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President Donald Trump said Wednesday evening that he was giving "very serious consideration to bringing Fannie Mae and Freddie Mac public" after more than a decade of being under government oversight."Fannie Mae and Freddie Mac are doing very well, throwing off a lot of CASH, and the time would seem to be right," Trump wrote on his Truth Social platform. "Stay tuned!" He added that he would consult with Treasury Secretary Scott Bessent along with Commerce Secretary Howard Lutnick and Bill Pulte, the director of the Federal Housing Finance Agency, which oversees Freddie and Fannie, as he comes to a decision.The companies, which play a crucial role in the market for mortgage-backed securities, have been under government conservatorship since the 2008 financial crisis. Fannie and Freddie have both returned to steady profitability, with earnings being retained.Hedge funds and other investors have called for the government to release the two entities from conservatorship, which could provide a windfall for shareholders — including the government itself. Many complex details would have to be worked out for any such plan, including what stake would initially be offered in any sale, and how investors who hold existing shares — which still trade — would be treated.Ben Elliott, Bloomberg Intelligence industry analyst, said Trump could take "definitive, irreversible steps" to end the conservatorship "but his administration can't achieve a successful public offering unilaterally or overnight." Revenue SourceTrump's comments came shortly after he met with a group of House conservatives currently holding up his signature tax cut legislation over concerns about the impact on the deficit. A release could help provide billions to assuage concerns among fiscal hawks about the impact to the deficit.The move could also provide a boon to allies like hedge fund manager Bill Ackman, whose Pershing Square Capital Management has invested in the entities. Ackman's argued that the two should be released, something that he said would be the "biggest deal in history." He has predicted the US government would generate a profit of about $300 billion.Yet critics have argued that any such decision comes with some risks, especially over how much of a government guarantee Fannie and Freddie would still have. Investors could become more wary of buying mortgage-backed securities if the government's backing of Fannie and Freddie is lessened and may end up demanding extra yield as compensation, which would put upward pressure on mortgage rates.Those rates could potentially increase 0.5% percentage points or more, some investor surveys have indicated. Last week, the average rate on a 30-year, fixed-rate mortgage was 6.81%, according to Freddie Mac."The form of the government guarantee will be critical to watch, if plans to reform Fannie and Freddie move forward," said Yunkai Wang, a strategist at Citigroup Inc. "Investors will now be watching to see what hints Bessent or Pulte give."'Carefully planned'Pulte said in February during a congressional hearing that any effort to release the entities must be "carefully planned" to make sure the housing market remains safe without pressure on mortgage rates. Bessent has also emphasized that plans for Fannie and Freddie would depend on the implications for mortgage rates.In an interview with Bloomberg Television earlier this month, Pulte said his focus was on "driving performance in the business.""I think right now what we're doing is making sure these businesses are actually functioning as businesses, where people would find them attractive," Pulte said.Trump's message comes as the FHFA is weighing possible staff cuts at the Division of Conservatorship Oversight and Readiness, according to people familiar with the matter. 

US mortgage rates climbed last week to a three-month high, prompting a slide in applications for home purchases and refinancing.The contract rate on a 30-year mortgage rose 6 basis points to 6.92% in the week ended May 16, according to Mortgage Bankers Association data released Wednesday. The rate on five-year adjustable mortgages also increased to the highest since early February.READ MORE: Lenders feel better, not exuberant, about housing marketAn index of applications for home purchases as well as a gauge of refinancing each decreased around 5%, the MBA data showed.The applications figures illustrate a lack of sustainable momentum in the housing market. While contract signings of new and previously owned houses firmed up in March, elevated borrowing costs and home prices are proving a larger hurdle for many prospective buyers. April sales data are due later this week. Mortgage rates follow moves in Treasury yields, which have climbed since late April. Recently, yields have pushed higher on concerns of fiscal largess as tax legislation advances on Capitol Hill, as well as the downgrade to the US's credit score by Moody's Ratings.READ MORE: 'Don't fix what's not broken': experts mull cons of GSE exitThe MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.

