Uncategorized

Fannie Mae and Freddie Mac unveiled a new strategy for their legacy joint venture, aligning with priorities set by President Trump and their federal overseer.Their Common Securitization Solutions JV will be renamed U.S. Financial Technology to reflect a new role in which it will sell access to the mortgage-backed securities platform used to manage their $6.5 trillion portfolio to others, according to a press release issued Thursday.The news arrives following speculation that CSS could play a role in fulfilling goals to monetize Fannie and Freddie that Trump and their oversight agency chief, Bill Pulte, have said they've discussed."We created U.S. Fin Tech to demonstrate the incredible ingenuity of American technology under President Trump's leadership," said Pulte, who also has similarly rebranded the Federal Housing Finance Agency he heads. (Pulte now calls his agency U.S. Federal Housing FHFA.)Tony Renzi, a former GSE executive who also has worked in the private sector, will remain at the helm of the rebranded joint venture."We are excited to have a name that demonstrates that we are leading the United States and the world in financial services technology," Renzi said.A revived concept and implications for conservatorshipThe decision to open up the platform the GSEs have used to make their bonds more fungible marks an about-face from 2021's decision to pivot away from a plan for use in the private-label securities market and the disbanding of an independent board formed to look into this."That was part of the original idea behind the CSP, and that the CSP would be available to any lender, not just Fannie and Freddie. I think that still makes sense," said David Dworkin, president and CEO of the National Housing ConferenceThe repositioning of the securities platform might be a step toward releasing the GSEs from conservatorship."One area that is complicated and difficult under any release from conservatorship is the common securitization platform," said Dworkin. "Under its current structure where it's exclusively available to both Fannie Mae and Freddie Mac that presents probably insurmountable antitrust issues."Spinning off the securities platform could address the issue. This would require launching "a real IPO and then have an independent board manage and govern the CSP, which would become essentially a utility company," Dworkin said."Spinning off the CSP gives you additional value for the CSP itself, and it likely enhances the value of the enterprises, because it adds value to their MBS," he said.Proceeds use may face limits in administrative monetizationThat strategy could play a role in addressing a goal related to finding a way to better monetize the GSEs, although it may not be entirely in line with the thinking of those who want Fannie and Freddie to be more like other private companies that trade publicly."What you have here that's really sort of makes it more complicated is you're trying to make this more like a public company in many ways, while putting in a utility," said Marty Green, principal at law firm Polunsky Beitel Green, in an interview this week, when asked about CSS.Whether a spinoff could be done administratively or would require congressional intervention could depend on use of the proceeds.The Dodd-Frank Act requires that any funds gained from the exercise of government warrants that are part of the conservatorship and the sale of stock be solely used for deficit reduction."That clause of Dodd Frank would have to be removed in order to use the proceeds for anything but deficit reduction," he said.Deficit reduction is in line with Trump administration goals, but the inability to use the funds for recapitalization that would help improve the GSEs' finances and prepare them for a release from conservatorship could be a reason to seek broader authorities to use the proceeds."NHC's position is that a stock sale with the appropriate legislative authority should be used for full capitalization and then other housing purposes," said Dworkin, who said this is one of several goals and safeguards the group recently published on GSE reform.

