“Dr. Oz says rubbing coffee grounds on your naked body will get rid of cellulite. Apparently, you can't do this in the downtown Austin Starbucks.” Here in Austin at the MBA’s IMB conference, some of the informal talk is about the reasons why U.S. home sales in 2024 fell to their lowest level in nearly 30 years. (No homes to buy? Are insurance and property taxes too high? Everyone who wants a house already has one?) Donald Trump has ordered "emergency relief" on housing affordability, and plans to attack regulatory costs: “Hardworking families today are overwhelmed by the cost of fuel, food, housing, automobiles, medical care, utilities, and insurance. Moreover, many Americans are unable to purchase homes due to historically high prices, in part due to regulatory requirements that alone account for 25 percent of the cost of constructing a new home according to recent analysis.” I am not sure how much of that 25% is addressable at the Federal level and how much is local building / environmental codes. That said, it is encouraging that the government is taking a look at the issue. (Today’s podcast can be found here and this week’s is sponsored by Figure. 50 percent of the top IMB’s use them, and if you haven’t examined your HELOC/HELOAN strategy recently, it’s time to get on it. Hear an interview with CoreLogic’s Greg Gallagher on the short and long-term implications of the Los Angeles fires in regard to affordability and insurance.)

Broker and Lender Products, Programs, and Software

Servicers: what if you could predict why your customers are calling before they say a word? The ICE Customer Service solution offers call prediction models that provide the top three reasons a customer may be reaching out, helping your support staff tailor interactions to resolve calls faster and provide a better customer experience. And most importantly, these models are built with privacy and transparency in mind. ICE safeguards proprietary data by using models that are accurate, private, and explainable… No black-box algorithms involved. Plus, constant feedback loops increase the models’ accuracy over time and help them adapt to your unique business needs. Read ICE’s new blog to learn about how they’re delivering the future of customer service with tools that protect data and help support agents resolve more customer inquiries in just one call.

The Future of Funding: OptiFunder Connects the Dots Across the Warehouse Ecosystem! OptiFunder has redefined the warehouse funding process by seamlessly connecting all participants in the ecosystem, from originators and warehouse lenders to major LOS systems, eVaults, fraud prevention tools, investors, custodians, and more. Recognized as the fastest-growing private mortgage tech company, OptiFunder surpassed one million loans funded through its WMS, secured significant partner integrations, including FraudGuard and FundingShield, and launched Greyhound, designed specifically for warehouse lenders to optimize their lending operations. By automating critical funding through repayment and loan sale activities and connecting all key players, OptiFunder empowers mortgage originators and warehouse lenders to work better together, eliminating inefficiencies and minimizing risk. These advancements reflect OptiFunder's mission to drive a fully connected funding lifecycle for originators and warehouse lenders, making the mortgage process smarter and more streamlined than ever before. Meet the OptiFunder team at the IMB Conference in Austin this week or visit the website to learn more.

Unleash Your Potential with the Top Dog Program! Introducing Kind Lending’s Top Dog Program, the ultimate way to elevate your broker game! Designed to celebrate and reward our top partners, this program offers clear pathways to success with exciting rewards at every level. Advance through the ranks (Good Dog, Big Dog, and Alpha Dog) and unlock premium perks like EPO waivers, private event strategies, and exclusive access to pilot programs. It’s more than recognition… It’s about growth, innovation, and building stronger partnerships. Whether you’re a new Puppy just starting out or ready to claim Alpha Dog status, the Top Dog Program is your opportunity to thrive and lead the pack. Don’t wait: Join the program that’s reshaping broker success. Visit here today and start your journey to the top! Kind Lending. Where brokers lead, and success follows.

In today’s competitive mortgage marketplace, customizing workflows and borrower experience is crucial to differentiation. With the industry-first configurability of Maxwell Point of Sale, lenders can define workflows for any mortgage product, while configuring triggers and business rules to align the borrower experience to operational processes. Maxwell Point of Sale also features more than 60 third-party integrations, allowing lending teams to seamlessly connect with other vital pieces of their workflow, from credit and verifications to pricing and disclosures. Maxwell Point of Sale also sees a 60% increase in pull-through from Rate Lock to Close versus its top competitors. Want to learn more? Let us know and we’ll show you what Maxwell can do for you and your borrowers.

USDA, VA, and FHA Product Updates

President Trump had a flurry of activity last week, some of it dealing with mortgages and affordability. The Mortgage Bankers Association said the efforts should include eliminating FHA’s life-of-loan premium requirement and a reduction in the mortgage insurance premium charged by FHA. We’ll see.