Fair Isaac Corp.'s shares saw their worst day since March 2020 on Wednesday, falling alongside credit bureau stocks after the head of the Federal Housing Finance Agency questioned credit report pricing. The FICO score provider dropped 16%, notching the day's worst performance among S&P 500 Index members and extending Tuesday's 8.1% slide. Shares of credit reporting agency TransUnion fell 8.8%, while Equifax Inc. dropped 6.7%.READ MORE: FICO's Julie May on how score use in mortgages is changingFHFA Director Bill Pulte questioned credit score pricing in a series of posts on X this week. He said he was disappointed by FICO's cost increases and asked why some credit reports "cost double" under President Joe Biden compared to what they did when Donald Trump was first in office. At the Mortgage Bankers Association's Secondary Market in New York this week, Pulte also said the agency is reviewing a shift to a bi-merge credit score for underwriting. That approach would require reports from only two of the major credit bureaus instead of all three. "We are encouraged by the FHFA leadership's commitment to financial safety and soundness, as well as preventing fraud," said Satyan Merchant, TransUnion's senior vice president for auto and mortgage, in a statement. "Data demonstrates that a tri-merge report best supports FHFA's priorities."Concerning the data, a representative of TransUnion pointed to a company report that said eliminating one score would "provide an incomplete picture" because a consumer's score can vary across bureaus.READ MORE: Senator renews call for DOJ to look into FICOFair Isaac and Equifax did not immediately provide Bloomberg News with a comment on the matter."There does not appear to be a specific new proposal, but prior pricing actions are clearly on the FHFA radar," Baird analyst Jeffrey Meuler wrote to clients. The analyst noted that there are factors that may limit risks for FICO and the bureaus, including that it could be hard to establish the authority to limit business-to-business pricing. Jefferies' Surinder Thind told clients to "buy the dip" in FICO's shares after Tuesday's decline. Even if the bi-merge model were adopted by all lenders, the analyst estimates a hit to Fair Isaac's adjusted earnings per share of 16% at most, with a 10% hit for Equifax and TransUnion. FICO said in November that its wholesale royalty for mortgage originations would rise to $4.95 per score, from $3.50. Jim Wehmann, the company's president of scores, wrote in a blog post announcing the change that the FICO Score had enhanced liquidity, expanded "fair and objective" access to credit and supported homeownership. "At $4.95 per score, the royalty collected by FICO for mortgage is entirely fair and reasonable, particularly considering the significant benefits it brings to the industry," Wehmann wrote. Shares of Experian Plc, the other major credit bureau in the US, closed 1.1% lower in London. An Experian representative did not immediately respond to a request for comment.

Widespread industry adoption of electronic promissory notes presents challenges but has steadily gained momentum over time as various aggregators sign on, and one is paying up for certain downpayment assistance loans using them.Western Alliance's Amerihome, the largest bank-owned correspondent investor in the mortgage business, recently got on board with e-notes. Also Click n' Close, a company run by e-note pioneer Jeff Bode, pays a 10 basis-point premium for correspondent DPA loans.These developments, combined with data and projections that show this form of digital collateral on track to triple to nearly 30% by 2028, show e-notes are here to stay, according to panelists at a meeting in New York. Currently, close to 10% of the industry uses e-notes."We will be going this direction and not looking back because it solves so many problems," said Lynne Chandler, digital program director at Ginnie Mae, a government securitization guarantor that boosted adoption a year earlier by announcing commingling of e-notes in loan pools.Ginnie is a corporation within the Department of Housing and Urban Development that  oversees a multitrillion-dollar securitized mortgage market, so it's given e-notes momentum.As has often been the case with government-related technology initiatives in the mortgage industry, this one started out at influential quasi-governmental loan buyers Fannie Mae and Freddie Mac, later migrating to Ginnie Mae in 2021.E-note use in the Ginnie market has grown unevenly over the years, with the count jumping 205% from 17,580 the first year to 53,655 in 2022, then growing by 16% in 2023 to 62,175, and rising by 44% to 89,764, according to figures Chandler shared.While there has been some turnover in senior leadership since last year at Ginnie, and the election has raised some questions about the direction of past policies, the current senior-most executive at the government corporation said Monday he continues to back e-note use.Teri Pansing, a senior vice president responsible for corporate closing at Fairway Independent Mortgage, said getting settlement agents and other stakeholders involved was a challenge that took several years to address, but e-note use is finally becoming routine for the company."It's how we do business now," she said.The number of players involved has grown significantly, according to Camelia Martin, vice president of e-mortgage strategy and adoption at Snapdocs, who shared a breakdown of e-note users by market segment.There are 267 originators, 47 warehouse lenders, 38 investors, 29 servicers, 12 subservicers, six custodians and a number of government-related entities like Ginnie Mae that use e-notes, including the government-sponsored enterprises and most Federal Home Loan Banks."We think we're going to see a tremendous spike-up in e-notes," said Gil Lopez, senior vice president in Amerihome Mortgage's correspondent division.The company is tracking the expense savings possible by using e-notes rather than physical documents that may require more time to get to borrowers, particularly when a natural disaster or accident may impede delivery.While some savings from e-notes are possible, they are limited because the broader closing process still can't be consistently automated. A hybrid mix of manual and automated steps that accommodate different jurisdictional rules are most commonly used for e-closings as a result.Based on the extent of any savings, Lopez said the company will consider whether e-notes warrant a premium. "That's what we're hoping for," he said.

