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President Trump's stated interest in exploring a public offering of Fannie Mae and Freddie Mac's shares had led to some shifts in how their stock and mortgage-backed securities traded at deadline on Thursday, but not to the degree a commitment to a conservatorship exit would have.Barclays reported that shares of the larger of the two government-sponsored enterprises that buy a significant portion of the mortgages made in the United States, Fannie Mae, started the day up around 30%, according to a Barclays report. Freddie also experienced some gains that lagged Fannie's.Agency mortgage-backed securities spreads were wider by two to three ticks at deadline, according to Walt Schmidt, a senior vice president at FHN Financial, who indicated that the reaction was muted because showing interest in a Fannie/Freddie IPO is a lot different from committing to one."If we were pricing in the end of conservatorship, we might be a couple points wider. It would be really wide. We're only a couple ticks wider. It's not that big of a move," he said in an interview.While Fannie and Freddie's stock could benefit from a conservatorship reversal, an exit raises some questions for the large to-be-announced MBS market they back as it suggests change to the status of the guarantee they provide.But there are consistent signals that show Washington does not want to unduly disrupt MBS trading, according to Barclays' report."The end to the conservatorships is likely to be structured in a way that does not increase mortgage rates, i.e., does not widen the MBS basis. This is consistent with long-standing bipartisan policy of pursuing reform without disruption to the TBA market," Barclays' researchers said.The need to get Fannie and Freddie back to capital levels in line with those in the private market and how to handle the investment Treasury has in the GSEs are the other key challenges in how to free them from conservatorship, according to a research note by Keefe, Bruyette & Woods.Other immediate reactions to Trump's interest in raising cash by taking the enterprises public, which followed discussions with legislators who expressed concerns about the deficit in budget negotiations, included suggestions for how the money could be reinvested."President Trump is right to free Fannie and Freddie. But even better, let's use the proceeds – some $250 billion – to build middle-class housing for American workers," said  Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York and member of the Housing for US.Some of the estimates for what could be made from floating a public offering for the GSEs, billing it potentially as the largest in history, are "a little aggressive," according to Schmidt, who said based on where their shares are currently trading, the amount would more likely to be less than half that much.The director of Fannie and Freddie's regulator, Bill Pulte, has said he will be working to improve the enterprises' already strong earnings to increase their value. Pulte has placed himself in direct control of the GSEs as chair of their boards to that end.Democrats have questioned the legality of his position on Fannie and Freddie's boards, but Pulte said this week he learned from a discussion with one of the critics that this stems from a misunderstanding of his role, which is not just to serve as Fannie and Freddie's regulator but also as their conservator.

Real estate trade groups are applauding the progression of President Trump's "big, beautiful bill" that could deliver, and sustain, numerous tax benefits for real estate players.The U.S. House of Representatives early Thursday morning narrowly passed the Republican-led bill, which now faces a likely arduous journey in the Senate. While lawmakers fretted over spending cuts to items like Medicaid, they prioritized extending Trump's hallmark Tax Cuts and Jobs Act and increasing a coveted state and local tax deduction."MBA is pleased that this bill includes numerous tax provisions that will help to increase real estate investment in communities and improve the financial outcomes of homeowners, renters, and our members' businesses," said MBA President and CEO Bob Broeksmit in a statement Thursday. The tax considerations for mortgage professionals The trade group highlighted lawmakers' preservations from the 2017 TCJA, such as the deduction for qualified residence interest, and an up to $500,000 homeowner exclusion on the gain on the sale of a principal residence. Also intact are the deductibility of business interest for real estate, and Section 1031 like-kind exchanges relevant to commercial real estate players. Republicans expanded a deduction for Qualified Business Income from 20% to 23% under a permanent Section 199A, a desired provision for partnerships and S Corps. The benefit introduced in Trump's first term aids small businesses alongside corporations who received a permanent tax break to 21% eight years ago. The American Land Title Association in a statement Thursday lauded the tax provisions which will aid the thousands of title and settlement companies it represents. "The expanded deduction under Section 199A is a welcome step that supports the long-term health of our small business members and the communities they serve," said ALTA CEO Diane Tomb in a statement Thursday. The MBA also supported improvements to the Low-Income Housing Tax Credit program, and a new round of Opportunity Zones, a development effort championed by current Department of Housing and Urban Development Secretary Scott Turner. The House bill also includes numerous benefits to consumers, such as no taxes on tips, overtime, and on interest on some auto loans, according to reports. Lawmakers also slightly bumped up the standard deduction and child tax credit. The individual estate tax exemption will also rise to $15 million and continue to be adjusted for inflation. One of the largest battles occurred over the SALT cap, which was set at $10,000 in 2017 and set to expire this year. Mortgage bankers have rooted for the tax break to stay, and GOP lawmakers pushed the cap to $40,000 to appease Representatives in higher-income blue states."MBA looks forward to engaging with the Senate on possible improvements to this House-passed reconciliation baseline as changes are considered and crafted," said Broeksmit in a statement. The bill heads to the Senate, where Republicans also hold a slim majority. Lawmakers this summer must also weigh the debt ceiling, as U.S. Treasury Secretary Scott Bessent has warned Capitol Hill to increase or suspend the limit ahead of Congress' August recess. Missing that deadline could have grave consequences on the economy, including roiling mortgage markets, observers commented.