The Department of Housing and Urban Development is weighing a number of changes to its manufactured housing program as it looks to it as a key solution to addressing the nation's housing shortage quickly.Government officials, including the heads of Ginnie Mae and the Federal Housing Administration, outlined potential improvements under consideration, including updates to the Manufactured Home Construction and Safety Standards (aka HUD's code), during a manufactured housing roundtable Thursday.Regarding the HUD code, which was established in 1976, Frank Cassidy, the de facto FHA commissioner, told an audience packed with mortgage lenders that thereare plans to eliminate the chassis requirement for manufactured homes. Currently, HUD requires manufactured homes to be constructed with a permanent chassis to make the property moveable if need be."This makes little practical sense," said Cassidy during the roundtable hosted at HUD's headquarters. "[We are gathering industry feedback] to move forward with eliminating this costly and seemingly unnecessary requirement."The idea of removing the chassis requirement has received traction in recent years, with Sen. Tim Scott of South Carolina introducing legislation to do so in 2024. Stakeholders argue that removing the steel chassis would lower the cost of manufactured homes and allow for more creative construction methods.Opponents of the change, however, including the Modular Home Builders Association, say eliminating the structural component would blur the line between federally regulated manufactured housing and state-inspected modular homes, potentially undermining consumer confidence.Apart from changing regulations around manufactured homes, Joseph Gromley, Ginnie Mae's current highest-level executive, said the government guarantor is committed to establishing a liquid capital market to prop up FHA's manufactured housing loans. "We would like to establish a viable, competitive secondary market for manufactured home loans on par with our single family platform," Gromley said. Limited liquidity options for manufactured home loans have forced lenders to hold chattel loans in their portfolios, increasing their risk and limiting their ability to serve more borrowers — which has reduced participation, said Ginnie Mae's chief operating officer.The FHA has two manufactured housing programs — Title I and Title II — both of which are underutilized.According to Matt Jones, deputy assistant for Single Family Housing at HUD, in the past three years the FHA originated 130,000 Title II  manufactured home loans, and practically none under its Title I program."FHA's Single Family program is committed to exploring how lenders originating manufactured homes can better use the March 2024 loan limit increases to finance more homes titled as personal property," said Jones. "Our leadership team is committed to reviewing our entire portfolio of product offerings with a focus on making it easier for borrowers to finance single family properties and manufactured homes, while also looking at how to simplify doing business with us," Jones added.In considering said updates, the government agency hopes the manufactured housing industry produces homes "in a quick, efficient and inexpensive manner," said HUD Secretary Scott Turner."We live in the right now generation," Turner added, highlighting the importance of swift industry action once changes are made.Prior to the manufactured housing roundtable, Secretary Turner highlighted the administration's focus on lowering housing costs, while increasing supply. Apart from manufactured housing, the head of HUD has also floated the idea of opening up federally owned land for new construction. Speaking at a summit in May, Turner said that through a partnership with the Department of the Interior, more than 500 million acres of federal land have been identified as underutilized and suitable for affordable housing development.

Early- and mid-stage mortgage delinquencies saw the biggest yearly increases among all credit products, a development Vantagescore deemed a "surprise", which "may be demonstrating early signs of borrower financial stress."The share of mortgages 30-to-59 days behind on payments jumped to 1.03% in May from 0.92% during the same month a year earlier. Among all types of accounts 60-to-89 days past due, mortgage holders' share grew to 0.32% from 0.26% in May 2024. The increase in both stages exceeded the pace seen in all other types of loans monitored by the credit-scoring agency in its monthly gauge.  By comparison, shares of early-stage delinquencies increased by just 0.08% for auto lending and 0.02% among personal loans compared to May 2024. Credit cards, though, posted an annual rate decrease of 0.05%.  The data signals consumer difficulty ahead if trends hold, the Vantagescore report said. "The rise in early and mid-stage delinquencies this month indicates potential financial strain among some consumers," said chief digital officer Susan Fahy in a press release.The increase in home loan delinquencies, in particular, came as a surprise because consumers typically prioritize mortgage debt over other credit payments, Vantagescore noted. "Mortgages may be an area to watch for increasing credit stress, particularly for traditionally less risky segments," Fahy also remarked. The average mortgage loan balance held by American consumers trended upward, as it has every month this year, coming in at $267,700 in May. The total increased 2.8% from $260,400 on a year-over-year basis, and 0.3% from April's $266,900. The mortgage balance-to-loan ratio stood at 79.9%. What's fueling consumer credit distress?Vantagescore's findings come as consumer worries about personal financial situations worsened this spring, according to recent research published by the Federal Reserve Bank of New York. The percentage of consumers who feared they may miss a payment rose at the same time their outlook regarding their personal financial situation "deteriorated sharply," Fed researchers reported. Labor worries, including both wages and the likelihood of finding work, contributed to a higher degree pessimism. Ongoing volatility in interest rates, with a majority of consumers expecting them to increase further, means homeowners are finding little relief in housing affordability as average new monthly payments consistently run above $2,000 since 2023, according to the Mortgage Bankers Association. Uncertainty surrounding tariff policies is also leading to consumer worries, with many, including some in the housing market, anticipating price hikes to come due to the impact of the import taxes. Credit quality is across the countryThe average credit score held steady at 702, as it has for all but one month over the past year. February saw a brief dip to 701, Vantagescore's credit gauge report said. New Hampshire borrowers posted the highest average of 727 last month, with Mississippi coming in at the bottom at 668. New credit accounts of any type opened in May accounted for 5.9% relative to the total volume of existing accounts, edging down from 6% a year ago but inching up from April's rate of 5.8%. For mortgages by themselves, new loans came in at an approximately 0.3% share. The number  has remained within the 0.2% to 0.3% range since November 2022. 