Bloomberg News As banks provide the liquidity that fuels private credit lending — even without originating the loans themselves — researchers at the Federal Reserve say traditional lenders risk being dragged into a financial crisis if defaults among private credit borrowers spike.In a new paper, Boston Fed researchers José L. Fillat, Mattia Landoni, John D. Levin and J. Christina Wang warn that while banks usually hold senior, secured claims with private credit firms — meaning they are "first in line" to get paid if a borrower goes under — that status is only useful if there's anything left to pay with. If all of the borrowers drew heavily on their bank credit lines at the same time — say, during a major financial shock — it could strain banks' liquidity.The private credit industry has grown from $46 billion in 2000 to about $1 trillion in 2023. Bank loans have been a key driver of this growth, making the traditional financial sector a key source of liquidity for these nonbanks. Treasury Secretary Scott Bessent recently said the rapid growth of private credit signals that traditional banks are being too tightly constrained.The researchers said banks therefore have indirect exposure to the loans private creditors make. Whether private lenders are elbowing in on banks, or rather, venturing into areas banks won't enter, is key to how much risk is being generated. Many of the loans made by private credit companies resemble bank lending: commercial loans made directly to smaller businesses as well as broadly syndicated loans, the most common type of leveraged debt in which a really large loan is split up among many lenders, each taking a piece of the total amount. These loans are usually made to big companies, and the terms are often sold or traded to investors.These similarities between private credit and traditional bank offerings means private credit is serving more borrowers who otherwise might have gone to a bank for a loan, the researchers say. While private credit firms may in some cases be elbowing in on the banking competition, a phenomenon they dub "substitution," the alternative, "expansion," where private credit ventures into areas banks aren't willing to lend, is more systemically risky."If the growth of PC lending represents mostly a shift in credit provision from banks to PC funds, it could reduce overall financial stability risk because PC funds tend to employ lower leverage than banks (that is, they have lower debt-to-equity ratios), and they pose less run risk … [as] their limited partners are locked up contractually for multiple years," the researchers note. "If PC lending has grown because lenders have been making riskier loans that banks would not make, then aggregate credit risk in the financial system likely would rise."Not only would the financial sector be effectively more leveraged overall, but the researchers say the added leverage would be on the balance sheets of riskier borrowers, weakening these businesses' resilience to shocks and making the financial system more precarious. Large banks' loan commitments to private equity and private credit funds have surged to about $300 billion as of 2023 —14% of such banks' total nonbank loans and up from $10 billion in 2013 — according to another study conducted by the Boston Fed. Wednesday's study also found that from 2013 to 2023, every publicly traded Business Development Company — a type of private credit company the researchers examined as a proxy for the industry — borrowed from at least one of the large banks that submit Y-14 filings, a disclosure required by the Federal Reserve to assess the capital adequacy and risk profiles of large financial institutions, defined as those with $100 billion or more in assets.Most bank loans to private credit companies are revolving credit lines, and about a third of such loans remained unused as of late 2023, indicating these loans serve as a liquidity backstop for private credit. "Because bank loans to PC funds are typically secured and among those funds' most senior liabilities, banks would suffer losses only in severely adverse economic conditions, such as a deep and protracted recession," the researchers wrote. "But losses could also occur in a less adverse scenario if the default correlation among the loans in PC portfolios turned out to be higher than anticipated — that is, if a larger-than-expected number of PC borrowers defaulted at the same time … such tail risk may be underappreciated."

