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For the first time in four weeks, mortgage rates have moved lower, following another seven-day period where the benchmark 10-year Treasury yield moved in a wide range.However, rates are still at levels last seen in February, the Freddie Mac Primary Mortgage Market Survey showed."The average mortgage rate decreased this week, which is welcome news to potential homebuyers who also are seeing inventory improve and house price growth slow," said Sam Khater, Freddie Mac chief economist, in a press release.The 30-year fixed-rate mortgage averaged 6.85% as of June 5, compared with last week, when it was 6.89%. It remained lower than the same week a year ago, when it averaged 6.99%. Meanwhile, the 15-year FRM also moved 4 basis points lower than the previous week and back under 6%, to 5.99%. This compared with 6.03% on May 29 and 6.29% as of June 6, 2024.This rate drop, while lower than expected, is a "small but positive shift" for housing, said Samir Dedhia, CEO of One Real Mortgage.What other gauges show about mortgage ratesThe 10-year Treasury, which had a high nearing 4.5% intraday on May 28 before dropping down to 4.24% at its close, moved back above 4.6% earlier this week before ending June 4 at 4.37%.At 11 a.m. Thursday morning, it had regained 1 basis point and was at 4.38%. A higher number of jobless claims led to the increase, explained Louis Navellier, an investment banker. "The bond market was not very reactive to the labor news either," he added.Zillow Home Loans mortgage rate tracker reflected such movements, with the 30-year FRM falling to 6.9% on June 4 from an average of 7.01% one week earlier.By 11 a.m. on Thursday morning, it was up to 6.91%. At that same time on May 28, it was at 7.08%.Lender Price data posted at the same time on the National Mortgage News website had the 30-year at 6.902%, compared with 6.982% one week prior.What moved mortgage rates this weekThis was a "small respite" for mortgage borrowers, Kara Ng, Zillow senior economist, said in a June 4 blog posting."Bond yields — and the mortgage rates that tend to follow them — fell as the ADP employment report showed private employers added only 37,000 jobs in May, one third of what was expected by economists," Ng said. "The Bureau of Labor Statistics employment report, released June 6, will give economists another glimpse of how the labor market is faring."Easing inflation pressures and more stable activity in the bond market drove the decline in the Freddie Mac survey, Dedhia added. "As Treasury yields pulled back, mortgage rates followed, showing that the market is still very sensitive to economic data and investor expectations around future Fed decisions," Dedhia continued. "While we're not seeing a dramatic drop, this kind of consistency is a good sign as we move into the heart of the summer buying season."The rates some lenders are promoting aren't a reliable indicator of actual market conditions."Mortgage rates stay hunkered at 7%, and secondary [mortgage-backed securities] spreads are 155 basis points over Treasuries despite the budget deficit narrative keeping rate [volatility] relatively high," Eric Hagen, analyst at BTIG, wrote in his June 4 roundup."We see a handful of originators still advertising teaser rates near 6.5%, but it tends to include higher up-front points, which are typically less attractive from the borrower's perspective if there could be a refi opportunity in the near future," he said.How current mortgage rates affect first-time homebuyersHagen pointed to comments in the senior loan officer survey from the Fed in April indicating a tighter credit box for non-agency mortgages.It suggests "the marginal first-time buyer with a high debt-to-income [ratio] is probably getting priced-out right now versus remaining a renter, even if buyers are picking up some more bargaining power because home price appreciation is tapering off," Hagen said.The Mortgage Bankers Association's Weekly Application Survey released June 4 noted rates on the conforming 30-year FRM fell 6 basis points to 6.92% as of May 30."Mortgage rates near 7% are keeping mortgage activity in a holding pattern," MBA President and CEO Bob Broeksmit said in a Thursday morning statement. "Although refinance and home purchase applications are consistently higher than last year's pace, we expect activity to remain within the same narrow range until mortgage rates move lower."The group's current forecast is for rates to fall to 6.6% by the end of 2025, "which should increase demand," Broeksmit continued.Ng said even with higher rates, affordability is better than last year, as the typical mortgage payment is 1.7% lower than May 2024."Economic uncertainty held back sales activity in April," Ng said. "The stock market's significant volatility during this period may have impacted down payments and made households nervous about the future, leading to buyer hesitation."

