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The expiration of the Department of Veterans Affairs loss-mitigation program drove an overall rise in foreclosures to start 2025, with the jump among VA loans the highest in decades, according to the Mortgage Bankers Association. The share of mortgages in foreclosure relative to total volume increased to 0.49% in the first quarter, up 4 basis points from 0.45%  three months earlier. The latest percentage is also up 3 basis points from 0.46% year over year, MBA said in its latest national delinquency survey.At the same time, new foreclosure starts climbed up to 0.2% from 0.15% during the fourth quarter of 2024. "Foreclosure inventories increased across all three loan types, and particularly for VA loans," said Marina Walsh, the trade group's vice president of industry analysis, in a press release.  "The percentage of VA loans in the foreclosure process rose to 0.84%, the highest level since the fourth quarter of 2019. The increase from the previous quarter marks the largest quarterly change recorded for the VA foreclosure inventory rate since the inception of MBA's survey in 1979," she added.Numbers among VA borrowers took a turn upward to start the year following the expiration of a voluntary foreclosure moratorium tied to the Veterans Affairs Servicing Purchase program. Initial data at the start of the year in several reports showed a noticeable spike in foreclosure starts as well as auctions. Against that backdrop, MBA and other mortgage industry groups are sounding the alarm about the need to introduce new relief for distressed veteran homeowners, with VASP no longer available for new applicants as of May 1. Successor VA loss-mitigation measures have yet to be  enacted, but a new partial-claim proposal is currently making its way through Congress.While the rise was more muted elsewhere, the share of Federal Housing Administration-guaranteed loans in foreclosure also climbed upward to 0.92% during the quarter. Forborne conventional mortgages made of 0.38% of the outstanding volume. Why this report paints a mixed pictureAlthough trends show reasons for concern, Walsh pointed out that current delinquency and foreclosure rates both sit under historical averages, with first-quarter numbers offering a mixed picture of borrowers' standing.The total delinquency rate increased for the second quarter in a row to 4.04% and was also up year over year, driven by conventional mortgage activity. The share rose from 3.98% three months earlier and 3.94% a year ago. Numbers were adjusted for seasonality. The delinquency rate, however, does not include loans that rolled over into foreclosure. Compared to the previous quarter, the delinquent share among conventional loans backed by Fannie Mae and Freddie Mac increased 8 basis points to 2.7% from 2.62%. The FHA segment saw a 41 basis point drop to 10.62% from 11.03%, while delinquency share among VA loans slid 7 basis points to 4.63% from 4.7%.Current delinquency rates are 8 basis points higher for conventional mortgages on an annual basis. Among government-backed loans, the FHA share increased 23 basis points year over year, with the percentage falling 3 basis points for VA loans.By delinquency stage, the portion of loans 30-days past due rose a seasonally adjusted 11 basis points to 2.14% from the previous quarter. The share shrank to 0.73% for payments 60 days late, down 3 basis points. The 90-day delinquency rate similarly fell 2 basis points to 1.17%.Is the uptick in mortgage delinquencies the start of a trend?MBA's findings largely align to data regarding seriously distressed loans and foreclosures noted by the Federal Reserve Bank of New York in its first quarter report. New foreclosure filings leaped by almost 50% on a quarterly basis to approximately 61,660 from 41,220 in the fourth quarter, according to New York Fed's calculations.The number of mortgages flowing into the seriously delinquent stage of 90 days or more past due similarly accelerated 13 basis points to 1.22% from 1.09% of total loans outstanding in the prior quarter. On a year-over-year basis, the share rose from 0.92%.Meanwhile, the new seriously delinquent rate of home equity lines of credit accelerated to 0.88% from 0.56% three months earlier and 0.52% in the first quarter 2024.Delinquency upticks in recent months might serve as a flashing caution light for servicers in the months ahead if trends hold. While VA policy changes played a significant role in the foreclosure spike to start the year, New York Fed noted warning signs appearing across the board, with the latest activity catching up to quarterly delinquency growth rates . "It looks like it's a pattern of increasing delinquency leading to increasing foreclosure across all types of mortgages," researchers at the New York Fed said.