A consortium of consumer advocacy groups and legislators called for the re-establishment of an expired Department of Veterans Affairs program that kept thousands of service members out of foreclosure. The National Consumer Law Center criticized the VA for allowing the Veterans Affairs Servicing Purchase program to lapse without a sufficient replacement. The program, which previously included a temporary foreclosure moratorium, ended on May 1. NCLC was joined by the National Fair Housing Alliance and Reps. Mark Takano, D-Calif. and Chris Pappas, D-NH, in calling for its reinstatement at a press conference on Tuesday. Both Democrats serve on the House Committee on Veterans Affairs. VASP helped keep 40,000 borrowers from losing their homes and now leaves scores more vulnerable to foreclosure, according to NCLC. "The VA Home Loan Program is a benefit that Veterans have earned through service and sacrifice to give them housing stability," said Alys Cohen, senior attorney at the center, at the event. "The termination of VASP results in veteran borrowers having substantially worse options than other borrowers with federally backed mortgage loans. As a result, veterans with VA mortgages will face preventable foreclosures," she claimed. VASP initially included a temporary servicing foreclosure moratorium after the program's introduction. Following the end of the moratorium in late 2024, foreclosure filings on VA mortgages saw a significant spike in the first half of this year.  While supporting a VASP successor partial claims bill, which passed in the House of Representatives one day before NCLC made its announcement, Cohen said the new VA Home Loan Reform Act would not be adequate to fully assist service members."We are committed to working with Congress on establishing a new hardship program," said Cohen. "But simply cancelling VASP without a replacement will throw tens of thousands of veterans out of their homes." Lending mortgage trade groups had previously raised warnings about the expiration of VASP, but also put forth firm statements of support for quick enactment of the new bill. In a letter to the House Committee on Veterans Affairs earlier this month, the National Association of Mortgage Brokers underscored the urgency of the situation for many borrowers."There were more than 75,000 delinquent VA borrowers who had missed three or more payments on their mortgages, which means we could now face a serious financial and homelessness problem," NAMB President James Nabors wrote. The proposed legislation would encourage housing stability "by empowering the VA to take proactive steps in default situations," Nabors said.Diverging from NCLC's remarks, the Mortgage Bankers Association pointed to similarities in the newly passed bill when compared to other government-backed relief measures as it advocated for its approval in the Senate. "We applaud the passage of this important bill, which gives the VA permanent authority to create a partial claims program that aligns with the loss-mitigation options offered to borrowers across other federal housing agencies," MBA President and CEO Bob Broeksmit said in a statement. MBA said it would work with lawmakers to get the legislation passed as quickly as possible. "Thousands of struggling veteran homeowners risk foreclosure without this swift legislative action and subsequent implementation," Broeksmit added.

Google has launched a joint effort with the Financial Services Information Sharing and Analysis Center, or FS-ISAC, that will combine the search giant's threat detection capabilities with FS-ISAC's network and intelligence sharing to prevent fraud within the financial sector.The program, announced Tuesday, is dubbed the Financial Services branch of Google's Priority Flagger Program, according to a press release about the matter.The collaboration with Google "accelerates the speed with which FS-ISAC members can identify and mitigate evolving fraud threats, increasing the security of institutions and the communities they serve," said Teresa Walsh, FS-ISAC's chief intelligence officer, in the announcement.What is priority flagging?While anyone can flag content on Google platforms — for example, using the flag icon that appears below all YouTube videos — flags from Priority Flaggers are prioritized for review by content moderators due to their high degree of trust and expertise.Google's Priority Flagger program provides tools to eligible organizations like government agencies and non-governmental organizations, or NGOs, to quickly resolve with Google any violations of the platform's policies, such as ads that attempt to defraud bank customers by imitating that customer's bank and misusing its branding.Google considers priority flaggers to be particularly effective at reporting content that violates Google's Community Guidelines or policies. The program gives participants dedicated channels to inform Google of potential violations that will be reviewed at a priority.Content reported by Priority Flaggers is not automatically removed. The same standards apply for all flags; the difference is the prioritization of the review process.Why FS-ISAC joinedThe goal of the Financial Services Priority Flagger Program is to accelerate fraud prevention and detection specifically for the financial sector, according to Google and FS-ISAC.Google's Priority Flagger Program generally streamlines the process of identifying, reporting and mitigating fraud threats related to Google platforms — specifically, Google Workspace and Google Ads.This collaboration builds on "years of collaboration" between the organizations, according to Amanda Storey, senior director of trust and safety at Google. It is "the kind of concrete cross-sector effort that meaningfully helps financial institutions protect their customers and employees," she said.How the program worksAs part of this financial