After a tepid Spring homebuying season, housing market headwinds continue to challenge demand for homebuying, but improved for-sale supply is providing buyers with more options and helping to keep softer price pressures for those looking to buy. And while annual home price growth has slowed considerably, home prices this spring have held steady, and gains have largely mirrored trends seen before the pandemic. However, this is a significantly different housing market heading into the summer months.With increased visibility into tariffs, diminishing concerns about an economic recession, and a higher number of homes for sale, the homebuying market could see improved optimism and increased activity going forward. But the course correction for the housing market will take some time and widespread concern about personal finances, job prospects, and potential tariff impacts continues to weigh on home prices.Furthermore, consumer sensitivity to mortgage rates remains high, consistently hovering around the 7% mark. Rumors of potential homebuyers walking away from their offers in droves dominate the chatter in housing finance. The past Spring homebuying season, usually a boon for our business, was more of a bust. The next few months are likely to mirror this performance, as the Federal Reserve is not expected to cut rates anytime soon. According to April numbers from the National Association of Realtors, existing home sales are down 2% from a year ago; the slowest April sales pace since 2009, when the subprime mortgage meltdown dominated headlines. Here's the good news: Given the cyclical nature of the housing market, we are currently riding the trough, with nowhere to go but up. Indeed, home buyers are in a better position than they have been in the last few years given more inventory and less competition from other home buyers. Again, pending home sales are slowly inching up in 2025, with monthly pending sales for April are up 9% year-over-year, suggesting that pent-up home buyer demand is resulting in stronger activity than in 2023 and 2024.Buyers have more negotiating power and are securing better deals than last year, with fewer homes selling above the asking price than in previous years – at 27% in April and compared to 31% last April, particularly in markets with higher inventory levels. Sellers are listing their properties at a higher rate than last year, suggesting that the improvements in for-sale inventories will continue. Moreover, Cotality data indicates that a seasonal uptick in buyer competition is underway – more homes are selling over the asking price than during the winter, up from 18% in January, and with shorter days on market (23 days, down from 44 in February), both returning to pre-pandemic levels.But the housing finance heat wave is only blowing through select markets, particularly markets in California, with 10%+ increase in home sales compared to 2024.  In contrast, Miami, Austin, Atlanta remain 20-30% below 2024 sales activity and are projected to remain weak.Digging deeper, more home sales in the West are supported by a surge in for-sale inventories, which have increased by 60-70% year-over-year in Western markets. Inventories in the Northeast remain 60-80% below 2019 levels, which is holding back home sales activity but also continuing to put pressure on home prices.However, despite slow activity and generally more inventory, and given the consumer overall sour sentiment towards the housing market, it is important to note that the number of markets where home prices are declining has not grown notably. About 14 of the 100 largest markets reported annual declines, up from 12 markets last month. Overall, the housing market is holding steady, but unfortunately this means we are in for a few more months of a bumpy ride.HOME PRICE SNAPSHOTHottest markets going into spring home buying season include Los Angeles, Orange County, Oxnard and San Jose, California; York, Montgomery County and Harrisburg, Pennsylvania; Durham and Winston, North Carolina, Boise City, Idaho. Home prices picked up in early spring, consistent with seasonal trends, but are muted compared to pre-pandemicHome prices rose 2% YoY in April, continuing the trend of slower home price growth.Home Prices are forecasted to increase by 4.3% by April 2026Expecting below average home price growth in the next few yearsPrices remained flat since July when spring mortgage rate jump dampened home buying demandMarkets surrounding New York City continue to see the highest appreciation rates (including Bridgeport, Newark, Lakewood, Hartford)Cape Coral and North Port in FL remain slowest appreciating markets and down 4%-7% YOYMarkets furthest off the 2022 home price peaks are Austn, San Francisco Bay area, Idaho markets, while New York markets are up over 20% since mid 2022Home price cooling persists in Florida, San Francisco Bay area, Texas and areas in the Midwest that are being hit with insurance increases

A mortgage lender helping Americans buy homes abroad received a capital boost this week thanks to a new warehouse agreement with an investment management firm. Volo Loans, which specializes in serving U.S. citizens looking to finance properties in Costa Rica, landed its $50 million investment from Gramercy Funds Management, a global firm specializing in emerging market alternative assets. The capital provides Volo with a senior secured warehouse facility to originate new loans in the Central American nation. Volo claims its process shortens the origination time for American customers looking to buy or refinance a property in Costa Rica from over a year to 45 days or less.  "The biggest challenge that we set out to solve was providing good quality financing options for U,S. citizens as they look to move abroad," said Volo Loans co-founder and CEO Ben Pack in an interview with National Mortgage News."That's been the biggest challenge. Historically, people have had to pay cash, which means they have to liquidate assets, leverage their house or sell their house up in the U.S." Current loan products include fixed and adjustable-rate options to fund both existing-home purchases and lots for new construction around the country, as well as refinances. "The majority of the financing we do are for people that are buying second homes, Airbnb or investment properties. We certainly do finance people that live there full time, but the majority of folks, it's a second home or an investment property," Pack said. The company designed its platform to alleviate cash and residency requirements as well as other complexities foreigners typically navigate when buying a home in Costa Rica. Volo developed the process to resemble the American conventional mortgage experience as closely as possible, using Fannie Mae and Freddie Mac standards to guide its underwriting process. Payments and servicing are handled domestically, with loans funded in U.S. dollars. Costa Rican real estate and legal partners work alongside Volo's American lending team. The Salt Lake City-based company was founded in 2022 and is also currently licensed in Utah, according to the National Multistate Licensing System. Pack's own experience in trying to buy a vacation home planted the seeds for the business idea that turned into Volo. While Costa Rica offers amenable homeownership rights, he said, he also realized there were no good financing options. "You can try and go through the local banks, but it is extremely difficult to say the least."The size of the ex-pat population in the country also opens the door for future growth to a larger client base attracted to the country. The company hopes to develop a similar product for Canadian citizens in the future and plans to expand the business model elsewhere, Pack remarked. "We've identified the top 10 markets around the world that we can take this same structure and plug it in to provide international buyers financing options that currently don't exist," he said. "We've already identified the next country that we will go into."Who is looking to move abroad?Volo's investment comes as a Harris Poll from early 2025 found over 40% of Americans entertaining the thought of moving abroad, with 15% seriously or definitely planning to relocate in the next two years. Canada, the United Kingdom and Australia were the three most popular destinations for Americans seeking to move to a foreign country. While no Central American nation landed in the top 10, approximately 120,000 Americans currently live in Costa Rica full time.   