The Mortgage Bankers Association has responded to the Office of Management and Budget's request for information on "unnecessary, unlawful, unduly burdensome and unsound rules" with several origination and servicing policy suggestions.There already has been pullback from some of the policies the association is calling for the Office of Management and Budget to rescind, with the suggestions aimed at putting a more definitive end to these where the OMB has the authority to do so. The MBA also has some suggestions for revising certain rules.The OMB has the authority to rescind rules in some cases but others are governed by the Administrative Procedures Act and would need to go through a different process for alterations.Some rules the MBA would like to see rescindedFirst on the MBA's list is the full removal of the Consumer Financial Protection Bureau's nonbank registry, citing its overlap with one the states have, according to the letter Pete Mills, the association's senior vice president of residential policy and strategic industry engagement, wrote to OMB.The bureau, which just withdrew 70 guidance and enforcement documents, said last month it was considering issuing a notice of proposed rulemaking that would rescind the regulation or "narrow its scope" and would not be enforcing compliance with previous Biden administration rules around it. The CFPB also said in a staff memo that it plans to shift several aspects of enforcement to the states and stop nonbank oversight, according to NMN affiliate American Banker.The MBA also called for rescinding some Department of Housing and Urban Development rules, including one aimed at modernizing required contact with borrowers in default."While intended to provide servicers with the flexibility to deploy alternative methods to conduct meetings with borrowers before foreclosure, this rule preserves a duplicative regulatory environment that HUD has previously recognized as unnecessary to help borrowers maintain homeownership," the letter said.Another HUD rule the association is recommending for rescission calls for minimum property standards for structures in areas identified as having high levels of flood risk. The Federal Housing Administration issued a waiver for the requirement earlier this year."HUD's reliance on an undeveloped climate-informed science approach and costly elevation requirements threatens affordable housing production by introducing unclear, burdensome challenges," Mills wrote in the letter.Furthermore, the letter calls for the full rollback of energy-efficiency standards for new-construction single- and multifamily homes financed through either HUD or the U.S. Department of Agriculture. These standards call for compliance with 2021's International Energy Conservation Code."With over 30 states still operating under the 2009 code and a shortage of inspectors trained on the 2021 standards, this policy creates unnecessary disruption and restricts the already-limited housing supply available to renters and first-time homebuyers," Mills said.What the MBA would like to see revisedThe association also indicated it's interested in seeing the following rules changed:Mortgage servicing rules under the Real Estate Settlement Procedures Act requiring modernizationAspects of RESPA's Section 8 that aren't in line with "the current state of technology"Loan originator compensation requirements under the Truth in Lending Act that are "too complex"Home Mortgage Disclosure Act requirements for multifamily loans that do not involve consumersUnfair and Deceptive Acts and Practices oversight at Federal Housing Finance Agency that are "inappropriate" given the Federal Trade Commission's traditional oversight (FHFA Director Bill Pulte has withdrawn an advisory bulletin on UDAP.)Aspects of the FHFA's enterprise regulatory capital framework that are too complex or have had unintended consequences related to their impact on loan pricingFHA claims curtailment policies that require modernization Department of Veterans Affairs servicing and claims procedures for modifications requiring face-to-face interviews, which impose "significant logistical and compliance burdens" Reg AB II disclosures the Securities and Exchange Commission requires for private-label residential mortgage bonds, which the MBA said could be better "harmonized"

Mortgage lender Lower is acquiring Movoto, a home search website, from prior parent company OJO Labs, the companies announced Tuesday.The combination of the two firms will create "an end-to-end homeownership platform" connecting consumers, originators and real estate agents. The vision echoes a similar one pursued by Rocket Companies through its acquisition of Redfin, announced weeks ago.Dan Snyder, CEO and co-founder of Lower, said the purchase of Movoto strengthens the firm's position "as the challenger platform" and gives it a chance to capture "significant market share." "The future of our industry lies in blending the best technology with the irreplaceable expertise of local agents and loan officers," Snyder said in a statement. "Movoto is the perfect platform to accelerate this vision, allowing us to create a simpler, smarter path to homeownership." Financial details of the Lower-Movoto deal were not disclosed. Movoto, ranked among the top five U.S. real estate platforms, received more than 150 million visits in 2024, a press release claims.The combined company will have more than 1,000 employees, with offices in Columbus, Ohio, and Austin, Texas. Immediately after the closing, the teams will integrate Movoto into the Lower brand. John Berkowitz, current CEO of Movoto, will transition to Lower and serve as the president of real estate at the multi-channel mortgage lender. The purchase will connect Lower's almost 500 sponsored loan officers with "thousands of motivated homebuyers and top-performing agents in their markets," the firm said."Modern technology should work for the local loan officer, not replace them," said Craig Montgomery, chief strategy officer at Lower, in a statement. "Movoto arms originators and agents with real-time opportunities and puts them at the center of the homebuying journey – right where they belong. It's the kind of innovation that puts originators in a position to win consistently."This is Lower's second acquisition in 2025, with the first being the purchase of software firm Neat Labs in January.Combined with the acquisition of Neat Labs and the launch of the LowerOS mortgage platform last fall, the purchase of Movoto will position Lower for rapid growth into a broader fintech organization, the company said in a press release.

