Here in Miami, and everywhere, lenders and real estate professionals are acutely aware of supply and demand impacting prices, as does anyone who buys and eats food. The U.S. Federal Reserve can only do so much inflation, and whether or not the Federal government admits it, skyrocketing egg prices are largely the result of a widespread bird flu outbreak that forced a mass culling of egg-laying birds. (Avian influenza is suspected in the decline of peregrine falcons: falcons will hunt other birds; they may be more vulnerable than other species to the virus. Nests are going empty although here is a cool webcam of a falcon nest… hopefully it’s there when you look. If not, try this one.) Returning to economics, now President Trump wants to spend $1 billion of taxpayer money to bring down the price of eggs which are now about $5 a dozen if you can find them. Critics are calling “foul” and don’t want more government interference in the private markets. Proponents say ordinary egg buyers need help. The government will be front and center when it comes to Freddie and Fannie: The private label market isn’t where the GSEs are, on a variety of levels, although it is expected to expand. Some people want to privatize them as soon as possible for personal gain. Others want to keep them in conservatorship indefinitely. Input in state, regional, and the national MBA is important. If privatized, will their focus really stay on affordable housing, first time home buyers, and diverse markets? (Today’s podcast can be found here and this week’s is sponsored by Sagent. Sagent brings the modern experience customers now expect from loan originations to loan servicing, where lifetime customer relationships are managed and grown. Hear an interview with Preferred Mortgage Services' Dan Thompson and Rhonda Gallion on how Narrow AI is solving the billion-dollar cash flow shortfall for the mortgage ecosystem.)

Lender and Broker Products and Services

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Did you know in January, national house price growth slipped to the slowest pace since June 2023 amid elevated mortgage rates and rising inventories? It's true! In case you missed it, First American Data & Analytics recently released its January Home Price Index (HPI) report where you can receive the most current insights into home price changes at the national, state, and metropolitan CBSA levels. In the report, First American Chief Economist Mark Fleming says, “Elevated mortgage rates reduce house-buying power for potential buyers, holding back demand. At the same time, inventory levels are increasing as some potential sellers list their homes for sale after coming to terms with ‘higher-for-longer’ rates and more new-home completions hit the market, further dampening price growth." Download a full copy of their report to learn more valuable insights.

CFPB in the News

No lenders want to deal with 50 mini CFPBs across the nation. Want some intelligent thought about why it may not necessarily be the best thing to make Congress, legislatively, to do away with the CFPB? Here you go.

For his part, Jonathan McKernan, President Trump’s nominee to head the CFPB, pledged that the agency would “implement and enforce the federal consumer financial laws and perform each of its other statutorily assigned functions.” So yes, if you’re praying, for some reason, that it goes away entirely, whether you like it or not, the smart money is on the CFPB continuing in some form.

Residential lenders and legal eagles took note yesterday that the Consumer Financial Protection Bureau’s new potential leadership dismissed at least four enforcement lawsuits undertaken by the previous administration’s director. In legal filings, the CFPB issued a notice of voluntary dismissal for cases involving Capital One, Berkshire Hathaway-owned Vanderbilt Mortgage & Finance, a Rocket Cos. unit called Rocket Homes Real Estate, and a loan servicer named Pennsylvania Higher Education Assistance Agency.

“The Plaintiff, the Consumer Financial Protection Bureau, dismisses with prejudice this action against all Defendants,” the agency said in the Capital One case. It used similar language in the other cases.

Recall that Elon Musk’s Department of Government Efficiency, among other things, has forced the CFPB to shut down its Washington headquarters, fired about 200 employees, and told those who remain to stop nearly all work, per CNBC.

For those of us who aren’t lawyers, in legal terms, "with prejudice" means that a case is dismissed permanently and cannot be brought back to court. This type of dismissal is considered a final judgment, preventing any future claims on the same issue. As attorney Brian Levy points out, “Contrast this case being dropped (with prejudice) to the Eric Adams case dropped (without prejudice). The CFPB can’t hold this over the defendants and bring it back to life at a later date (no double jeopardy).”

If Data Drives the Economy, Then Let’s Think About the Data

The economy of the United States is built on jobs and housing. With the turmoil in Washington comes the question about how firings and layoffs will impact economic statistics like weekly jobless claims or the unemployment rate. Both are watched by bond investors and help determine where they think the economy, and therefore interest rates, are going.

The Trump administration's push to shrink the federal workforce has involved a hiring freeze, deferred resignations, and layoffs, though the overall impact on the labor market is expected to be modest. Federal employment accounts for just 1.5 percent of total U.S. payrolls, and excluding the Post Office, it has contributed only 4,000 of the 168,000 net jobs added over the past year.

Wells Fargo’s economics team believes that the hiring freeze, while limiting new hires, includes exemptions that should cushion job losses. Additionally, about 75,000 employees opted for a deferred resignation program, keeping them on payroll until September 2025, while layoffs (mostly of probationary workers) are estimated to number between 10,000 and 100,000. In the coming months, federal employment is projected to decline by 25,000 to 50,000, with private-sector job losses from federal contractors being harder to quantify but likely minimal.

The February jobs report may show a small drop in federal employment, with larger declines expected in March and April. While these workforce reductions could put slight upward pressure on the unemployment rate, legal challenges and potential policy reversals create uncertainty, making the overall effect on job growth relatively mild.

Capital Markets

Bond prices up, rates down. Bond prices down, rates up. Bond prices of most maturities retreated on Thursday, making for their first lower finish in seven trading days. There was almost no reaction to the day's economic data, which featured a larger-than-expected increase in jobless claims (to 242k from 220k), an unrevised second reading of Q4 GDP (2.3 percent), strong Durable Orders growth in January (3.1 percent when expectations were for 1.8 percent) despite orders ex-transportation coming in flat (missing 0.4 percent estimates), and a larger-than-expected decrease in Pending Home Sales for January (-4.6 percent versus -0.8 percent expectations).

Economic growth has been driven largely by consumer spending and government spending, but with targeted efforts by the Trump administration to cut government spending and to implement tariffs, there will be concerns about economic deceleration due to less of a contribution from consumer and government spending. Those concerns have helped to push rates lower, and mortgage rates again hit year-to-date lows in this week’s Primary Mortgage Market Survey from Freddie Mac. The 30-year rate fell for the sixth straight week, this week dropping 9-basis points to 6.76 percent and the 15-year rate slipping 10-basis points to 5.94 percent. From a year ago, the respective rates are 18-basis points and 32-basis points lower. (For the most timely and accurate rates, please visit https://www.mortgagenewsdaily.com/mortgage-rates) 

Today brings the Personal Income & Consumption (+.9 percent and -.2 percent, respectively) report for January, which includes the Fed's preferred inflation gauge, the Core PCE Price Index. The core PCE price index was +2.5 percent year over year, +.3 percent month over month, as expected. Other releases today include the goods trade deficit ($153.3 billion), retail and wholesale inventories, Chicago PMI for February, and remarks from Chicago Fed President Goolsbee. After the numbers we begin Friday with Agency MBS prices little changed from Thursday night and the 10-year yielding 4.27 after closing yesterday at 4.29 percent. The 2-year yield, of interest to lenders offering an adjustable rate mortgage, is down to 4.06, but still the spread between it and the 10-year T-note is 20 basis points,