Respondents cited a range of factors behind their sentiment, including political developments, lower taxes abroad and personal growth. The data was collected over three different time periods both before and after the U.S. election. Generation Z and millennials were more likely to entertain the thought of an expat experience compared to their older cohorts, with a majority of both groups considering an international move.Among the group considering a move, a 60% share said they were open to paying for services that would help facilitate relocation. When it came to looking for a place to live, more than four out of five said they wanted connections to international real estate firms that would ease their housing search.

Wall Street is cranking up the bond machine as US homeowners, finding that buying a new house is out of reach since mortgage rates started climbing in 2022, are instead getting home equity loans and sprucing up their current properties.Roughly $18 billion of bonds, backed by consumer loans on everything from second mortgages to loans that get repaid from future home value, were issued last year, according to data compiled by Deutsche Bank AG and Bloomberg. That's triple the amount in the year prior, and sales are on pace for a similar level in 2025.With a near-record $35 trillion tied up in US home equity, households are dipping into their housing wealth to pay for renovations and other purchases rather than buy new homes that would require them to switch into mortgages at higher rates. With sales of previously owned homes — and thus new loans — stalling, the home loan industry is paying attention."They're taking their mortgage-making factories and starting to use them to create home equity products," said Gabe Rivera, co-head of securitized products at PGIM.Investment firms are scooping up the loans and then repackaging hundreds or thousands of them at a time into bonds of varying size and risk, a process known as securitization. This year, Atlanta-based Angel Oak Capital Advisors and New York's Annaly Capital Management Inc. both issued their first-ever bonds secured by home equity lines of credit. In April, mortgage servicing giant Mr. Cooper Group Inc. joined the growing ranks with its first bond backed by second mortgages. Home equity-backed bonds are still a relatively small corner of the market, at least compared with the vast bond offerings for mortgages guaranteed by the quasi-government entities Fannie Mae, Freddie Mac and their sister organization Ginnie Mae. Together, the trio are expected to crank out some $1.15 trillion of MBS this year alone, according to Citigroup Inc. estimates. Still, the field is growing. TPG Angelo Gordon estimates there's a $2 trillion market for home equity products. And thanks to tighter lending standards and regulations, the debt also appears safer than in the 2008 financial crisis, when many borrowers in riskier loans fell into foreclosure.That's piqued the interest of big investors, including private credit firms, which are deploying other strategies to scale up access to home equity. One method is to agree to purchase substantially all of the loans that mortgage lenders write, even ones that haven't yet been made, as long as each fits certain criteria. Those arrangements are known as "forward flow" agreements. Despite the growth in direct lending, the public securities markets often represent the largest and most liquid source of capital to fund such deals.Cashing OutTo homeowners, the vast difference between the rate on their current mortgage and what they'd get with a new mortgage poses a problem. Before, when a consumer wanted to convert some home equity into cash, they could simply replace their existing mortgage with a new bigger one in a cash-out refinancing. But with mortgage rates still high, that no longer makes sense. Instead, homeowners are using either a home equity line of credit, which is a revolving credit line akin to a credit card, or they can take out a second mortgage. Both achieve a similar purpose: convert home equity into an up-front cash advance, without jeopardizing the existing mortgage. "Home equity products are designed to let homeowners take cash out against their house while keeping in place senior mortgages with below-market coupons," said PGIM's Rivera. Riskier BetsUse of a newer solution, home equity investment, or HEI, contracts more than tripled last year. They work by giving a homeowners an up front cash payment, in exchange for which borrowers agree to give lenders some of their future home equity. HEI contracts are often used by borrowers with somewhat lower credit scores than those who borrow against their existing equity or take out second lien mortgages, and are often used to consolidate debt or pay for remodeling and home renovation projects, according to DBRS. Some investors caution that HEI contracts resemble mortgage products with adjustable interest rates from the early 2000s, which ended up delivering losses to investors."Investors considering bonds backed by these contracts should carefully scrutinize them," said Michael Hislop, an analyst at Curasset Capital Management. "What kinds of borrowers are going to find HEI the most attractive? Ones without money to make mortgage payments." DBRS said defaults of HEI contracts have been relatively rare so far, according to its 2024 report.Stable MarketBy and large, securitizations of home equity have performed relatively well in recent years.Lending volume for home equity-related debt is far below the years leading up to the housing bubble bursting nearly two decades ago. Industry insiders say that consumer housing reforms made after the subprime housing bubble of the early 2000s have purged most of the riskier borrowers from the market and that structural housing shortages are keeping upward pressure on home prices. Even so, there are dangers. The good performance has coincided with a period of strong housing price growth and low unemployment. If home prices were to enter a sustained decline, pressures could emerge, according to Ryan Singer, head of residential credit at Balbec Capital. "It's true that there are trillions of dollars in home equity," said Singer. "But if you look at the individual mortgages, you can actually see that borrowers are making very small down payments on average, and that there are plenty of people with no equity in their homes."Still, as long as interest rates remain elevated homeowners will continue to look for alternative ways to borrow. And with plenty of specialist companies tapping into structured debt markets for the first time, Wall Street's bond machine will keep humming.