services-specific initiative, FS-ISAC will operate a dedicated channel for its members, according to the announcement.Through this channel, members can report fraud and other malicious activity that leverages Google Workspace or Google Ads.The program initially launched with a pilot group of FS-ISAC member institutions. In the first 10 days of the pilot, FS-ISAC flagged 21 accounts, which allowed Google to identify and take action on 288 abusive accounts connected to the original ones, according to the press release. The program is now expanding to include all FS-ISAC member firms, providing access to reporting mechanisms, resources and direct support from experts.Other organizations using priority flaggingOther nonprofit organizations use the Google Priority Flagger Program to address specific types of online harm.For example, the National Advertising Division, which is affiliated with the Better Business Bureau, also joined the Google Priority Flagger Program this year. The National Advertising Division uses a dedicated channel to inform Google of potential Google Ads policy violations.Organizations with expertise in recognizing and fighting online harm are most suitable for the program, according to Google. Partnering allows them to leverage direct channels and prioritized reviews to support their missions.One of many collaborationsFS-ISAC's new program is part of Google's participation in the consortium's Critical Providers Program, according to the Tuesday announcement. Google Cloud joined the Critical Providers Program in March 2023 in a partnership focused on bolstering supply chain security and fostering transparency within the financial sector.The Critical Providers Program is an official conduit for nonfinancial organizations that provide network infrastructure and services to share timely and industry-specific security information. Google Cloud was the first major cloud provider to join this program, according to an announcement at the time.More broadly, the partnership is an example of the financial services industry's efforts to work across sectors to solve fraud. While fraud yields losses for both banks and its customers, the schemes are often executed on platforms that banks do not control, hence the need for dedicated partnerships across industries.For example, banks have worked with telecommunications companies to fight fraud via text messages and phone calls, with social media platforms to fight fraud on social media and with the U.S. Postal Service to fight mail theft that feeds check fraud.Ad fraud pervasive on GoogleGoogle's new partnership with FS-ISAC reflects the significant and persistent challenge of fraudulent advertisements published through the Google Ads platform. The issue not only impacts consumers but also poses a substantial financial threat to legitimate businesses.Fraudsters employ increasingly sophisticated tactics to exploit Google's advertising ecosystem. One common method involves creating fake ads that impersonate legitimate brands, then bidding on those brand names as keywords. When a user clicks on such an ad, they are often redirected to a phishing site designed to steal credentials, payment information or identity data.Allure Security, a firm that offers brands a service for shutting down impersonations, notes that these malicious sites can even be designed to show benign content when accessed directly, but redirect to a scam site only when a Google Click ID is detected, making them harder to spot.Beyond targeting consumers, criminals are also directly attacking advertisers. Earlier this year,  anti-malware software company Malwarebytes reported on "The great Google Ads heist," a scheme where fraudsters used fake Google Ads to phish advertisers themselves for their Google account credentials. Once an account is compromised, the criminals can use the legitimate advertiser's budget to run their own malicious campaigns, effectively using stolen funds to perpetuate more fraud.

Alanna McCargo announced Tuesday via LinkedIn that she has returned to the Urban Institute as a nonresident fellow.The former Ginnie Mae president wrote that she is rejoining the think tank at a time when there are "significant policy challenges ahead for affordability, community investment and inclusive finance."This move follows an announcement earlier this year that the housing industry veteran would step down from her role as president and CEO of the Federal Home Loan Banks of San Francisco."Amid rapid change driven by economic, environmental, and social forces, ensuring access to capital, advancing inclusion, and promoting sustainable policy are more critical than ever," McCargo wrote in addressing her move back to UI. "It is an honor to return to the Urban Institute to help expand research, data analysis, and partnerships that drive equitable housing, economic opportunity, and community resilience."McCargo previously spent five years at the Urban Institute, working from 2016 to 2021 as a vice president in its Housing Finance Policy Center. After her time at the organization, she served as a senior advisor to the Department of Housing and Urban Development's Secretary Marcia Fudge from January to December 2021, LinkedIn shows.She then led Ginnie Mae as a Senate-confirmed president through the end of 2024, guiding the agency through the COVID-19 pandemic and a volatile interest-rate cycle that strained some of its mortgage company counterparties. Her departure marked the end of a historic tenure as Ginnie Mae's first female president. In May 2024, McCargo announced she would become president and CEO of the Federal Home Loan Bank of San Francisco. However, her tenure was short-lived as earlier this year she announced her departure from the regional bank and plans of returning to Washington, D.C., to serve as an advisor to it.The FHLBank declined to comment on the reason for the change.