Better Home & Finance is offering numerous reasons to believe better days are ahead despite its struggle to reach profitability.The digital lender Tuesday morning disclosed a $51 million net loss in the first quarter, in line with net losses of $59.2 million and $50 million in the prior and year ago periods, respectively. Since going public 21 months ago, the company has yet to post a quarterly profit.Depending on the mortgage market, Better could achieve profitability in the second half of 2026, Chief Financial Officer Kevin Ryan said in an interview. During Tuesday morning's earnings call, founder and CEO Vishal Garg suggested loan origination expenses would rise as the lender leans into growth, but eventually it could lead to greater operating leverage. Executives are bullish on the company's artificial intelligence prowess, including its Tinman platform and voice assistant Betsy, and its new retail effort, to lead them into the black. The mostly direct-to-consumer lender recorded $868 million in funded loan volume in the first quarter, up 31% from the year ago period. Home equity mortgages accounted for $157 million, or 18% of that volume. In the final months of 2024, the mortgage shop closed $936 million across 3,300 originations. Neo Home Loans updateAlso within that first quarter period was $163 million of funded loan volume from Better's Neo Home Loans retail team, which began originating loans in January. The company expects Neo to approach $450 million in origination volume this spring.Ryan in an interview said Neo loan officers quickly grasped the Tinman platform and were more productive on it in a short learning period than they were when using Encompass and other loan origination systems."That gives us a lot of confidence that the technology is real," said Ryan. Neo is the subject of a theft of trade secrets complaint between Better and Luminate Home Loans; the complaint is pending in a California federal court. Tinman, Betsy and lowering the cost per loanBetter in its earnings report also announced an agreement for an unnamed bank, a former Encompass customer, to use Tinman for its mortgage operations including wholesale and non qualified mortgage originations. Garg during the call emphasized the success of Tinman and Betsy, revisiting Better's goal to get loan production costs down to $1,500 per origination, or around six times cheaper than the industry average. "You can't deploy an AI agent on any of these old, broken systems," said Garg, referring to other industry technologies. "So I think it's sort of like a seminal 1995 to 1999 moment, where now AI is a thing, and none of these systems are AI-equipped."The lender reported $33 million in revenue for the first quarter, for a 50% year-over-year increase and 32% gain over the prior quarter. In the recent period however, Better's expenses approached $83 million. Better's restructured financingTuesday's results came a few weeks after Better restructured a $530 million convertible note arrangement with financier Softbank, the Japanese conglomerate. The transaction is expected to create approximately $200 million of positive, pre-tax equity value for the company, it said. "It just gives partners confidence that when they're entering in a partnership, it's going to be a long-term partnership with a company that's got the financial stability to see through what's been a very difficult cycle for everybody," said Ryan. The company's stock was trading at $14.08 a share around 1 p.m. Eastern Tuesday, a penny higher than its opening.