Federal Reserve Gov. Michelle BowmanBloomberg News WASHINGTON — Michelle Bowman has been confirmed by the U.S. Senate to be the Federal Reserve vice chair for supervision. The Senate confirmed Bowman's nomination in a 48-46 vote, split along party lines. Once she is sworn in, Bowman will serve as the top bank regulator at the Fed, wielding considerable influence over key banking agenda items, including retooling the 2023 Basel III endgame capital proposal and broader deregulation of the industry. The tight vote for Bowman's nomination was unexpected. Bowman is a favorite of the banking industry — and community banking sector in particular, having been a community banker herself. Moderate Democrats on banking issues would typically be relied upon to shore up the votes in favor of her nomination. The nomination and confirmation process, however, has been less bipartisan under the Trump administration as it pursues sweeping changes that Democrats argue undercuts the function of government and regulatory independence — a particular point of interest at the Fed. Bowman, for her part, promised to protect political independence at the Fed for monetary policy, but not specifically for bank regulation. "It is important that we maintain our independence with respect to monetary policy and the responsibilities that we have that are related to the economy," she said at her confirmation hearing earlier this year. Sen. Mark Warner, D-Va., who ended up voting against her nomination, asked at the confirmation hearing what would happen if the Office of Management and Budget would implement a rule saying that the Fed had to check in on bank regulation rules with the White House. "I hope you would say that would be inappropriate," Warner said. "We haven't seen that happen at this point … ," Bowman said."The key word … in that sentence is 'at this point,'" Warner interrupted."But I appreciate that concern," Bowman said. "I agree with the principles of cost-benefit analysis and ensuring that we've identified a problem that needs to be solved and we need to provide an analysis that supports rulemakings that we put forward. So I wouldn't think we would have challenges with any rulemaking that we might want to engage in."Banking and industry groups applauded Bowman's confirmation. "Sound banking regulation and supervision are crucial for maintaining a safe and robust financial system," the Financial Services Forum president and CEO Kevin Fromer said in a statement. "As Vice Chair for Supervision, Governor Bowman will be instrumental in shaping policies and practices that affect the ability of banks to support our economy and promote financial stability. America's leading banks look forward to working with Vice Chair Bowman to advance effective regulatory and supervisory policies that benefit the broader U.S. economy.""With her deep experience as a federal regulator, state regulator and community banker, Governor Bowman understands the real-world impact U.S. banking rules can have on the economy and consumers," said Rob Nichols, American Bankers Association president and CEO in a statement. "We applaud the president for nominating her and look forward to working together to develop a rational bank regulatory framework that preserves the commitment to safety and soundness that we all share, while giving banks of all sizes the chance to support their customers and communities and drive the U.S. economy forward." The credit union industry group also lauded her confirmation. "She brings strong financial services experience and expertise to the role as a former community banker and has met with credit union organizations many times through the years," said Jim Nussle, America's Credit Unions president and CEO in a statement. "Bowman is a strong ally for credit unions and our issues and agrees with our concern with the Fed's proposal to cap debit interchange fees. Her role as Vice Chair for Supervision gives credit unions a stronger voice in financial regulation. We thank the Senate for moving quickly on her confirmation."Consumer groups and Democratic lawmakers have argued that Bowman's promised deregulation could hurt consumers. "Trump has nominated Fed Gov. Michelle Bowman to become one of the most important financial regulators in the US and the world, the Vice Chair for Supervision at the Fed," said Dennis Kelleher, president and CEO of Better Markets, in a statement. "Her job will be to protect the jobs, homes and savings of hardworking Main Street Americans from the profit-maximizing risks created by Wall Street's biggest, most dangerous megabanks. Unfortunately, Bowman has the opposite views: while claiming to care about Main Street, she enthusiastically and unequivocally supports those banks' priority of deep, broad and mindless deregulation, which will no doubt contribute to another horrific crash." 