The 30-year fixed rate mortgage moved 5 basis points higher from last week, but still remains under 7%, at least according to Freddie Mac."Mortgage rates inched up this week but continue to remain lower than one year ago," said Sam Khater, Freddie Mac's chief economist, in a press release. "With more inventory for buyers to choose from than the last few years, purchase application activity continues to hold up."The average of 6.86% as of May 22, is up from 6.81% seven days earlier, while a year ago at this time, it was higher at 6.94%.Meanwhile, the 15-year FRM averaged 6.01%, up 9 basis points from last week when it was 5.92%. For the same week in 2024, the average was 6.24%.What is influencing mortgage rates this weekOn a more immediate basis, political developments in Washington around the tax bill and comments from Pres. Trump on ending the government-sponsored enterprise conservatorships have likely resulted in higher mortgage rates, although the 10-year Treasury yield is flat on the day.Some of the more-timely trackers have the 30-year FRM climbing above 7.1% as of 11 a.m. The 10-year yield was at 4.59%, down 1 basis point from the previous close; it had been climbing since May 16, when it closed at 4.44%, which was before Moody's announcement later that day."Treasury yields first increased due to Moody's downgrading the U.S. credit rating, which factored in the increased risk from the government's elevated budget deficit and high interest payments," said Kara Ng, Zillow Home Loans senior economist in a Wednesday evening statement. "Throughout the week, yields continued to rise as government budget negotiations further amplified concerns about the deficit."Zillow was at 7.13%, up from 7.1% at the end of Wednesday and from the average of 7.01% one week earlier.Lender Price data posted on the National Mortgage News website was at 7.115%. This compared with 7.034% on Wednesday and 7.015% one week ago.Where mortgage rates are likely to goUnlike Fannie Mae, which is expecting rates to decline through the next six quarters, Redfin is predicting the weekly average to remain around 6.8% for the rest of the year."One of the only things that could drive rates down is if the administration eliminates all of the new tariffs and makes it clear they're not coming back," said Chen Zhao, Redfin's head of economics research, in a press release."Rates could also drop if the country dips into a severe recession," he said. "But that is less likely now that the trade war has been scaled back, and it would be counterproductive for house hunters because even though mortgage rates would be lower, many buyers would have less money to buy a home."Also bearish on mortgage rate movements is TransUnion."Due to the anticipated impacts of announced tariffs on near-term inflation, mortgage rates are expected to remain elevated above 6% in the next quarter," said Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion, in a press release. "Without a significant decrease in mortgage rates, origination activity for both purchases and refinances is likely to remain subdued."What happened with application activity?Last week's Mortgage Bankers Association Weekly Application Survey was down over 5%."Mortgage applications declined last week as ongoing uncertainty in the financial markets raised mortgage rates to levels not seen since February," Bob Broeksmit, the organization's president and CEO, said in a Thursday statement."Refinance and home purchase applications both fell as a result, but purchase demand overall is holding steady, up 13% one year ago," he continued. "MBA expects mortgage rates to remain volatile but to stay within the same narrow range of 6.6% and 7% in the coming months." 