There’s been a lot of hubbub about crypto-backed mortgages in the past 24 hours.But the excitement (of crypto enthusiasts) might be a little overdone. It’s time to explain.When it comes down to it, all that happened was FHFA Director Bill Pulte ordered Fannie Mae and Freddie Mac to “consider cryptocurrency” in their risk assessments.And to allow so-called HODLers to qualify for a mortgage without actually having to sell their crypto holdings.In other words, it’s only a starting point in the discussion and it’s not really a crypto-backed mortgage.Current Mortgage Guidelines Require Virtual Currency to Be Sold First If Used for QualifyingFirst a quick background on the matter. As it stands now, Fannie Mae and Freddie Mac require mortgage loan applicants to sell any virtual currency they wish to use for qualifying purposes.For example, if you have $100,000 in bitcoin holdings, and want to use it for the down payment, closing costs, or for asset reserves, it must be sold into U.S. dollars in order to be counted.At that point, it’s considered “acceptable for the down payment, closing costs, and financial reserves,” per Fannie Mae guideline B3-4.1-04.Specifically, this means providing documented evidence that the virtual currency you’d like to pledge toward the mortgage has been exchanged into U.S. dollars and is then held in a U.S. or state regulated financial institution.In addition, the funds must be verified to be in U.S. dollars prior to the loan closing.Also, any large deposits must be documented to ensure the funds came from the borrower’s virtual currency account (and not somewhere else).This is similar to other assets used for qualifying purposes, though the rules are a bit harsher when it comes to crypto, ostensibly because it’s still kind of uncharted territory.Yes, it has become a lot more mainstream in the past couple years, which is probably why this new directive exists to begin with.But let’s consider the treatment of stocks and mutual funds.If you want to use your stock, bond, or mutual fund holdings to qualify for a mortgage, you can do so and “no documentation of the borrower’s actual receipt of funds realized from the sale or liquidation is required.”However, the value of the asset (as determined by B3-4.3-01) must be at least 20% more than the amount of funds needed for the down payment and/or the closing costs.So you need a sizable buffer in order to HODL your stocks and bonds.But if you don’t have that 20% buffer, evidence is required showing that the borrower sold or liquidated their position, and it must be documented.In this case, it’s basically the same as the guidelines for cryptocurrency.What Did Pulte Actually Say About Mortgages and Cryptocurrency?In his order, Pulte said, “Cryptocurrency is an emerging asset class that may offer an opportunity to build wealth outside of the stock and bond markets.”Adding that, “cryptocurrency has not typically been considered in the mortgage risk assessment process for mortgage loans delivered to the Enterprises, without converting the cryptocurrency to U.S. dollars prior to loan closing.”Finally, he states, “Each Enterprise is directed to consider only cryptocurrency assets that can be evidenced and stored on a U.S.-regulated centralized exchange subject to all applicable laws.”There’s also a note about considering “additional risk mitigants” such as adjustments for market volatility as cryptocurrency is newer and might require wider guardrails.How that might look is instead of a 20% buffer, you might need a 30% or 40% buffer to HODL and use the assets for mortgage qualifying purposes.The most important detail here is there isn’t some new Wild West mortgage underwriting being unveiled.It’s actually pretty boring and everything will need to be documented, similar to stocks, bonds, etc.This isn’t a return to 2006 underwriting standards, despite the many memes that have popped up overnight making it appear that way.The joke du jour is you can now use Fartcoin holdings to qualify for a mortgage. I get it, it’s funny, no problem there.But it’s important to clarify that any crypto must currently be liquidated to U.S. dollars, at which point it’s a very real asset, even if it was previously Fartcoin. That doesn’t really matter, does it?And if this directive does eventually amount to changes, you’ll likely still need a big buffer to use any crypto for down payment, closing costs, or reserves.So a lot of checks and balances will remain in place either way. Importantly, Pulte’s order says any changes should “facilitate sustainable homeownership to creditworthy borrowers.”Read on: Can you use bitcoin to pay the mortgage? 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)