Bloomberg News In 2018, the Federal Reserve Board's total growth restriction on Wells Fargo established a new tool for dealing with large banks with broken compliance cultures.Many in and around the banking space viewed the $1.95 trillion asset cap — imposed in response to Wells Fargo's cross-selling and fake accounts scandals — as a high-water mark for regulatory enforcement, one they believed would inform how regulators administer similar penalties moving forward.But after seven years, billions spent by the bank on reforms and billions more in lost potential growth, it is unclear to the rest of the banking sector and the broader public just what the San Francisco bank did to get out from under the cap. The Fed's 169-word written statement announcing the removal of the asset cap on Tuesday simply stated that the bank made "substantial progress" on addressing its deficiencies and "fulfilled the conditions required" to remove the restriction. Sean Vanatta, a financial historian and author of "Private Finance, Public Power," a book on the history of bank supervision in the U.S., said the minimal disclosure provides little guidance to other banks that might find themselves facing similar penalties and leaves the broader public to reach its own conclusions about why the cap is being lifted now. "The lack of transparency as to what this really means makes it hard for outside observers on either side of the question to have a sense what it is that Wells Fargo did to have this order lifted, and whether, as external observers, we should be satisfied with this," Vanatta said.While growth restrictions are a fairly common tool for bank supervisors to compel institutions to come into compliance, the cap imposed on Wells Fargo was unique in both its size and scope. The penalty has only been used on one other large bank, Toronto Dominion, which had its growth capped last year in response to a sweeping money-laundering scandal. In some ways, the lifting of the asset cap was bound to come with unclear reasons and motives, since correspondence between banks and their regulators are often deemed confidential supervisory information. But it isn't clear how much of the haziness surrounding the lifting of Wells' asset cap can be chalked up to prudent information management. In an appearance on CNBC on Wednesday, Sen. Elizabeth Warren, D-Mass., argued that congressional committees have long been trusted to deal with confidential information and are capable of shielding it from the broader public. Given the scale of Wells Fargo's malpractices — which resulted in the opening of millions of unauthorized credit cards and checking accounts in customers' names — she said the public deserves some insight into whether the bank has sufficiently changed its ways."I want the Fed to give the Congress, the Banking Committee, five years of bank examination documents. I want to see what it is that Wells Fargo represented to the Fed and what the Fed asked of Wells Fargo," Warren said. "Remember, the oversight job of Congress is both for these giant financial institutions, but it's also oversight over our regulatory agencies, including the Fed, to make sure the Fed is doing its job."Some view the longevity of the penalty as an indictment of the Fed more than the bank. Karen Petrou, co-founder and managing partner of Federal Financial Analytics, said if Wells Fargo was consistently failing to get into compliance, its supervisors should have increased the penalty to force swifter action. On the other hand, she added, if the bank had satisfied the necessary criteria years ago, regulators should not have dragged their feet in removing the cap."If the supervisors are not just following picky little details and the bank is truly delinquent, then they should move past one enforcement order and slam them with another," Petrou said. "But seven years of limbo speaks to me of supervisory failure, not Wells Fargo recalcitrance."Petrou said regulators are incentivized to keep enforcement actions in place longer than necessary to avoid being held accountable for scandals or bad actions that might arise from a bank after their release. It leaves banks in a state of perpetual limbo, she said, hinders their competitiveness."We need to have a much more rapid, meaningful, fish-or-cut-bait approach to supervisory orders," Petrou said.The limited disclosure about the end of the asset cap has left other frustrating, albeit predictable, information gaps, including why the underlying enforcement action remains in place despite the removal of the growth restriction. Fed Chair Jerome Powell told the Senate Banking Committee in 2018 that Wells Fargo would not have to fully implement its remediation plans to have the cap lifted, but that it merely needed to be "on track." Mayra Rodriguez-Valladares, a financial risk consultant, said it is not unusual for enforcement actions to be pulled back in phases. She noted that the Fed could have kept the enforcement action in place because of lingering concerns about Wells Fargo's governance and risk management, but added that she would have liked the board to make that distinction clear."What does this mean? Was there just a lag or are you still finding problems? It does send mixed signals, removing the cap while keeping the enforcement action in place," she said. "They really should have explained what they were thinking."The order imposing the asset cap provides some broad standards for withdrawing the asset cap specifically. The action, which was approved by a 3-0 vote of a depleted Federal Reserve Board on February 2, 2018 — then-Chair Janet Yellen's final day at the central bank — with then-Vice Chair for Supervision Randall Quarles abstaining, identified a four-step process for removal.Wells Fargo would first have to submit written plans for improving its governance and risk management. Then, those plans would have to be approved by officials in Washington and at the Federal Reserve Bank of San Francisco. The bank would then have to implement those plans and have its actions reviewed by a third