Former Churchill Mortgage employees moved one step closer to getting a $850,000 settlement approved by a federal court in Tennessee over claims that their employee retirement accounts were mismanaged. The proposed settlement would dole out approximately $850 per class member and over $200,000 would be paid to attorneys representing plaintiffs.If approved, the deal would resolve a certified class action lawsuit lodged in 2023, which accused Churchill Mortgage's CEO, Mike Hardwick, and others associated with the company's employee stock ownership plan of using annual dividends made from company profits from 2013 to 2019 to financially prop up the company.Members in the class action suit also claim that in 2020 their ESOP bought Churchill's stock from Hardwick for close to $74 million, which was nearly three times the fair value. The deal left the retirement plan and the company deeply in debt, while Hardwick walked away with a big profit, the suit alleged. Both issues represent an alleged violation of the Employee Retirement Income Security Act. Bloomberg Law first reported on the suit. Contingent on the approval of a Tennessee federal court, the plaintiffs will in turn agree to not refile similar litigations against defendants in the future.Though the settlement received its first green light May 8, both parties will convene Sept. 17 for a hearing before a final order is issued. The class action, per estimates, has close to 300 members. A legal document filed April 17 outlined that both parties had issues coming to a mutual understanding."Defendants vigorously denied all of the allegations, asserted affirmative defenses, and otherwise defended its actions with respect to the 2020 transaction and its fairness to the plan," the document filed in April said. "Plaintiffs and defendants also strongly disagree on the proper measure of damages. That core dispute had not been resolved at the time the parties reached their Settlement, and the uncertainty put both parties at great risk," that same legal filing added.Litigation was kicked off in 2023 by three underwriters that launched litigation against Churchill Mortgage's CEO and individuals affiliated with the company's ESOP.The filing from two years ago outlines that Hardwick in 2013 started "cashing out his equity in Churchill," via the creation of the ESOP for employees. Each year, $2.4 million in dividends was deposited into the plan, but in most years a significant portion of the dividends were used to offset corporate obligations, like ESOP contributions, instead of being used for the benefit of the plan and its participants.In 2020, Hadwick sold his remaining equity in Churchill, amounting to 510,000 shares of common stock to the ESOP for $74 million."Each share of ESOP-held preferred stock had been valued at $52.25 as of December 31, 2019. But only a few months later, the plan paid Hardwick $145.90 per share of common stock in the 2020 Transaction," litigation read. "Thus, the plan paid Hardwick almost three times what Churchill preferred stock had been valued less than a year earlier.""The 2020 transaction allowed Hardwick to unload his stake in Churchill above fair market value, for the reasons explained herein, and saddle the plan and Churchill with tens of millions of dollars of debt to finance the transaction," original litigation filed said.It is uncertain how the three underwriters became privy to what was happening to their retirement accounts. The information was not disclosed in the three filings viewed.Churchill Mortgage could not immediately be reached for comment.

It’s been an uphill battle to sell a home lately, with interest rates through the roof and home prices equally expensive.But somehow, someway, the home builders have been increasing sales and unloading inventory as affordability continues to hamper existing home sales.Part of it has to do with mortgage rate lock-in, with existing homeowners less likely to sell and give up their low fixed rate, but that’s just one side of the story.The builders are also really good at offering incentives to move their product, even if it’s not the “best time to buy.”They’ve been referred to as efficient sellers compared to the owners of existing homes, who have struggled to woo buyers the past few years. But why?The Home Builders Are Offering Customers Lower Mortgage RatesOne of the big differentiators lately has boiled down to mortgage rates. After interest rates quickly climbed from their record lows in the 2s all the way to 8%, existing home sales fell off a cliff.And they haven’t recovered much either since sliding to their lowest point since 1995 last year.Meanwhile, newly-built home sales are chugging along at a solid clip, in spite of still-elevated mortgage rates.Sure, mortgage rates have come down a bit from their cycle-highs seen in October 2023, but they’re still way up there.At last glance, the 30-year fixed was hovering close to 7%, a far cry from the sub-3% rates on offer as recently as early 2022.Despite this, the home builders are selling homes, snagging a near-15% market share in 2024 when it’s normally only about 10%.So how are they doing it? Well, one of the best tools in their arsenal has been mortgage rate buydowns.Instead of simply telling a home buyer they have to suck it up and buy a home with a 7% rate, they’ll offer a special, bought-down rate.For example, it’s not uncommon to see a builder offer a mortgage rate beginning with a 4 today.And if you look at the chart above from Realtor, you’ll see that since mortgage