Investor reaction to events of the past eight days has contributed to mortgage rates moving below 6.8% for the first time since the start of May, Freddie Mac said.The 30-year fixed-rate mortgage was at 6.77% as of June 26, compared with 6.81% eight days prior and 6.86% for the same week in 2024, the Freddie Mac Primary Mortgage Market Survey found. The last time the 30-year FRM was this low was May 8, when it was at 6.76%.The 15-year FRM fell 7 basis points from the prior week's survey to 5.89% from 5.96%. Compared with one year ago, it is 27 basis points lower from 6.16%.Why this week's rate movement help borrowers"Borrowers should find comfort in the stability of mortgage rates, which have only fluctuated within a narrow 15-basis point range since mid-April," said Sam Khater, Freddie Mac chief economist, in a press release. "Although recent data show that home sales remain low, the resulting available inventory provides homebuyers with a wider range of options to consider when entering the market."On June 18, the Federal Open Market Committee acted as expected and did not reduce short-term rates. But four days later, Pres. Trump initiated an attack on Iran's nuclear facilities, creating uncertainty in the financial markets.While the 10-year Treasury yield fell 2 basis points on June 20, the first trading day after the FOMC meeting, it dropped 5 basis points on June 23 to 4.32%. At 11 a.m. on June 26, it was 4 basis points lower at 4.28%.Typical patterns would find a reduction in the 10-year yield as a result of a "flight to quality" by investors looking to avoid financial and political upheaval.What other rate trackers are reportingEven with this week's drop in the 30-year FRM, Zillow Senior Economist Kara Ng noted it has remained in the same 6% to 7% area over the past year.Zillow's rate tracker as of 11 a.m. Thursday morning was at 6.81% for the 30-year FRM, down by 1 basis point from Wednesday. Last week, the 30-year averaged 6.91%."Rates remain stuck in this range, reflecting competing economic signals: signs of a gradually cooling economy argue for lower rates, while stubborn inflation supports upward pressure," Ng said in a Wednesday evening statement. "This tension was evident in the Federal Reserve's latest Summary of Economic Projections, which downgraded forecasts for [gross domestic product] growth and increased projections for both unemployment and inflation.Zillow's forecast is for mortgage rates to end the year near the mid-6% range.Lender Price data posted on the National Mortgage News website put the 30-year FRM at 6.837% at 11 a.m. Thursday. This is down from 6.915% midday on June 18.Similarly, Optimal Blue's product and pricing engine tracker had the conforming 30-year FRM at 6.724% for June 25, compared with 6.808% on June 18.The latest Mortgage Bankers Association Weekly Application Survey found the 30-year FRM was up 4 basis points to 6.88% as of June 20."Mortgage demand was flat last week as economic, financial, and geopolitical uncertainty have kept mortgage rates volatile and in the same narrow range of around 6.8%," said Bob Broeksmit, MBA's president and CEO in a Thursday morning comment on the results. "While MBA's new forecast calls for rates to decline only slightly to 6.7% by the end of 2025, annual mortgage originations volume is expected to rise 15% to just over $2 trillion."How a possible July Fed rate cut would impact mortgagesA pair of Federal Reserve governors, Michelle Bowman and Christopher Waller, have indicated support for a July FOMC rate cut.However, Melissa Cohn, regional vice president of William Raveis Mortgage, said those comments could be jumping the gun as it is too early to see how Pres. Trump tariffs could impact inflation.Still, "The bond market has liked Bowman's and Waller's comments, and has rallied in the midst of everything going on," Cohn said. "Oil prices are way down, which helps the inflation outlook. A rate cut could cause the bond market to rally until we get the next piece of economic data or geopolitical unrest."