party. Finally, Wells Fargo would have to get a notification, in writing, from the Fed that the prior three conditions had been met. Since then, Wells Fargo has taken numerous steps to address its shortcomings, including building out comprehensive, firm-wide compliance and oversight programs. The growth restriction has also caused it to wind down products, sell off business lines and avoid certain types of deposits."We are a different and far stronger company today because of the work we've done," Wells Fargo CEO Charlie Scharf said in a written statement Tuesday after the cap was removed.But when and how those efforts became sufficient to satisfy regulators and why it took the bank so long to reach that point is unclear. Wells Fargo, through a spokesperson, declined to comment on its efforts to get out from under the asset cap.In a 2018 Senate Banking Committee hearing held shortly after the Fed's enforcement action against Wells Fargo, Warren pressured Powell to commit to additional transparency measures related to the cap, including a public vote on its ultimate removal and the disclosure of the third-party review of the bank's reforms. In a follow-up letter, Powell said the confidential supervisory and personal information likely to be included in the third-party report would probably prohibit the Fed from releasing even a redacted version. But, he committed to review the report and "determine whether and to what extent the report can be publicly disclosed without impairing protected interests."The Fed's vote to remove the cap, which took place on May 30, did not have a public component. The Fed also has not indicated whether it will release the third-party review, which was originally supposed to occur by September 30, 2018. The lifting of the asset cap has been largely expected by investors and appears to have been priced into the bank's stock — which closed at $75.38 on Wednesday, slightly below the $75.65 it closed at on Tuesday before the announcement — ahead of the cap's removal. The bank had already been freed from seven other enforcement actions from various regulatory agencies this year. Todd Baker, a financial consultant and adjunct faculty member at Columbia University Law School, said the period of growth restriction and strict oversight has likely made Wells Fargo a stronger bank, forcing it to not only improve its compliance functions but also operate more efficiently. Given how closely lawmakers and the broader public are likely to scrutinize the bank moving forward, Baker said the Fed must have a high level of confidence in Wells Fargo to avoid further scandals, at least for the foreseeable future."The last thing the regulators want is to announce the removal of this asset cap and then two months later, issue another enforcement action for something serious," he said. "So, it's an indication that they really do feel that, after all those years, Wells has taken enough steps that they're in a relatively confident position as to the likelihood of future blowups."Still, the lack of explanation from the Fed — whatever the reason — leaves an information void that can only be filled by speculation. Vanatta said that is not a desirable outcome, particularly in light of how closely the removal of Wells Fargo's regulatory shackles align with the arrival of the new Trump administration, which has championed lighter regulation in pursuit of greater economic growth. "It leaves a lot of room for questions," Vanatta said. "Personally, I'm content to take the Fed's word that Wells Fargo has met the criteria, but because we don't have any insight into how — into what that means — it makes it look like it could be a political action, or the Fed is trying to preemptively defend itself from criticism by just ending this case and trying to move on."

The Federal Housing Administration has revised updates planned for rules around contacting and offering options to distressed borrowers.The FHA has removed required outreach at particular times from a planned transition to permanent loss mitigation options from temporary pandemic contingencies, and also is tweaking modernization of what were originally "face-to-face" meeting requirements.Overall, the new version of the loss mit and borrower contact requirements will be more cost effective for servicers, according to the Department of Housing and Urban Development affiliate, which insures certain affordability loans often utilized by first-time homebuyers."These targeted policy updates expand the options available for mortgagees to reasonably engage with borrowers in default and are designed to help them achieve significant savings," FHA said in a bulletin.Reactions to the FHA's distressed borrower rule revisionsOne aspect of loss mitigation some industry experts think the revision improves are certain procedures used to test distressed borrowers' ability to reperform if their loan terms are modified."This FHA policy shift is workable and thoughtful. It modernizes some of the requirements on communication to reflect that it's 2025 and provides some operational clarity on trial payment plans," said Isaac Boltansky, head of public policy at Pennymac, in an email.Industry representatives also indicated changes to the requirements that give servicers more leeway would be helpful to more moderate-sized companies in particular."This is a meaningful step toward aligning compliance with practical servicing realities," said Scott Olson, executive director of the Community Home Lenders of America, in a press release.Previous loss mit requirements for interviews during certain hours within a borrower's time zone "would have proven extremely difficult to small servicers with geographically diverse portfolios," said Donna Schmidt, president and CEO at DLS Servicing and WaterfallCalc."The revised rule is a significant improvement over the first draft, accomplishing the same basic results without nitpicking requirements that overshadow the spirit of the process. I believe both borrowers and servicers will benefit from the new approach," she said in email.