rates surged higher, the difference in average mortgage rate for existing home buyers versus new construction home buyers has widened.It used to be nearly identical, whether buying a used home or a new home, but now it’s clearly lower for new homes.Home Builders Are Controlling the Financing Piece to Boost AffordabilityAs you can see, new construction home buyers are winding up with mortgage rates about a half-point lower on average relative to existing home buyers.Much of this has to do with the fact that home builders often have their own in-house mortgage lender.Some examples include DHI Mortgage and Lennar Mortgage, two of the biggest home builders in the country with equally big lending units.Aside from the expected efficiencies of having a one-stop shop, they can also pitch special mortgage rates to their customers.This includes both temporary mortgage rate buydowns and permanent ones, with many builders offering both to get customers in the door.For example, you might see a special rate of 2.99% in year one, 3.99% in year two, and 4.99% for the remainder of the 30-year loan term.Meanwhile, someone buying an existing home might face an interest rate in the high-6s, which at minimum is unattractive. And at worst, makes them ineligible for a mortgage.So aside from existing home inventory being lower due to lock-in, the sellers of existing homes aren’t doing as great of a job unloading their properties.If they took out a page from the builder’s playbook, they too could accomplish the same thing.After all, a 1% drop in mortgage rate is equal to roughly an 11% drop in home price. And the home builders know this.If You’re a Home Seller, Consider Offering a Credit for a Mortgage Rate Buydown Instead of a Price Reduction$500,000 Purchase Price$20k Price CutPermanent BuydownMortgage Rate6.875%6%Cost to Seller$20,000~$10,000Loan Amount$384,000$400,000Monthly P&I$2,522.61$2,398.20Those who are struggling to sell their home today might want to consider a rate buydown instead of a price reduction.Redfin recently noted that nearly half of home sellers were offering seller concessions to buyers, which is just below a record high.And some of them are offering credits for things like a mortgage rate buydown. This can be a smarter approach than dropping the listing price, as you get more mileage via a lower rate.As noted, lowering the purchase price often doesn’t move the dial much in terms of monthly payment.Here’s a quick example. Imagine selling a home for $480,000 versus $500,000. But the mortgage rate is 6.875% instead of 6%.The monthly payment is actually lower on the $500,000 purchase. It’s $2,398.20 instead of $2,522.61, despite a larger loan amount of $400,000 vs. $384,000.A good real estate agent can negotiate with the buyer’s agent and their client to illustrate this and offer a credit toward that rate buydown.Similar to a new-construction home, an existing home can come with a reduced mortgage rate to push the sale through. And both the buyer and seller walk away happy. 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)

Frank Gargano A U.S. consumer watchdog looks poised to tear up a rule on customer financial data sharing and start all over again — but with a depleted staff, a potentially drained budget and all of the same thorny issues.The Consumer Financial Protection Bureau is likely to scratch and rework its open-banking rule, which requires banks to share their customers' deposit account and credit card information when they request it with fintech firms for free. While such a move is ostensibly a win for large banks including JPMorganChase, which lobbied against the measure, it could re-open the fight and risk expanding its scope at a time when the CFPB's fate is in doubt. "Open banking pits two sides of industry against each other, with consumers somewhere in the middle," Dan Murphy, who managed the CFPB's open banking program during the Biden administration and is now an independent consultant, wrote in a post on Friday. "Want to give the banks the ability to charge fees for consumer-permissioned data access? Good luck explaining that to fintechs. Want to let fintechs do whatever they want with consumer-permissioned data? Good luck explaining that to banks."Going back to the drawing board on the rule — finalized late last year in a near 600-page document — risks dredging up numerous issues. Even though banks bristled at open banking, arguing the requisite data-sharing arrangements would stoke fraud and expose them to greater liability, some appreciated the clarity once it was instated and made investments to comply. The Financial Data Exchange said last month that 114 million secure customer connections have now been established between fintechs, banks and other financial firms compared to 76 million a year ago. "Millions and millions of dollars have been spent on this," said Cathy Brennan, a partner with the law firm Hudson Cook, who counsels financial companies. Representatives at the CFPB didn't immediately respond to a request for comment. Reworked 1033 ruleThe agency is leaning toward fully vacating the rule and aims to rewrite it, Bloomberg Law reported earlier this month. But how it could rework it is unclear. If the CFPB allows banks to charge fees for sharing data and limits their liability for breaches, that would be a boon for those firms. But the watchdog could also expand the measure's scope, requiring banks share data on other financial products beyond deposit accounts and credit cards. Fintechs, which argue the open banking