The Federal Housing Administration announced plans to introduce an across-the-board multifamily mortgage insurance premium that would eliminate incentives to adopt energy-efficiency standards. The Department of Housing and Urban Development proposed to level premiums to 25 basis points for all loans originated in multifamily programs administered by the FHA, a first step in eliminating what it called an "ideologically motivated" initiative. FHA operates as a division governed by HUD. "By leveling MIPs and cutting cost-inflating regulations, we're unlocking competitive financing and driving down costs across the board to spur development," said HUD Secretary Scott Turner in a press release.  First rolled out in mid 2016, HUD's green mortgage insurance incentives reduced multifamily premiums to 25 basis points for developers voluntarily meeting energy-efficiency benchmarks. Without the reduction, building owners would be charged MIPs typically between 45 and 70 basis points. For loans already holding the lower green-energy premium, annual reporting to show compliance to the benchmark will also no longer be required. "For too long, access to housing has been tied to obsolete, ideological mandates. Under President Trump's leadership, Americans are no longer forced to subsidize misguided and inefficient green energy crusades at the expense of real housing solutions," Turner remarked.What multifamily and energy leaders had to sayHUD's proposal will remain open for comment for 30 days following its announcement, but multifamily leaders initially reacted favorably to the news. "Leveling upfront and annual mortgage insurance premiums will help increase rental housing production and improve affordability for renters across the country," said Mortgage Bankers Association CEO and President Bob Broeksmit in a press release. "We commend HUD Secretary Scott Turner and his team for being responsive to our recommendations," he added.MBA's counterparts at the National Apartment Association similarly lauded HUD leadership for its decision. "The administration's move is an important step toward our shared goals of improving housing affordability, increasing much-needed supply and lowering onerous regulatory requirements," said Nicole Upano, NAA's assistant vice president, housing policy and regulatory affairs, in a statement.Putting forward a different take was the Institute for Market Transformation, a national nonprofit supporting efforts for clean-energy building construction, who said HUD's decision would worsen affordability and raise costs. "FHA's green MIPs have successfully rewarded building owners and developers across the country for investing in energy efficient housing, saving energy and cutting utility bills. These investments yield excellent returns, but without the green MIPs, many owners won't even think to invest," noted Cliff Majersik, senior advisor at the institute. Other Trump administration actions on environmental policyHUD's latest update is another example of the broad focus on deregulation coming from President Trump in his second term that steers policy away from what might be considered "woke" environmental, social and governance initiatives. The FHA's pivot on insurance premiums comes after it pushed out the effective dates for builders to demonstrate compliance with clean-energy standards on new constructions in March. HUD delayed the proof-of-compliance date by 18 months for multifamily and two years on single-family homes, with enforcement now not scheduled to begin until 2027 at the earliest. The new measures to qualify for FHA, as well as U.S. Department of Agriculture, mortgage lending programs were announced during the Biden administration. A notable exception to the antiwoke trend, though, also came out of HUD recently, as it defended the same policy, which received backing from groups representing heating and air conditioning industries. In a legal case lodged by another trade association seeking its elimination and supported by several state attorneys general, HUD claimed arguments made by the National Association of Home Builders undermined government analysis and relied on cherry-picked data.Despite also postponing the rule's effective compliance date, the departments said it would not lead to the detrimental outcomes NAHB claimed. Both sides in the suit are scheduled to debate motions for dismissal and summary judgement in July.  