Closed-end home equity loan annual growth outpaced its line of credit cousin in the fourth quarter, increasing 13% above its high point from a year ago, the TransUnion first quarter Home Equity Trends Report found.Total home equity origination, in which TransUnion counts first mortgage refinance activity as well (although it does not distinguish between types), had 23% growth to 720,000 accounts at the end of the fourth quarter from the same period in 2023; because of a reporting lag, this and certain volume data is one quarter behind the other information in the report.READ MORE: Home equity lending has strong two-year runway ahead"A deep understanding of industry dynamics within the home equity market enables mortgage lenders to better identify homeowners who may benefit from home equity lending products — and to tailor their offerings accordingly," the TransUnion report said. "Leveraging tools that provide insights into a homeowner's available equity, such as combined loan-to-value metrics, is essential for executing effective, targeted marketing campaigns." At the Mortgage Bankers Association's Secondary and Capital Markets Conference in May, panelists noted the growth in the product over the previous two years, while expressing optimism for continued expansion through the next 24 months.How are borrowers tapping their home equity?The total outstanding open-end and closed-end home equity accounts grew 5% annually in the first quarter, to 12.1 million. That is also up from 11 million in the first quarter of 2023 and 10.2 million one year before that. HELOCs have a 65% share, while home equity loans have a 35% share.Home equity loan originations totaled 287,000 accounts in the fourth quarter, versus 254,000 for the same period in 2023.Meanwhile, HELOCs grew 8%, to 268,000, up from 248,000. The largest share growth was in first mortgage refis, up 93%, but as other analyses have noted, those numbers were up from an extremely low base, to 165,000 accounts from 85,000 one year prior.HELOC volume is being helped by interest rates for this product declining, a recent ICE Mortgage Technology report said.Who is originating the most home equity products?Credit unions had the largest share of HELOC originations in the fourth quarter at 36%, followed by large depositories at 28%, small depositories at 24% and nonbanks at 11%.But for closed-end seconds, similar in nature to traditional first mortgages, nonbanks had a 56% market share, followed by credit unions at 25%, small depositories, 14%, and large banks at just 5%.By loan amount, $32 billion of HELOCs were produced last year, with large banks and credit unions with similar shares of 33%, small banks at 26% and nonbanks at 8%. For seconds, $14 billion was produced, with nonbanks doing 36% of the volume and credit unions at 34%.One reason why the MBA Secondary panel was bullish on home equity lending's immediate future was the amount of non-mortgage debt held by Americans.The TransUnion report put that total at $790 billion at the end of the first quarter, up 6% year-over-year, with an average of $8,000 owed per homeowner. This is also up from the recent low of $508 billion in the first quarter of 2021.How much total home equity is available?TransUnion calculated tappable home equity at $21.1 trillion as of March 31, up 7% from the same day one year earlier and 62% over the same day in 2018.The total number of homeowners with an equity position of at least 20% in their property is 85.9 million. They have a median $268,000 of tappable equity.Over 6 million homeowners have over $1 million in available tappable home equity, according to TransUnion.At the other end of the spectrum, 27% of low-to-moderate income households have a current loan-to-value ratio of 80% and are able to borrow from their equity.Average home equity extracted for non-LMI homeowners was $252,000 in the fourth quarter, up 0.2% year-over-year, while the median amount of $185,000 was down by 3.1%.For LMI households, the average extracted equity amount of $168,000 was up 0.3% versus the fourth quarter of 2023, while the median of $113,000 was 5.8% lower.What percentage of their line are homeowners using?While HELOC utilization is up from last year, it's down from the pre-pandemic era. As of the end of the first quarter, 57% of HELOC borrowers had used more than 20% of their available credit, versus 55% one year prior. However, the Q1 2025 share is three percentage points lower for the same three-month period in 2019.The shifting need for cash finds 89% of borrowers taking a draw on their HELOC within the first six months of origination as of Dec. 31. On the same day in 2023, the total was 87%, while in the outlier year of 2020, it was just 80%, with the following year rising to 82%.For the other three years TransUnion provided first quarter data for, 2018, 2019 and 2022, 86% had a draw within the first six months.What can lenders do when the draw period ends?There's an opportunity for mortgage lenders to refinance borrowers reaching their end of draw periods in the next two years.The number of accounts that will no longer be able to take out proceeds is approximately 901,000 as of the first quarter, up 5% from one year prior.Of those, 3% expired in the current quarter, 45% will do so in the next 12 months with the remaining 52% by March 31, 2027.How well do home equity loans perform today?Unlike during the financial crisis period, these products are performing well. At the end of the first quarter, 30-day lates were at 181 basis points for HELs and 81 basis points for HELOCs. This compared with 186 basis points and 79 basis points respectively as of March 31, 2024.But in the first quarters between 2008 and 2013, early stage delinquency rates for the closed-end loans were over 6%, peaking at 9.43% in 2010. HELOC lates peaked at 291 basis points in the first quarter of 2010 as well.Similar patterns were seen for both 60-day and 90-day late payments as well for both products. For the first quarter, 60-day lates for closed-end home equity products were 106 basis points, and 90-day were at 76 basis points.HELOCs have a 47 basis point mid-stage and 35 basis point serious delinquency rate.