In another twist of events, President Donald Trump has floated the release of Fannie Mae and Freddie Mac.On his Truth Social Platform yesterday, he said, “I am giving very serious consideration to bringing Fannie Mae and Freddie Mac public.”He went on to add that “Fannie Mae and Freddie Mac are doing very well, throwing off a lot of CASH, and the time would seem to be right. Stay tuned!”The move comes at a time when mortgage rates have experienced increased volatility, potentially related to his big, beautiful bill making its way through the legislature.Questions remain if the pair’s release is a good idea and how it might impact the housing market, which is already in a tenuous position.Fannie and Freddie Surge on the News of a Possible ExitShares of both Fannie Mae and Freddie Mac hit new 52-week highs on the message from President Trump.At one point, shares of Fannie Mae (OTCMKTS: FNMA) rose to a whopping $10.89, before coming back down to around $9 per share. That’s still a 467% return over the past year.Meanwhile, shares of Freddie Mac (OTCMKTS: FMCC) climbed to a new 52-week high of $7.60 before falling back to $7.08. That’s a near-380% return over the past year.Long story short, there is a ton of speculation surrounding their eventual release, and big names like Bill Ackman are long both the stocks.Ackman stands to make $1 billion or more if things pan out, which so far they have.The shares of both companies were closer to $1 each before Trump won the presidential election back in November.It’s unclear how high they could go, but the gains thus far would likely make any investor happy.The pair have been in conservatorship since 2008, with the Treasury providing financial support via Senior Preferred Stock Purchase Agreements (SPSPAs).As such, they have an implied government guarantee, which arguably leads to lower mortgage rates on loans backed by Fannie and Freddie, known as conforming mortgages.The question is what might happen if they’re released.Would Mortgage Rates Go Up if Fannie and Freddie Are Released?This is the million-dollar question many are most concerned about. What would happen to mortgage rates if Fannie and Freddie go public?There are varying opinions, though most speculate that mortgage rates would go up. But how much?A quarter of a point, a half point, a full percentage point? That’s unclear.The Urban Institute noted that bringing the GSEs out of conservatorship would increase g-fees by 10 to 25 basis points.However, “impact on supply and demand and liquidity is more speculative.”Either way, it could lead to resistance given that rates are already hovering around 7%, up from around 3% in early 2022.One could argue that a release would have made more sense when interest rates were rock bottom, not when they’re the highest they’ve been this century.Ultimately, without the implicit government guarantee, investors in GSE-backed mortgages will expect a higher return, which in turn will raise mortgage rates.Any potential move also calls into question Uniform Mortgage-Backed Securities (UMBS), a single security issued by the pair.If they become public companies, it’s unclear how their mortgage-backed securities would be pooled and guaranteed going forward.On top of that, there’s the viability of a 30-year fixed mortgage. Would that go away too?There are a lot of questions and not a lot of answers, which makes you wonder how quickly this could all actually happen.Would Even More Borrowers Rely on Government-Backed Mortgages?While Fannie and Freddie should arguably be released at some point, given it was always meant to be temporary post-early 2000s mortgage crisis, it needs to be conducted carefully.Aside from mortgage rates potentially rising, there is concern that liquidity could dry up, making it more difficult to get a home loan.If private capital doesn’t step up, you might see even more borrowers rely on the government, which would defeat the purpose of their release.For example, more home buyers might take out an FHA loan, which puts increased pressure on taxpayers. Again, going against the nature of the release.This could be a troubling development, with FHA lending already seeing a big uptick as borrowers stretch to afford homes.Over the past year, FHA lending has seen its market share rise about 50%, from 12% to 18%, according to the Mortgage Bankers Association.At the same time, delinquencies have risen markedly on FHA loans, which could pose a threat to that agency and further limit credit availability.One has to wonder if now is the best time to talk release, and who it actually stands to benefit.My beef has always been that it’s more a speculative stock play than a thoughtful policy change. 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)

Federal Reserve Gov. Christopher Waller.Bloomberg News Federal Reserve Gov. Christopher Waller said the central bank is not looking to intervene in the Treasury market despite a recent dampening in demand for U.S. debt.Long-term bond yields are surging for the second time in as many months, with rates on the 10-year notes climbing two basis points — to 0.2 percentage points — since the start of the week. Fears about this trend were amplified by weak demand in a Treasury auction for new debt on Wednesday.These developments have reignited concerns that arose during a bond market sell-off in April, which followed the rollout of President Donald Trump's sweeping tariff proposal. Waller attributed this week's decline in bond demand to market concerns about the federal tax and spending legislation currently making its way through Congress."The markets are watching the fiscal policy, the bill being put through the House and the Senate and they have some concerns about whether it's going to be reducing the deficit," Waller said during an appearance on Fox Business Thursday morning. "We ran $2 trillion deficits the last few years, this is just not sustainable, so the markets are looking for a little more fiscal discipline."Like other Fed officials, Waller warned that the U.S. rate of debt accumulation is "unsustainable." He added that while many sovereign debt investors had hoped that Republican control of both houses of Congress and