Guild Mortgage finalizing a deal to go private via a $1.3 billion acquisition by Bayview Asset Management piqued the attention of some recruiters.Inquiries to Guild's originator talent are coming in, the firm's originators and industry stakeholders claim."I can confirm the phone is ringing off the hook with recruiters," Geoff Black, originator at Guild, wrote in a LinkedIn post discussing the matter. "The news broke and it was like a trigger lead. A little off-putting to be honest."Another Guild branch manager also noted that "calls have ramped up," which he called "annoying," but "a part of the business."San Diego-based Guild Mortgage is a purchase-heavy shop, which may be why their employees are in high demand. About 88% of the firm's volume came from purchases in the first quarter of 2025, much higher than the 71% average for lenders, Guild's earnings report shows.The mortgage lender, which was founded in 1960, has over 2,700 sponsored loan officers, per the Nationwide Multistate Licensing System. Prior to opting to sell, Guild Mortgage was pushing to expand its market share nationwide, by organically hiring employees and acquiring five mortgage lenders since 2022.Why some mortgage recruiters see opportunityOne recruiter who is currently moving a group of Guild originators to a competitor noted the firm made a few decisions following the announcement that it would be acquired that could affect the pace at which LOs leave the company. The recruiter pointed out that Guild selectively offered stay-on-bonuses to a very specific number of originators and not all. It is a practice implemented often by other firms, but one that can be costly, they added."As a retention strategy, don't give selective bonuses. People don't want to be picked over their friends," they said."That's a tragic mistake."Guild has also allegedly refused to improve pricing, the recruiter claims.Both of those things have created a promising landscape for recruiters to exploit anxiety about the sale. Though recruiting calls have poured in, the volume of outreach has varied, according to a number of Guild employees contacted.Doug Wall, a Guild originator, noted that the pace of recruiter outreach "has been overblown for sure." "People are starting to more fully understand the big upside to this acquisition, and therefore understand that there is no real reason for any loan officer to leave Guild because of it," Wall added.Regarding the stay-on-bonus, Greg Sher, managing director at NFM Lending, mentioned in a recent post that one of the terms that was shared with him by a Guild employee "called for a retention in the neighborhood of 40 basis points on the last 12 months production.""A much larger percentage to be paid 6 months after the deal closed, plus a three year clawback. I'm told terms differ, depending on production levels (naturally)," Sher's post said.Guild Mortgage did not immediately respond to a request for comment Tuesday.Originators at Guild taking a wait-and-see approachOverall, Guild employees have expressed a positive outlook on the pending acquisition, expected to close at the end of the fourth quarter.Dede Stoner, a Montana-based branch manager, noted the merger will give Guild "access [to] more products and more capital, creating the opportunity to serve more customers." "Most importantly, Guild will still be Guild," she said in a written statement. "We will operate as an independent company strategically aligned with our new sister company Lakeview. I have full trust in Guild's decisions and being able to help clients with their home loans in the same capacity or better."Sources interviewed say Guild decided to merge with Bayview not out of financial strife, but because it sees potential to grow and operate without the headwinds of being a publicly traded company.Guild will retain independent operations in the acquisition but also partner closely with Bayview affiliate Lakeview Loan Servicing, according to the two companies' agreement.Lakeview holds 2.8 million loans in its servicing portfolio that Guild will target to generate additional origination opportunities."I give a lot of credit to Terry for making smart conservative moves," said Black. "The current implication is existing LO's will eventually have access to leads generated from the gigantic servicing base from Bayview. What LO doesn't want to hear that!""At the same time, the more 'company generated' leads enter the picture, the more the LO can get diminished - lower comp. Less freedom. Who knows how it will shake out," the LO added.The proposed transaction could be part of a broader trend of growing integration between lenders and servicers, as exemplified by Rocket Mortgage's plans to buy servicing giant Mr. Cooper.

