (NFIP).So while mortgage rates might improve because of all this, it could create even more chaos if mortgage lenders get inundated with new loan applications.This is partially why I argued that we might be better off without a shutdown and more economic data released.Read on: How the Government Shutdown Affects Mortgage Lending 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)

United Wholesale Mortgage has reduced the fees and added other enhancements for one of its title alternative programs.The company's title review and closing program, known as TRAC+, looks to save borrowers money by significantly reducing costs for refinances compared with traditional title insurance options.In the past, Mat Ishbia, president and CEO, has been outspoken about the costs of title insurance. In an April 2, 2024 video, he questioned why a borrower needs to pay $1,500 to $2,000 for a lender's title policy.The original TRAC program was introduced in October 2022.Last May, United Wholesale Mortgage brought out the TRAC+ option, which has the lender handle the title reviews, closing and disbursement, for a flat $1,850 fee.With the changes announced on Wednesday, the title fees are now as low as $1,295, depending on the state where the property is located and the loan amount.Other changes to TRAC+ include:A $500 borrower incentive that can be applied as a credit to pricing, a credit listed on the Closing Disclosure form or as a check to the borrower; andUWM is offering 9,500 loan officer Partner Points, which can be redeemed for a $300 gift card to help borrowers with expenses after closing.The TRAC+ program also offers:The ability to get closing packages out in as little as 15 minutes; andVirtual closings with notaries available 24 hours, six days a week.A related program, TRAC Lite, has a $0 title fee along with reduced settlement agent fees ranging between $350 and $600.UWM again extends refi pricing promoAlso, UWM has again extended the end date for its latest pricing promotion, R/T 90 until Oct. 31, a company spokesperson added.On Sept. 17, UWM announced its first extension of the refinancing promo, pushing it out through Sept. 30. It offered a 90 basis point incentive on rate and term refinancings and was previously supposed to end on Sept. 16.The incentive applied to conventional, jumbo, Federal Housing Administration and U.S. Department of Agriculture rate-and-term refinances, along with FHA Streamlines, VA IRRRLs, and VA Type 1 Cash-Outs. IRRRLs are interest-rate reduction refinance loans.

 What's at stake: Mortgages requiring federal flood insurance will be more difficult to close during the shutdown, among other impacts. Expert quote: For "financial services broadly, banks in particular, there are going to be disruptions." — Brian Gardner, Stifel Financial Corp.Forward look: Extended shutdowns threaten federal worker pay and U.S. creditworthiness, potentially triggering broader market disruptions that would affect banks' Treasury holdings and lending activity.WASHINGTON — The threat of government shutdown has become somewhat commonplace in Washington, part of the push and pull of a tightly divided Congress. But when the government shut down at midnight Wednesday morning, it marked the first closure since early 2019, which was the longest in history at 35 days. Republicans and Democratic lawmakers are deadlocked as Democrats refuse to vote on a bill that wouldn't extend health care subsidies set to expire at the end of the year, subsidies that are necessary to stave off dramatic increases in health care prices for millions of Americans. Republicans won't negotiate or vote on Democrats' alternative legislation. Banking is more insulated than many other industries from the immediate impacts of a government shutdown. Most banking agencies, including the Federal Reserve, the Federal Deposit Insurance Corp. and the Consumer Financial Protection Bureau, are self funded or funded outside of the traditional Congressional appropriations process, and thus will continue operating mostly as normal. That being said, an extended shutdown that would slash pay cuts for federal workers and threaten the credit of the United States would have long-lasting implications for all kinds of financial institutions, banks included. "Financial services, broadly, banks in particular, there are going to be disruptions," said Brian Gardner, Chief Washington Policy Strategist at Stifel Financial Corp. "And the longer the shutdown, the more disruptive they are." And there are a few key programs that grind to a halt immediately. Here's the ways the government shutdown will most greatly affect the banking sector. Financial regulatory agencies face more uncertainty This shutdown is happening against the backdrop of a broader effort by the Trump administration to restructure the regulatory state, most notably for banks in the form of a radical reduction in the CFPB workforce. While the agency is self-funded, Trump has said that his administration might use the shutdown to lay off thousands of government employees, an effort that has been underway at the bureau since February.  Adam Martinez, the CFPB's associate director and chief operating officer, sent an email to staff late Tuesday about planning for a lapse in federal funding, according to a copy of the email obtained by American Banker. The CFPB is funded by annual funding requests to the Federal Reserve, which is funded by its monetary policy activities. "CFPB will continue operations in the event of a shutdown, even though some other parts of the federal government would be affected.  Therefore, CFPB employees should plan to report to work as usual on Wednesday October 1, 2025. Bureau leadership will monitor the situation and alert you if any services may be disrupted or if you will need to alter processes," Martinez said in the email. "The Bureau anticipates no disruption in pay, benefits, travel, or other services should other agencies close," the email said. Currently, the majority of CFPB employees are being paid not to work. Acting CFPB Director Russell Vought, who is also the Trump administration's director of the Office of Management and Budget, directed staff to "stand down" in February and moved to fire most of the bureau's employees. The CFPB workers' union sued, gaining an injunction against the administration issuing a reduction-in-force without following proper procedure. An appeals court stayed the injunction last month, and the union is now appealing the stay to the full DC Circuit.The FDIC and the Fed are also self-funded — the FDIC through fees to banks, the Fed via its monetary policy operations — and will continue to operate largely as normal during a shutdown. The Office of the Comptroller of the Currency, which is housed in the Treasury Department, could see some minor disruptions, although a large share of Treasury's workers are considered "essential" and thus not subject to furlough during government shutdowns. The Securities and Exchange Commission has in the past mostly shut down during a government funding lapse. "What is deemed to be non-essential activities are going to cease, said Gardner. "Nonessential is in the eye of the beholder, and there's a lot that the administration can decide is essential and what is nonessential." Based on historical patterns, that means the SEC will