FHA published Mortgagee Letter ML 2025-05 providing updated and revised guidance for nonprofit organizations seeking approval to participate in FHA’s nonprofit programs. The updates in this ML are designed to increase nonprofit organizations’ participation in FHA’s nonprofit programs by expanding the relevant experience requirements and simplifying the application and recertification requirements for nonprofits seeking approval and placement on the FHA Nonprofit Roster. Nonprofits must be approved and placed on the Roster to participate in FHA nonprofit programs that leverage their unique expertise to offer affordable homeownership opportunities for low- and moderate-income individuals and families.

USDA Rural Development Final Rule, effective March 4, 2025, implements changes to 7 CFR 3550, which makes existing manufactured homes that meet specific criteria, eligible for financing. In addition, the Final Rule reduces regulatory burdens related to manufactured housing requirements and provides flexibilities for energy efficient manufactured and modular homes located in land lease communities operating on a non-profit basis.

FHA Mortgagee Letter (ML) 2025-04 takes into consideration stakeholder feedback received on the draft ML announced in FHA INFO 2024-79, dated November 20, 2024. The provisions announced in this ML create greater flexibilities for borrowers using income received from individuals who rent space in borrowers’ homes referred to as boarders in Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1) to qualify for an FHA-insured mortgage. These new flexibilities include revisions to the required underwriting standards for documenting and calculating this type of income.

Per FHA’s published Title I Letter (TIL) TIL-489, FHA adopted the commonly used industry standard URLA, simplifying its Title I loan application process. This enables lenders to use existing origination system technology to collect borrower data, which eliminates the financial burden of acquiring multiple software licenses or manually completing a Title I program-specific application form. FHA believes these changes will encourage greater lender participation in its Title I program.

FHA published updates to the Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1). This update includes minor policy changes, technical edits, and incorporates previously published policy. Stakeholders are encouraged to thoroughly review and familiarize themselves with the revisions in Handbook 4000.1. See the Handbook 4000.1 Transmittal for a summary, as updates, changes, effective dates, and other pertinent information is reflected and incorporated. For comparison purposes, a separate redline version has also been posted on the Handbook 4000.1 Information web page. The online version of Handbook 4000.1 is being updated and will be available soon.

Pennymac Announcement 25-08 provides information on USDA’s December announcement regarding a reduction to the seasoning period and updated housing payment requirements for refinance transactions required for loan applications dated on or after 1/23/25.

An update to Government LLPAs effective for all Best-Efforts Commitments taken on or after Thursday, January 16, 2025 was described in Pennymac Announcement 25-06.

Pennymac Announcement 2025-04: VA Full Doc and VA IRRRL Program updates.

Pennymac Announcement 2025-05 updated Government LLPAs effective for all Best-Efforts Commitments taken on or after Tuesday, January 14, 2025.

Updates to Government LLPAs, effective for all Best Efforts Commitments taken on or after Wednesday, January 22, 2025 was announced in Pennymac 25-09.

Capital Markets

Last week was relatively light on economic data. Existing home sales finished the year with positive momentum and were up 2.2 percent in December with gains seen across many property types. On an annual basis, existing home sales were up 9.3 percent, however they remain 20 percent below the average pace in 2019. The market continues to face multiple challenges including elevated mortgage rates and limited supply which is keeping home prices from easing in many markets. Affordability remains a key challenge facing many potential homebuyers.

Elsewhere, initial jobless claims rose to a six-week high as fallout from the Southern California wildfires began to show in the data. The labor market has been resilient as claims continue to hover near historic lows, however continuing claims have recently begun to increase, suggesting that unemployed workers are having a difficult time landing their next role. The health of the labor market is a key area Fed officials monitor and will influence future monetary policy decisions. In the meantime, no changes are expected following the Federal Open Market Committee’s (FOMC’s) meeting this week.

This week brings the end of the month as well as the latest decision from the FOMC on Wednesday afternoon, followed by Chair Powell’s press conference. The Fed is expected to hold rates steady at 4.25 to 4.50 percent, though the markets will be looking for clues regarding future rate moves as more executive orders are announced by the Trump administration. In addition to the Fed, Sweden’s Riksbank and the Bank of Canada have meetings on Wednesday, while the ECB is on Thursday.

Notable U.S. data includes housing, durable goods orders, the first look at Q4 GDP, and PCE. In addition to the usual bill auctions, Treasury will auction month-end supply today and tomorrow. Today’s calendar is underway with the Chicago Fed National Activity Index for December. December new home sales are next and will be followed by Dallas Fed Texas manufacturing for January, and Treasury auctions that will be headlined by $69 billion 2-year notes and $70 billion 5-year notes. We begin the week with Agency MBS prices better than Friday’s close by .250-.375, the 2-year yielding 4.20, and the 10-year yielding 4.54 after closing last week at 4.63 percent.