New York City mayoral candidate Zohran Mamdani's primary win has banks with high exposures to rent-regulated real estate on edge.Mamdani, who has vowed to freeze rents on rent-stabilized apartments if he's elected mayor, won over New Yorkers during the Democratic primary as their city's housing market grows more expensive and competitive.The primary results won't be official until a ranked-choice runoff on July 1, but Mamdani is likely to face Republican candidate Curtis Sliwa and current Mayor Eric Adams, who is running as an independent, in November's general election. Sliwa lost to Adams, who was the Democratic candidate, in the last election.Lenders that have already been making a beeline out of the business may see the prospect of a Mamdani mayorship as motivation to accelerate those efforts, said Piper Sandler analyst Mark Fitzgibbon.The 2019 Law That Triggered the RetreatBanks with major loan concentrations in the New York rent-regulated market have been trying to shrink those portfolios since 2019, when the state passed a law, designed to protect tenants, that limited their revenue streams by capping rent increases and eliminating eviction plans. Economic factors, such as the rapid rise of interest rates and inflation, amplified the pain. Commercial borrowers may struggle to afford loans that mature in a rate environment twice as high as when they were made. A total rent freeze would be "another kick in the shins to the industry," Fitzgibbon said.Still, rent-regulated real estate in New York has historically been a safe asset class, with minimal losses and conservative underwriting, he said."Could it result in some delinquencies? I think so," Fitzgibbon said. "But I think, more significantly, it probably accelerates the desire by a lot of these banks to shrink their portfolios even more on the multifamily space, which is bad for the city."Last year, Flagstar Financial was the poster child for how CRE exposure could hit a bank's stability. After a tumultuous first half of the year, the bank's outsized book of rent-regulated multifamily loans — which makes up more than one-fifth of the company's $67 billion loan portfolio — came under the microscope. In the last two weeks, as polling showed a stronger outlook for Mamdani, Flagstar's stock has dropped some 10%. On Wednesday, the $97 billion-asset bank's share price fell nearly 7% during parts of the day. But Peter Winter, an analyst at D.A. Davidson, wrote in a note that the selloff was "overdone," due to Flagstar's strong capital position.Flagstar did not respond to a request for comment.CEO Joseph Otting, who was brought on last year to stop the bank's spiral and assess its credit situation, said earlier this year that Flagstar's rent-regulated portfolio has held up well. "We're not seeing the stress that we personally anticipated to see in that portfolio when we actually went through loan by loan and then kind of built up what we thought the risk was in the portfolio," Otting said.There have still been some cracks. In May, New York real estate magnate Joel Wiener, who specializes in rent-regulated properties, put thousands of properties into bankruptcy after Flagstar — the primary lender — began foreclosure proceedings, according to court documents. The portfolio was shackled by about $564 million in mortgage debt with Flagstar.In the filing, Ephraim Diamond, Wiener's chief restructuring officer for the properties, said while rental income cash flows had previously covered the debt service, those revenues became insufficient due to interest rates that "sky-rocketed," along with the 2019 law enactment and rising inflation.What Comes Next for Banks in NYC?Even so, some of the elements putting pressure on the market could be on the upswing, Fitzgibbon said, especially since any potential Mamdani policy wouldn't take effect until at least 2026. If the Federal Reserve reduces interest rates this year, refinancing loans made during the low-rate era could be less drastic. Additionally, if inflation evens out, building owners could get a better handle on their costs. There are signs that the industry has been adjusting to the 2019 legislation. According to a 2025 report from the New York City Rent Guidelines Board, net operating income growth for buildings containing rent-stabilized units grew 8% across the city and by 18.6% in core Manhattan. That bump marked the first increase in four years.Otting said net operating income across Flagstar properties increased 6% in 2023.The proportion of distressed properties also declined in 2023 for the first time since 2016, per the report.Otting said earlier this year that the cash flows of Flagstar's borrowers seemed to be improving, and building owners were willing to put in more money to keep their loans current. He added that the shocking rise in expenses from a few years ago — as much as 30% to 40% increases for insurance, maintenance and labor costs — had started to stabilize. Flushing Financial, a $9 billion-asset bank based on Long Island, has also made its business in lending backed by rent-regulated real estate, which makes up 22% of its total loan portfolio. The bank has said in earnings presentations that borrowers have more than 50% equity in these properties, which also show minimal signs of eroding credit quality.Flushing Financial declined to comment.Still, a lot could happen between now and November. Former Gov. Andrew Cuomo lost to Mamdani in the Democratic primary but is rumored to be considering running as an independent in the general election.