go dark, he said. "So if you're looking to raise capital, your registration statement is probably not going to get processed," he said. Flood insurance program grinds to a halt One of the most immediate and concrete impacts on banks' daily operations comes from the closure of the National Flood Insurance Program. Without congressional authorization, the Federal Emergency Management Agency cannot issue new flood insurance policies, effectively blocking a significant number of mortgage originations."What is clear is that the flood insurance program will close to new policies until there is a spending deal," said Jaret Seiberg, an analyst with TD Cowen, in a note Wednesday. "That means no mortgages which require federal flood insurance will be originated."The impact hits banks in coastal and flood-prone regions particularly hard. Any property in a designated flood zone that requires a federally-backed mortgage must carry flood insurance. When the federal program shuts down, those transactions simply cannot close. While private flood insurance exists, it remains a relatively small market and doesn't fully substitute for the federal program's reach and affordability.Banks have developed workarounds through repeated exposure to shutdown threats. "The short-term impact is limited as lenders have been through shutdown threats repeatedly," Seiberg said. "The industry will move up closings to get ahead of the Sept. 30 deadline. This softens the impact, though extended shutdowns will block mortgages from being made."The Fed, the FDIC and the OCC issued reminders to lenders that they may continue to make loans that are subject to the federal flood insurance statutes when the National Flood Insurance Program is not available. "Lenders may continue to make loans without flood insurance coverage during this time but must continue to make flood determinations; provide timely, complete, and accurate notices to borrowers; and comply with other applicable parts of the flood insurance regulations," the agencies said. "In addition, lenders should evaluate safety and soundness and legal risks and should prudently manage those risks during the lapse period." Both House Financial Services Committee Chairman French Hill, R-Ark., and the committee's ranking member Maxine Waters, D-Calif., pointed to the flood insurance lapse just after the shutdown. Hill said that the lapse hurts "at-risk property owners across our nation," while Waters said that the program "would largely be unable to pay out flood insurance claims, and its flood mapping process would ultimately come to a halt — all during the height of hurricane season." Small business lending and community development stallBeyond mortgages, the shutdown could immediately freeze Small Business Administration loan programs that many banks rely on to serve small business customers. "SBA loans probably will not be processed … during the shutdown," Gardner said. "This creates a particularly difficult situation for banks that specialize in SBA lending, where government guarantees allow them to extend credit to businesses that might not qualify for conventional loans." Community Development Financial Institution programs also face disruptions, mostly in processing updates to CDFI status and applications, a process already slowed by the Trump administration's hostility toward the CDFI industry. Updates to the CDFI website will be unavailable during the shutdown, the fund said in an update, and the help desk will be unable to respond to questions related to CDFI Fund programs, compliance or certifications. The CDFI Fund is also not able to process new applications for lending awards to replace previous applications that made references to ethnicity, race or climate — initiatives that the administration has pledged to end support for. Treasury said the CDFI Fund will resume processing applications after the government shutdown is finished, but it's unclear what will happen to applications received between when the government reopens and the deadline closes. Economic data blackout complicates planning Perhaps less visible but equally consequential is the shutdown's impact on economic data collection and publication. The Bureau of Labor Statistics, Census Bureau, and other agencies that produce the employment reports, inflation data, and economic indicators that banks depend on for strategic planning largely cease operations."The whole situation around the BLS, there's a lot of attention on they're not going to come out with data," said Ian Katz. "That's the same as it would have been in another time. But now, because that whole issue has become so political and fraught, BLS not putting out data is going to be a big deal in Washington."Banks rely on government economic data for everything from setting lending standards to stress-testing their capital positions to forecasting loan demand. Risk management teams use employment reports to gauge consumer credit quality. Commercial lending officers study GDP and manufacturing data to assess business borrowers' prospects. Treasury departments analyze inflation trends to manage interest rate risk.When this data flow stops, banks must rely on private-sector forecasts and proprietary models, introducing additional uncertainty into already complex projections. The problem compounds if the shutdown extends long enough that multiple scheduled data releases get skipped entirely, creating gaps in the economic time series that banks use for historical analysis and modeling.The data blackout also affects banks' ability to comply with regulatory stress testing requirements, which demand sophisticated analysis of how their portfolios would perform under adverse economic scenarios. While regulators may grant extensions or flexibility during shutdowns, the underlying challenge remains: banks are trying to make billion-dollar decisions with some of their most important information sources unavailable.Market impact uncertain Historical precedent suggests financial markets may shrug off the shutdown, at least initially."I went back and looked at lengthy government shutdowns — not the one or two day variety, not the ones that happened over weekends and holidays, but instances where there are shutdowns of five trading days in a row or more," Gardner said. "There have been some sell-offs years ago. But the more recent shutdowns, I don't think you can really see much going on with the markets."Markets have become desensitized to Washington's fiscal dysfunction, viewing shutdowns as political theater rather than genuine economic crises. Traders expect Congress will eventually reach a deal, and the direct impact on corporate earnings and economic growth from a short shutdown remains minimal.However, an extended closure that threatens federal worker paychecks, delays government contracts, and raises questions about U.S. creditworthiness could shift market sentiment. Banks hold substantial Treasury securities in their investment portfolios, and any hint of credit risk associated with U.S. government debt would reverberate throughout the financial system. The longer the shutdown persists, the greater the risk that it evolves from a manageable inconvenience into a confidence-shaking event that affects lending, investment, and economic activity in ways that ultimately hit banks' balance sheets.