rule empowers consumers and boosts competition, have been pushing to include products such as auto loans and mortgages. JPMorgan Chief Executive Officer Jamie Dimon voiced opposition to the open banking measure, saying at an October conference that it creates risk for customers and for payment systems. His bank also made a private push, engaging more frequently with the CFPB than other large banks as it deliberated on the rule under the Biden administration, according to a person familiar with the matter. PNC Financial Services Group CEO Bill Demchak said during an October 2023 earnings call that customer data must be shared "in a secure manner."A representative for PNC declined to comment. Representatives for JPMorgan didn't immediately respond to a request for comment. Reworking the rule poses a potential issue for smaller banks. Currently, firms with less than $850 million in assets are exempted from having to comply. A reconfiguration raises the possibility that threshold is scratched.CFPB's fateThe question of whether the CFPB even has the ability to overhaul the measure remains. The rule took years to finalize — passing in October some 14 years after the statute introducing it was completed. A pair of bank lobby groups immediately sued the CFPB to block it. The Financial Technology Association, an industry group, has since challenged that, potentially allowing it to defend the CFPB's open banking rule if the agency opts not to. A federal judge in Kentucky is expected to decide whether the FTA can defend the rule by the end of the month. Both the CFPB and the bank plaintiffs said they weren't opposed to the FTA intervening in the litigation to defend the open banking rule in Monday court filings.Under Trump, the agency has been curtailed, with its work overseeing financial companies largely suspended. A bid by CFPB Acting Director Russell Vought to fire just under 90% of the CFPB's roughly 1,700 employees is being litigated. Amid the uncertainty, many senior CFPB staffers have voluntarily left the agency, including the Biden-era general counsel Seth Frotman and open banking liaison Murphy. How that litigation plays out is unclear, but even if opponents of Vought's cuts win, the agency's budget is also likely to tumble under legislation being advanced by House Republicans.The agency's fate was further clouded Friday with a surprise announcement that Trump's pick to lead the agency — Jonathan McKernan — was instead going to the Treasury Department. Back in courtWriting the open banking rule while fully staffed took more than five years, according to Dan Quan, a former CFPB senior adviser on technology issues and the founder of venture capital firm Nevcaut Ventures. Rewriting it with a skeletal staff and a shoestring budget will be daunting, he said."It's just impossible to undertake a rewriting of this rule," Quan said.Even if the CFPB is able to finalize a new rule that satisfies banks' concerns, fintechs are likely to head to court arguing the agency exceeded its authority in the rewrite, said Todd Phillips, an assistant professor of legal studies at Georgia State University's Robinson College of Business and a former Federal Deposit Insurance Corp. attorney."If they're going to rewrite the rule, it's just going to end up back in court," Phillips said.

President Donald Trump's campaign tax pledges — no taxes on tips and overtime pay, plus new tax breaks for car buyers and seniors — are the centerpiece of a multitrillion dollar package that will serve as Republicans' signature legislative effort.In a draft version of the tax bill released on Monday, House Republicans highlighted the president's populist priorities in a package that would enact those cuts through 2028. The bill would also make the lower individual tax rates Trump signed in 2017 permanent.READ MORE: Most economists expect rate cuts after JulyThe bill addressed a tax issue that has been dividing lawmakers since it was first restricted by Trump in 2017: the $10,000 cap on the state and local tax deduction. The plan raises the SALT limit to $30,000, but with limits for individuals earning more than $200,000 or couples making twice that. The proposal, notably, doesn't include a tax hike on the wealthiest Americans, after weeks of debate among Republicans about whether to raise levies on millionaires. The bill would permanently extend the 37% top rate for individuals that was set in Trump's 2017 tax law. That's despite Trump telling House Speaker Mike Johnson as recently as last week that he wanted a 39.6% rate for individuals making more than $2.5 million."The president loves the bill. He met with Jason Smith on Friday and it's a great first step," top Trump economic adviser Kevin Hassett told reporters Monday, referring to the House Ways and Means Committee Chair who led the effort to craft the tax bill. The package — which Trump has dubbed his "one big, beautiful bill" — is the totality of his legislative agenda. The bill is officially scored as losing $3.7 trillion in revenue over 10 years, within the $4.5 trillion limit lawmakers set for themselves. But narrow Republican margins in the House mean that the president needs nearly unanimous support from his party to pass the bill.The plan will take a big step toward advancing through the House as soon as this week, with the House Ways and Means Committee scheduled to begin debate on it on Tuesday.READ MORE: Where the highest property tax bills are foundJohnson told reporters Monday that the House is on track to pass the legislation by