the White House would lead to lower spending, things now seem to be trending in the other direction.Thursday morning, the House passed a tax bill that would add nearly $4 trillion to the federal deficit during the next 10 years. Because of this, Waller said, bond investors seem to be demanding a higher risk premium for their investments, indicating less confidence in the country's ability to service its debts.Because government bonds are used as a baseline for pricing mortgages and other loans, rising Treasury yields tend to elevate private market rates. While this can restrict economic activity, there is little the central bank can do about it. The Fed's primary monetary policy tool, the federal funds rate, affects short-term interest rates, which have a minimal effect on longer term rates.Waller noted that the Fed is prohibited from participating in the Treasury's debt auctions to keep rates low."As far as the Fed, no. We can't step in and buy at the primary auction," he said. "Congress set up the rules. We cannot do that."Waller added that he does not expect the Fed to cut its policy rate until this summer at the earliest. He said he wants to see how trade policy develops after the end of the 90-day pause on reciprocal tariffs, which expires in early July.But, Waller said he has grown more optimistic about the outlook on trade, crediting Treasury Secretary Scott Bessent's ability to strike deals with the UK and China as a sign of promise for the months ahead."I'm much more optimistic now than I was a month ago that we are going to be able to get a decent … average tariff across the world," he said. "Once Secretary Bessent took over, started cutting these deals — it sounds like there's a lot more on the table — that's all good news for the economy."

Fitch Ratings is starting to look more closely at depository lending involving nonbank financial institutions, including mortgage firms, as unfunded commitments to NBFIs take on a larger role in portfolios.Unfunded commitments to mortgage credit intermediaries by a group of banks Fitch studied totaled over $255.44 billion as of March 31, up from $202.28 billion on Dec. 31, 2024. The March 31 number is part of approximately $1.2 trillion to all types of NBFIs.Fitch is eyeing the larger NBFI figure because it represents a growth rate of 20% year-over-year compared to 1.5% for the separate commercial loan category. The trend is worth watching because it could bring more scrutiny to nonbank lending, including mortgage warehouse lines."Robust growth in bank lending to nonbanks warrants close monitoring as historically excessive growth in credit has led to asset quality problems that negatively affect banks," Fitch said in its report. "However, from a credit quality perspective, direct bank exposure to nonbanks is generally better than lending directly to underlying borrowers."The NBFI category includes private equity funds and several other types of intermediaries other than mortgage companies, such as those that provide business and consumer credit, among others. Fitch has shown particular concern about private credit exposures."A PC downturn, in isolation, is unlikely to have widescale financial stability implications for the largest banks, as direct exposure represents less than 30% of equity, on average," Fitch said in its report, while noting that it has faced challenges in assessing the full extent of the risk.Fitch studied 13 banks where NBFI exposures are concentrated. The group includes large players like JPMorgan Chase, PNC and U.S. Bancorp.So far total delinquent and nonaccrual NBFI loans "are averaging just 9 basis points for these 13 banks at quarter-end," Fitch said, while noting that "performance could deteriorate if economic conditions worsen, rates rise significantly, or borrowers face liquidity issues."Such findings could play a role in how the Financial Stability Oversight Council views nonbank risks this year under the Trump administration. One of FSOC's last major reports focused on nonbank servicing. 

More markets are watching falling home prices as the inventory of properties for sale piles up. Home prices grew 1.6% in May from the same time last year, down from April's 2% annual growth rate according to Intercontinental Exchange. The company's Home Price Index is the latest report showing continued growth in the nation's house values albeit at far slower paces than during the refinance boom. On a more recent basis, 40% of the nation's largest housing markets saw seasonally adjusted monthly home price declines from April to May, ICE reported. That included all but one of the top 24 markets in the West, where inventory surpluses are growing. Analysts pointed to Bay Area markets San Francisco, San Jose, and Stockton where the number of homes for sale has surpassed pre-pandemic levels. Industry stakeholders like the Mortgage Bankers Association have suggested rising inventory will bode well for purchase activity, while the spring homebuying season has moved at a moderate pace. Newly built homes have enjoyed a boost, but consumers overall still face affordability challenges namely in elevated mortgage rates. ICE found 23 major metros with annual price drops in mid-May, with the majority of those newly-declining markets in the West. Those include Denver, where home prices are down 1.6% annually, and perennial hotspot Phoenix, where prices have faded 1.2% in the past 12 months. The number of metros with annual price declines is the largest since late 2023, when mortgage rates climbed above 7.5%, according to this week's analysis. "If these current trends persist, we could see prices fall (year-over-year) in even more West Coast markets," a press release from ICE read. No markets in the Midwest or Northeast meanwhile recorded either annual or seasonally adjusted price declines. The ICE analysis comes at the same time Redfin economists suggest median U.S. home sales prices to fall 1% year-over-year in the fourth quarter. Additionally, Fitch Ratings recently found home prices overvalued by 11% nationwide in the recent fourth quarter. Fitch analysts blamed their findings on reduced demand stemming from factors including economic uncertainty.