A rally in short-dated Treasuries gathered pace Thursday after a raft of US economic data on balance favored wagers on as many as three Federal Reserve interest-rate cuts this year.Yields across maturities declined, with those on two-year notes falling five basis points and most reaching the lowest level in more than a month. The rally lowered the expected yield for an auction of seven-year notes later in the session by about four basis points.READ MORE: Homeownership stalls after a decade of gainsAs short-maturity yields more closely tied to the outlook for Fed policy declined more than longer-term ones, the widely-watched spread between the five- and 30-year points increased to more than 101 basis points for the first time since 2021. A steepening yield curve is generally associated with expectations for Fed rate cuts. "Overall, the data was mixed enough that we suspect the modest bid in the front-end of the market will persist," wrote Ian Lyngen, head of US rates strategy at BMO Capital markets. "The biggest surprise was personal consumption."The growth rate for personal spending during the first quarter — part of a revision to US first-quarter gross domestic product — was unexpectedly revised to 0.5% from 1.2%. While other economic data points released at the same time showed unexpected strength, traders continued to wager that the Fed will begin to cut rates in September, with two cuts fully priced in by year-end. A third quarter-point cut is about half priced in.The gains in Treasuries added to a strong run for the market. Two-year yields are down about 20 basis points over the past week near 3.73%, a seven-week low. The auction of seven-year notes at 1 p.m. New York time saw its expected yield decline nearly to 4%. It briefly exceeded 4.20% last week.Short-term yields were already lower before the economic data releases following a report in the Wall Street Journal suggesting President Donald Trump is considering naming a successor to Fed chief Jerome Powell as soon as September or October. Investors and analysts reckon Powell's replacement will grant the president's demands that the Fed cut interest rates right away causing traders to price in faster and deeper cuts beginning around mid-2026, when Powell's term ends.Wagers on lower interest rates weighed on the dollar, which weakened against all of its Group-of-10 peers. The Bloomberg's Dollar Spot Index slumped 0.5% to the lowest level in more than three years. Michael Pfister, an FX analyst at Commerzbank AG, says the euro could climb to $1.18 in the coming days if policymakers continue to price in earlier rate cuts.Potential contenders to succeed Powell include former Fed Governor Kevin Warsh, current Fed Governor Christopher Waller, National Economic Council Director Kevin Hassett, former World Bank President David Malpass and US Treasury Secretary Scott Bessent, Bloomberg News has previously reported.Last week, US rates traders amassed a record futures bet that whomever Trump appoints will lead the central bank to cut interest rates almost immediately.In a Bloomberg Television interview, BlackRock Inc. portfolio manager Russell Brownback said the market would push back if the Fed's independence began to come into question. "The markets would protest any kind of degradation of that independence very quickly," he said. "I believe in the sanctity of the institution."

Andrew Harrer/Bloomberg The U.S. economy slowed faster than previously realized, according to the latest revision to the government's gross domestic product estimate. Overall, the GDP's rate of contraction was lowered by 30 basis points, from an annualized rate of -0.2% to -0.5%, according to the Bureau of Economic Analysis's latest report, released Thursday. This is the final revision of first-quarter GDP. The initial reading showed the economy shrinking 0.3%.Two consecutive quarters showing contraction is the textbook definition of a recession, although policymakers have cautioned against reading too much into the first-quarter reading, pointing to the elevated import factor as a one-time shock.Imports, which count as a negative in GDP calculations, were still the driving force behind the output decline in the first quarter, increasing nearly 38% over the previous quarter. Government officials and economists have attributed this uptick to businesses pulling forward international orders to avoid higher future costs related to impending tariff implementations. During his post-Federal Open Market Committee meeting comments last week, Federal Reserve Chair Jerome Powell said the surge in imports has "complicated GDP measurement." He, instead, pointed to a different measure of economic activity: private domestic final purchases, which excludes both net exports and government spending. He said that index continued to grow at a "solid" 2.5% pace last quarter.Several other Fed officials have also gravitated toward the PDFP measure of economic activity in recent months as a steadier read of output. Still, the latest GDP report portends a potential more sustainable decline in economic activity, given the pullback on discretionary spending, including recreation and transportation services. Powell had noted that the PDFP reading also reflected a decline in consumer spending.This trend also matches up with surveys that show weakening economic confidence and higher inflation expectations in the year ahead."It remains to be seen how these developments might affect future spending," Powell said last week.The slowdown in economic activity has not yet resulted in layoffs or a significant softening of the labor market, but some officials are warning that such a shift could be on the horizon. In a speech this week, Fed Vice Chair for Supervision Michelle Bowman highlighted spending pullbacks as evidence that "downside risks to our employment mandate could soon become more salient."Bowman and Gov. Christopher Waller are the only two FOMC members who have said they would favor lowering interest rates at next month's meeting, provided inflation remains near the Fed's 2% target."If upcoming data show inflation continuing to evolve favorably, with upward pressures remaining limited to goods prices, or if we see signs that softer spending is spilling over into weaker labor market conditions, such developments should be addressed in our policy discussions and reflected in our deliberations," Bowman said. "Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market."Other Fed officials are content waiting for more data to ensure they have a firm grip on the impact of higher import taxes and the overall trajectory of the economy."There is still considerable uncertainty about tariff policies and their effects," Fed Gov. Michael Barr said this week. "Monetary policy is well positioned to allow us to wait and see how economic conditions unfold."