Memorial Day. It would then go the Senate where it could be subject to major revisions.Among provisions up for debate: the amount to increase the nation's borrowing authority. The House bill calls for a $4 trillion increase, smaller than the Senate's preferred $5 trillion level. Lawmakers are hoping to push any additional votes on raising the debt ceiling until after the 2026 midterm elections. Promises MadeThe draft language includes several of the unorthodox proposals that were central to Trump's campaign message: no taxes on tipped wages — an idea he said came from a waitress — and eliminating levies on overtime pay. The plan also calls making the interest on car loans deductible, similar to how mortgage interest can be written off. But the car buyers can only claim the break on American-made vehicles, underscoring Trump's desire to boost US manufacturing.Trump had also campaigned on ending taxes on Social Security benefits, but that runs afoul of the budget rules Republicans are using to pass the bill. Instead, the bill provides a $4,000 bonus for seniors on top of the regular standard deduction.One of the thorniest issues — the contentious standoff over increasing the SALT deduction — may still be up for debate. Some lawmakers representing high-tax areas want an even bigger tax break, as much as $124,000 for joint filers, a far cry from the $30,000 cap included in the legislation.READ MORE: Property taxes up 10.4% in past three yearsThe package lays out new levies. It would impose a new tax on private foundations of up to 10% and a new tax on foreign remittance of 5%, subject to exemptions. Also on the hook for tax increases: wealthy private universities, which could see an increase in the levy on endowments from 1.4% to as high as 21% on investment income.Multinational companies would get an extension of current lower rates on foreign profits, marking a win for corporate America.Tax breaks benefiting the renewable energy sector are also set to be scaled back. Popular production and investment tax credits for clean electricity would be phased out by the end of 2031, and new requirements against using materials from certain foreign nations would be added. The $7,500 consumer tax credit for the purchase of an electric vehicle would be fully eliminated by the end of 2026. Monday's draft bill came after the tax-writing committee released some initial provisions late Friday. Those included raising the maximum child tax credit to $2,500 from $2,000 and increasing the standard deduction, both retroactive to 2025 to put more money in voters' pockets before the 2026 elections. The bill also raises the estate tax exemption to $15 million and increases the 20% deduction for closely held businesses to 23%.While the bill would include roughly $1.5 trillion in spending cuts over the next decade, that wouldn't come close to covering the roughly $4 trillion in tax cuts outlined in the plan, meaning it would likely add to deficits in the coming years.Republicans have pointed to tariffs as a key source of revenue to help offset the deficit impact from the tax bill, and data out Monday showed customs duties jumped to a record $16 billion in April. The revenue won't be officially scored as paying for the bill since the text doesn't enact the emergency Trump tariffs into law.Following Monday's agreement between Beijing and Washington to deescalate the trade war, the Yale Budget Lab estimated all tariffs to date in 2025 would bring in roughly $2.3 trillion over the next decade if they remain in place, after accounting for the negative economic effects from higher levies.

Bloomberg News Prices continued to trend down toward the Federal Reserve's 2% target last month despite the rollout of sweeping tariff hikes.The Consumer Price Index rose 0.2% in April for an annualized increase of 2.3%. Core CPI, which factors out food and energy, was up 0.2% on the month and 2.8% year over year.The readings for both headline and core CPI matched the Wall Street consensus forecasts. The headline figure declined by 0.1% in March, driven by falling energy prices, while the core index ticked up 0.1%. The April report from the Bureau of Labor Statistics will be welcomed by the Federal Reserve, which voted earlier this week to hold its benchmark interest rate steady as it awaits a clearer signal of either economic deterioration or price stabilization. Technically, the Fed targets 2% core inflation relative to a different government index, the Personal Consumption Expenditure index. The levels on the two readings are slightly different, but tend to rise and fall together. The news is welcome news for the Fed and its effort to bring inflation to heel, but the report is only a single data point in the current ambiguous economic policy environment. The April reading comes just one day after the White House announced a 90-day mutual pause in steep tariffs between the U.S. and China. In a note distributed Monday, BMO Capital Markets analyst Ian Lyngen said most investors would view the report from the Bureau of Labor Statistics as "stale information" because it sheds no light on the biggest questions of the moment: whether the trade environment is driving up prices and what that means for the trajectory of interest rates. "This leaves the U.S. rates market in headline-watching mode for anything further related to the evolution of global trade and insight on how quickly investors might expect progress on other bilateral trade agreements," Lyngen wrote.Ahead of Tuesday's release, there were mixed