Fannie Mae now forecasts mortgage rates to slip back under 6% by the second quarter of 2026 as it elevated its gross domestic product outlook and modified its home sales projections.The origination forecast, while increased over both its March and April projections, other than for rates, remains more conservative than the Mortgage Bankers Association's latest outlook for this year.Furthermore, the Fannie Mae forecast is dated May 12, which was prior to Moody's cutting its ratings for the United States on May 16, which in turn pushed the 10-year Treasury yield to a 4.48% close on Monday and Tuesday. As of 1:30 p.m. Wednesday, it was 4.59%.The 30-year fixed rate mortgage was at 7.06% at that time, according to Zillow; Lender Price data on the National Mortgage News site put the rate at 7.034%, up from 6.974% three hours earlier.Where mortgage rates are headingIn the new forecast, Fannie Mae sees rates falling to 6.1% in the fourth quarter, dropping to 6% by next March and then at 5.9% for the following two quarters before ending 2026 at 5.8%.Fannie Mae's May forecast predicts $1.989 trillion in volume this year, with $1.46 trillion coming from purchases. Both are close to, but above Fannie Mae's April outlook.This compares with the MBA's $2.069 trillion forecast for 2025, of which $1.397 trillion comes from purchase volume.Fannie Mae expects a 27% refinance share this year; the MBA is looking for 39%.For 2026, Fannie Mae is predicting $2.376 trillion of volume, with $1.598 trillion from purchase activity. This is close to the MBA's $2.386 trillion forecast, with $1.589 trillion in purchase originations.Fannie Mae is now expecting 4.917 million total home sales in 2025, a year-over-year increase of 3.6% from 2024's 4.746 million. A month ago, it looked for 4.863 million, a 2.5% gain.GDP for the full year will grow 0.7%, compared with 0.5% in the April forecast. For 2026, it raised the outlook to 2% growth from 1.9%.How tariffs are likely to impact mortgage lendingBoston Consulting Group laid out three scenarios on how tariffs will impact GDP growth in its first quarter U.S. Mortgage Performance Report.Considering both U.S.-imposed and retaliatory tariffs, in the best case scenario (which BCG gives a 20% chance of happening), net GDP will grow 1.3%. In the most likely scenario, between the best and worst cases, it predicted 0.6% growth.For the worst case, at a 35% chance of occurring, BCG expects a 0.7% decline in GDP.BCG commented on the impact on the mortgage business in each of those developments."Mortgage market sustains gradual growth but without boom as rates remain elevated; profits expand in [a] stable market," BCG said about the better case's impact of tariffs on the business.In the most likely case, which BCG gives a 45% probability of happening, a temporary adverse impact will be felt on growth and margins. The impact in this situation is limited and recovery is relatively quick. Furthermore, "refinance activity acts as a shock absorber" for mortgage lenders.But for the worst case scenario, BCG expects origination volume to decline, secondary market spreads to widen and mortgage servicing rights valuations also be negatively affected more drastically than in the more likely prediction."Demand shocks exceed market's ability to absorb over time; refinance activity curbed as lenders tighten credit boxes and consumer circumstances worsen; risk of instability in MSR/MBS markets," the report said.The better impact from BCG's tariff scenario will result in few or no rate cuts from the Federal Reserve. The middle result has the Federal Open Market Committee making fewer reductions than planned as it balances inflation and unemployment. The expected monetary policy response if the worst case happens is rate cuts likely in line with the Fed's existing plan, BCG said.What can mortgage lenders do to offset the impact of tariffsBCG gave six takeaways for lenders and servicers to consider in planning for the impact of tariffs:Enhance scenario planning to account for the heightened period of uncertaintyAssess your pipeline hedging strategy (coverage ratios, float down policies) to account for potentially higher mortgage fall-out ratesLeverage data and analytics to take advantage of refinance opportunities within a volatile rate environmentDeploy proactive workout and modification solutions for loans in geographies likely to be the most impacted by tariffsContinue investment in technologies and workflow models that increase operating leverageEvaluate additional liquidity buffers to ensure an adequate capacity to handle higher delinquency rates