U.S. sales of previously owned homes unexpectedly dropped in April to the slowest pace in seven months, restrained by ongoing affordability constraints and highlighting a lackluster start to the key Spring selling season.Contract closings decreased 0.5% to an annualized rate of 4 million, according to National Association of Realtors data released Thursday. That fell short of the median estimate in a Bloomberg survey of economists and marked the weakest April since 2009."Pent-up housing demand continues to grow, though not realized," NAR Chief Economist Lawrence Yun said in a statement. "Any meaningful decline in mortgage rates will help release this demand."Odds of a sustained pickup in the resale market are limited as mortgage rates march higher and prices stay elevated, despite more listings coming on the market. What's more, consumer sentiment is near the lowest level on record, and the share who say now is a good time to buy a home is also close to an all-time low, according to the University of Michigan.Mortgage rates rebounded last week to a three-month high of 6.92%, and are continuing to move up even more as Treasury yields climb. The two tend to move in tandem, and Treasuries have sold off recently over concerns about the U.S.'s swelling debt and deficits.One disappointing aspect of the report was that a welcome increase in home listings failed to spark homebuying — which Yun said on a call with reporters will result in a "slight downgrade" to his yearly sales forecast. The inventory of existing homes for sale increased nearly 21% from a year ago to 1.45 million, the most for any April since 2020, NAR data show.Greater supply is also failing to bring prices down. The median sales price climbed 1.8% from a year ago to $414,000, a record for the month of April and reflecting greater activity at the upper end. However, Yun noted the size of the increase was the smallest since mid-2023, pointing to slowing price appreciation.Existing-home sales account for the majority of the U.S. total and are calculated when a contract closes. The government will release April new-home sales on Friday.--With assistance from Chris Middleton.

Frin left to right: Moderator Devin Norales, and panelists Max Slyusarchuk, Jeremy Schneider, Peter Simon and Rudy Orman address the audience at the Mortgage Bankers Association's Secondary and Capital Markets Conference in New York on May 19, 2025. Politics, marketing and organic growth within the borrowing public are providing momentum to non-qualified mortgage businesses, leading many in the segment confident of future prospects. While mortgage executives in 2025 have remarked that potential Trump administration policy changes, especially pertaining to government-sponsored enterprises Fannie Mae and Freddie Mac, would likely boost non-QM and other nonagency production, the market is growing due to other factors as well, a panel of leaders said."I think the growth prospects, independent of what the GSEs do, are good for non-QM, and unlikely to get worse," said Peter Simon, managing director at HPS Investment Partners at the Mortgage Bankers Association secondary markets conference in New York this week. Simon noted prospects could "potentially get a lot better" if the Federal Housing Finance Agency tightened credit standards at the enterprises."I can add that the minute GSEs tightened, we got more business," added Max Slyusarchuk, managing director of Imperial Fund Asset Management and CEO of affiliated lender A&D Mortgage, in reference to previous cycles. "And the quality of non-QM increases."Disruption from the GSEs may be coming sooner than many expected. On Wednesday, President Trump posted on Truth Social that he was seriously considering taking the two enterprises public. His announcement came just two days after FHFA Director Bill Pulte said he would defer any decision on removing Fannie Mae and Freddie Mac from government conservatorship to the president. However, Pulte was noncommittal in his answers to questions about whether he would make changes to the GSEs' footprint in the market.Contributing to non-QM momentum is the profile of applicants applying for mortgages that fall into the category, the majority of which consists of bank statement loans for self-employed borrowers or debt-service coverage ratio products for real estate investors."These borrowers are fairly sophisticated. They look at this as leverage more than they look at this as a loan," said Rudy Orman, senior vice president, third-party origination lending at Premier Mortgage Associates."It's the borrower that knows they're a real estate investor or the borrower that knows he's self-employed and realizes 'I'm going to pay a higher interest rate, but I'm saving all this money in taxes,'" he continued. For such borrowers, "this is not a rate product. This is features and benefits," Orman added.Underserved borrowers "who don't know they qualify for a mortgage and can qualify for non-QM" also are contributing to the market, Simon said.Loan performance and secondary market outlookTracking performance trends in historical data for non-QM loans over the past decade has proven challenging amid regulatory overhaul that transformed the market."Credit in this sector is very nuanced. We probably don't