feelings about whether market participants and observers should expect to see noticeable price changes so soon after President Donald Trump's so-called Liberation Day announcements. Andy Schneider, senior U.S. economist with BNP Paribas, wrote in a note last week that it was "too early" to see significant changes in price growth attributable to the tariffs. He added that many firms are stuck between the "push and pull between contending with increasingly high tariff rates and uncertainty over their persistence at current levels."BNP projected a headline CPI increase of 0.2% and a core CPI uptick of 0.26%, but Schneider noted that further increases are expected later in the year."We maintain our long-held view that tariffs will translate to substantially higher U.S. inflation," he wrote. "We see domestic prices heating up materially by summer, with [year-on-year] core CPI peaking at 4.4% by Q2 2026."Fed Gov. Adriana Kugler, in a Monday morning speech, pointed to recent survey data from the Federal Reserve Bank of Dallas indicating that more than half of businesses in the 11th District planned to pass tariff costs on to customers, with 26% saying they would do so upon the announcement of the levies. Another 64%, however, said they would do so within three months of the tariffs' implementation.While it does not appear that such costs have been conveyed to consumers at large scale, Kugler warned that if they are, the effects on the economy could be far reaching and detrimental."Given these expected price increases, real incomes will fall, and operating costs will rise, which will lead consumers to demand fewer final goods and services and firms to demand fewer inputs," she said. "Ultimately, I see the U.S. as likely to experience lower growth and higher inflation."Yet, despite this outlook, Kugler said she is content for the Federal Open Market Committee to keep its policy rate unchanged until the economic trajectory comes into better focus."With inflation and employment potentially moving in opposite directions down the road, I will closely monitor developments as I consider the future path of policy," she said.

Economists surveyed by Wolters Kluwer remain solidly behind the notion that the Federal Open Market Committee will reduce short-term rates in 2025.Its May Blue Chip Economic Indicators report even included the possibility that the Fed could actually raise interest rates in 2025 based on comments made by Chairman Jerome Powell which the authors noted could open the door to such a move. None of those panelists, however, are expecting a hike. But the consensus average regarding the size of a rate reduction for all of 2025 came out at 60 basis points, down from 65 basis points in the April BCEI survey.The latest survey was conducted on May 5 and 6, the second day being the start of the FOMC meeting; after it concluded the Fed announced it was taking no actions. If not now, when will the Fed cut rates?The survey found that 20% of the respondents believe the next cut will be in June, with 29% in July and 51% starting even later. Approximately 9 out of 10 expect a 25 basis point cut, with 10% at 50%,The report did come out before the announcement of a pause on tariffs with China, but the initial April 2 announcement resulted in a "pronounced shift" in the panelists' forecast a month ago.On the China news, the 10-year Treasury closed on May 12 at 4.46%, up 8 basis points on the day. On May 1, the yield was at a low of 4.12%.Meanwhile, the 30-year fixed on Monday afternoon was just shy of 7%, at 6.97%, according to Zillow. The Lender Price rate tracker on the National Mortgage News website was at 6.95%. Both were higher than last Thursday, the day after the FOMC meeting.Is the U.S. heading for a recession soon?An April 9 announcement of a 90-day pause in reciprocal tariffs with other countries did not ease recession concerns among BCEI panelists, as their responses on the probability of one occurring over the next 12 months was "essentially unchanged" between April and May. Just under half, 47%, said the U.S. will have a recession in the following 12 months.As for inflation, the likelihood that tariffs would lead to one-time price changes was a view held by 54%, while 44% were worried about longer-lasting effects."The Blue Chip forecast involves a dose of stagflation, but it is mild relative to the experience in the 1970s and 1980 and it is projected to be brief," Wolters Kluwer said.The report pointed out futures contracts for the Fed Fund Rate suggest the market is looking at reductions of 50 basis points over the next six months and 100 basis points through the 12-month period.While the short-term rates controlled by the FOMC do not directly impact mortgage rates, they are indicators on views of the U.S. economy that investors use when pricing longer-term instruments like the 10-year Treasury yield.The role of inflation in the decision"Inflation expectations will likely be the most important factor driving Fed decisions in the months ahead," the survey report said. "If long-term inflation expectations remain anchored, Fed officials would likely conclude that tariffs will fuel primarily one-time price increases rather than ongoing inflation."In this case, the FOMC would likely address slow economic growth and elevated unemployment. But evidence of stable expectations must be convincing to policymakers lest they repeat the misdiagnosis of transitory inflation they made in 2021 and 2022, which resulted in the run-up of mortgage rates during the period.