President Donald Trump said his massive tax package is close to being finalized, having notched a deal over the state and local tax deduction, but the White House has yet to win over a faction of conservatives who want more austere spending cuts."We're doing very well. It's very close," Trump told reporters Wednesday.House Speaker Mike Johnson said Wednesday that he had an agreement with lawmakers from high-tax states to increase the limit on the SALT deduction to $40,000. "The members of the SALT caucus negotiated yesterday in good faith," Rep. Mike Lawler, R-N.Y., told Bloomberg Television. "We settled on something that we believe in, we support."However, several hardline Republicans said House GOP leaders aren't honoring concessions the White House promised them and are threatening to tank the bill. But the White House says they never made a deal, instead presenting some of the conservative holdouts with a menu of policy options that the Trump administration can live with, a White House official said. The White House made clear to conservatives they would have to persuade their moderate colleagues to sign onto those ideas, the official said, a challenging feat given Republicans' narrow and fractious House majority.Trump and Johnson plan to meet with some of the ultraconservative lawmakers at the White House at 3 p.m., a person familiar with the plans said. That meeting will be an opportunity to strike a deal, the Trump official said.Rep. Andy Harris, R-Md., cast the conversations with the White House as a "midnight deal" for deeper cuts in Medicaid and faster elimination of Biden-era clean energy tax breaks."I'm sorry, but that's a pay grade above the speaker," Harris said. Harris said the bill doesn't reflect that agreement and hardliners will block the package if it comes to a vote. Rep. Ralph Norman, R-S.C., said the bill "doesn't have the votes. It's not even close."Freedom Caucus members said they aren't moving the goal posts by asking for more spending cuts than the budget outline they already voted for. They said they want to rearrange the spending cuts to focus on ending "abuse" in Medicaid and immediately ending green energy tax breaks.House Republicans leaders are also planning to accelerate new Medicaid work requirements to December 2026 from 2029 in a bid to satisfy ultraconservatives, according to a lawmaker familiar with the discussions. How deeply to cut safety-net programs such as food assistance and Medicaid health coverage for the poor and disabled has been a sticking point in reaching agreement on Trump's tax bill, as Johnson attempts to navigate a narrow and fractious majority.Harris and Norman spoke shortly after Johnson announced the SALT agreement on CNN. Johnson said there is "a chance" the package could come to a vote Wednesday.But several ultraconservatives cast doubt on that. "There's a long way to go," said Rep. Chip Roy of Texas, another Republican hardliner.The speaker can only lose a handful of votes and still pass the bill, which is the centerpiece of Trump's legislative agenda.The $40,000 SALT limit would phase out for annual incomes greater than $500,000 for the 10-year length of the bill, Lawler said. The income phaseout threshold would grow 1% a year over a decade, a person familiar with the matter said.The cap is the same for both individual taxpayers and married couples filing jointly, the person said.Another person described the income phase-out as gradual, so that taxpayers earning more than $500,000 would not be punished.Several lawmakers —  New York's Lawler, Nick LaLota, Andrew Garbarino and Elise Stefanik; New Jersey's Tom Kean, and Young Kim of California — have threatened to reject any tax package that does not raise the SALT cap sufficiently.The current write-off is capped at $10,000, a limit imposed in Trump's first-term tax cut bill. Previously, there was no limit on the SALT deduction and the deduction would again be uncapped if Trump's first-term tax law is allowed to expire at the end of this year.Johnson's plan expands upon the $30,000 cap for individuals and couples included in the initial version of the tax bill released last week. That draft called for phasing down the deduction for those earning $400,000 or more. That plan was quickly rejected by several lawmakers from high-tax districts who called the plan insultingly low.The acceleration of new Medicaid work requirements could become an issue in the midterm elections — which fall just one month earlier — with Democrats eager to criticize Republicans for restricting health benefits for low-income households. House leaders' initial version of legislation pushed back the new requirements until after the next presidential election.The earlier date for the Medicaid work requirement could alienate several Republicans from swing districts concerned about cuts to the healthcare program. It is also likely to provoke a backlash in the Senate.It will be very difficult for states to implement the work requirements in a year and a half, said Matt Salo, a consultant who advises health care companies and formerly worked for the National Association of Medicaid Directors.