understand it as well as we do in the GSE market, where we've got 25 years of publicly-available performance data that covers the Great Financial Crisis," said Jeremy Schneider, managing director at S&P Global Ratings.Uptick in delinquencies in cash-out refinances raise some concerns, panelists noted, but robust underwriting and home price appreciation appear to be keeping loan distress low and losses at a minimum. Simon credited secondary market players for the outcomes. "Investors who buy the bonds are a part of that. Rating agencies are part of that. The whole loan investors — they're in the first-loss position, so they're going to be very cautious about what risk they want to hold with an intent to hold it for as long as the loan exists," Simon said.Insurance carriers are among the biggest buyers of residential mortgages, particularly whole loans. "A common theme is they're often private-equity owned so they're thoughtful about risks they're putting into their portfolio," Simon added. Alongside whole loan sales are regularly securitized non-QM pools. "You have to have both because a securitization could be volatile," Slyusarchuk said. "Insurance companies are a different source of capital. They're not going to be as concerned with liquidity like the securitization market is," Orman also noted, pointing out the benefit of having diverse sources of liquidity.While non-QM has frequently been forecasted to expand over the past decade only to pull back when economic headwinds appear, companies in the segment have legitimate reasons to look forward with optimism, other experts in the space say. Non QM has become "much more well known to the general public, because people have been marketing these programs for 10 to 15 years," said Steven Schwalb, a managing partner at Angel Oak Cos. responsible for lending activity at its units, in a post-panel interview."You've got more participants getting bigger, and there's a lot more liquidity in non-QM," Schwalb said, noting that each year, more investors, warehouse lenders and banks get comfortable with it.

State Farm is going back to California's regulator for a higher homeowners rate increase.One week after State Farm General, the California division of the State Farm parent company, won approval from California insurance commissioner Ricardo Lara for a 17% emergency rate increase, effective June 1, it amended its previous increase request.State Farm General had filed with the California Department of Insurance (CDI) seeking a 30% increase, but later lowered that request to 22%. Now the insurer is seeking the full 30% increase again – in the form of an additional average increase of 11%. This additional increase may be higher or lower depending on whether the home is owned, a rental or a condo. A hearing is scheduled for October.In response, CDI's press office said in a statement, "State Farm's request for a rate increase isn't new. It's the same one they filed in June 2024, originally asking for 30%. The judge approved an interim 17% increase based on evidence presented in a hearing in April. A full rate hearing on the same request is still scheduled to get to the facts. They want more? We want more data, more transparency, more policyholders served, and more policies written in wildfire distressed areas. State Farm wanting a rate increase doesn't change the law. All rates must be justified so consumers don't pay more than is required."State Farm General will have to show it needs the increase, according to Dan Veroff, policyholder counsel at Merlin Law Group. "The Department of Insurance wants to see State Farm prove, financially, this additional increase is supported, and that it will result in State Farm taking back FAIR Plan customers not just in low risk but also in high risk areas," Veroff stated in an email response.Veroff's colleague, Derek Chaiken, an attorney at Merlin Law Group, called for more concessions by State Farm. "Before approving the filing, the Department of Insurance should scrutinize State Farm's financial justification and require measurable give-backs—such as commitments to continue writing in high-fire-risk ZIP codes, lower deductibles, and maintain adequate coverage—so homeowners are not paying more for less protection," Chaiken stated. "Experience from recent wildfires shows that piecemeal fire coverage through the FAIR Plan is confusing and often inequitable for policyholders; if State Farm wants higher premiums, it should also commit to easing the FAIR Plan's burden."The new State Farm General request highlights the problems of California's insurance market, according to T.J. Helmstetter of the Insurance Fairness Project. "We can't rate hike our way out of the insurance crisis. The absurdity and outrageousness of State Farm asking for another hike, just one week after getting one, is proof that the companies will keep coming back for more and more," he stated in an email response. "The reality is that this crisis is driven by climate change and a failure of leadership at every level. We can't expect it to be solved on the backs of ordinary Americans who are just trying to pay their mortgage or their rent. It's time for the federal and state governments to take this crisis seriously and offer real solutions to protect people."