Treasury yields tumbled after weaker-than-expected gauges of job creation and service-sector activity strengthened traders' conviction that the Federal Reserve could cut interest rates as soon as September.Two- to 10-year yields reached the lowest levels since at least May 9 after the ISM Services gauge for last month signaled contraction for the first time since last June. The bond market added to earlier gains unleashed by ADP Research data showing that private-sector job growth was the weakest in two years. The US government's broader employment data for May, to be released Friday, is expected to show deceleration also.READ MORE: Mortgage rates rise again to highest level since FebruaryThe ADP data drew a swift response from US President Donald Trump, stating in a social media post that the Fed needs to cut interest rates, a demand he's made repeatedly. Traders of swap contracts that predict Fed rate changes priced in higher odds of two quarter-point cuts by year-end, in October and December. The possibility of a move in September increased to around 95% from around 82%."This is a leading indicator into what we think is going to happen in Friday payrolls," Jim Caron, a chief investment officer at Morgan Stanley Investment Management, said on Bloomberg Television. "It does make the Fed probably have to step up and look. The thing they are worried about the most is a softening in the jobs market."READ MORE: April PCE inflation comes in at 2.1%, nearing Fed goalA subsequent drop in oil prices on signs that Saudi Arabia in open to increasing production subsequently spurred yields to session lows, with five- to 30-year tenors sliding 10 basis points on the day, the benchmark 10-year note's to 4.35%.Ahead of Wednesday's data, traders were ramping up bets against Fed rate cuts this year. Expectations rate have waxed and waned since December, when the central bank did the last of three cuts totaling 100 basis points, setting its target band for the US overnight lending rate at 4.25%-5%. The prospect that the Trump administration's tariffs agenda will reignite inflation has curbed wagers on additional rate cuts, despite signs of slowing economic growth.Friday's jobs report is forecast to show employers added 130,000 workers in May, following an April increase of 177,000. The unemployment rate is predicted to remain steady at 4.2%, according to a Bloomberg survey of economists."We are looking at the unemployment rate given it's more of a clear signal," Molly Brooks McGown, US rates strategist TD Securities, said on Bloomberg Television. An upward move in the unemployment rate to 4.5% — from the current 4.2% — would see the "Fed get more concerned," Brooks McGown said. That would "probably" make most investors more comfortable with the Fed stepping in, she said.Donald Trump just posted in reaction to the ADP employment change miss that Fed Chair Jerome Powell "must now LOWER THE RATE." While it's unlikely that Powell himself will be influenced by the president's constructive critique, there are some people with an eye on replacing Powell who may adjust their tone in response. Moreover, bonds are extending their gains following his comments, which may reflect algos trading on Trump headline said Sebastian Boyd, macro strategist.Other US economic indicators have continued to show strength. While the ISM Services gauge and its new orders component indicated contraction, its employment measure unexpectedly detected expansion for the first month in three. A gauge of prices paid by businesses in the sector rose more than anticipated to the highest level since November 2022.A separate US government gauge of hiring strength released Tuesday showed that job openings unexpectedly rose in April in a fairly broad advance and hiring picked up, spurring Treasury yields higher. Fading expectations for Fed rate cuts led the Treasury market to a 1% loss in May as measured by a Bloomberg index, its first since December. For 2025 through Tuesday, Treasuries have gained 2.1%."The JOLTS data seemed to indicate the labor market is holding in better than the ADP report suggests," said Zachary Griffiths, head of investment-grade and macroeconomic strategy at CreditSights. 

Senate Majority Leader John Thune believes the deal that led the House to increase the maximum deduction for state and local taxes to $40,000 will have to be changed in his chamber, according to his office.  The Senate has begun deliberations over President Donald Trump's massive "Big Beautiful Bill" that narrowly passed the House on May 22, with several Republican senators expressing concerns over its cost as well as cuts to Medicaid and clean energy tax credits.Ryan Wrasse, a Thune spokesman, did not provide details about how, exactly, the deal might be revised.   Republican lawmakers from states like New York and California demanded that the SALT cap be raised well above the $10,000 limit established in Trump's 2017 tax overhaul. House Speaker Mike Johnson eventually agreed to the new $40,000 cap.  "It would be very, very hard to get the Senate to vote for what the House did," Thune told Politico. "We've just got some people that feel really strongly on this."The tax measure would also extend tax cuts from Trump's first term that are to expire on Dec. 31, along with new tax relief, including temporarily exempting tips and overtime pay from taxes.Representative Nick LaLota, a New York Republican, indicated that a reduction in the SALT benefit could jeopardize passage of the bill in the House."No SALT. No Deal. For Real," he posted on X Tuesday night.