It’s been three years since Credit Plus re-branded as Xactus, and now another name brand in the mortgage world has a new name. Corelogic has become Cotality, leading to plenty of puns like, “If First American ever considers rebranding, let's hope they don't use the same agency as Corelogic, as then we'd have... Fatality.” In other current events, I received, “Rob, thank you for the advice in Saturday’s Commentary about logging on to www.ssa.gov and printing out a hardcopy of my SSA earnings history and the latest seven Cost of Living Adjustment letters ahead of DOGE rewriting all the code. We found an error that would have cost me thousands of dollars.” In other good news, The Office of the Comptroller of the Currency (OCC) reported on the performance of first-lien mortgages in the federal banking system during the fourth quarter of 2024. The OCC Mortgage Metrics Report, Fourth Quarter 2024 showed that 97.3 percent of mortgages included in the report were current and performing at the end of the quarter, an increase from 97.2 percent one year earlier. The percentage of seriously delinquent mortgages (60 or more days past due and all mortgages held by bankrupt borrowers whose payments are 30 or more days past due) decreased from the fourth quarter of 2023. (Today’s podcast can be found here and this week’s is sponsored by Calque. Calque provides a binding backup offer on your borrower’s departing residence to clear the existing mortgage balance and closing costs in 48 business hours or less. Today’s features an interview with NerdWallet’s Liz Renter on her company’s First-Time Home Buyer Affordability Report that focused on new insights from Q4 of 2024.)
Software, Programs, Services, and Products for Lenders
The non-QM market isn’t a niche. It’s a major part of virtually every successful lender’s strategy today. On Thursday, April 4th, at 2PM ET (11AM PT), NMP kicks off its Non-QM Masterclass Series, a three-part webinar designed to teach you the Why, Who, and How of Non-QM lending. In Part One, “Understanding Market Conditions and Trends,” Logan Finance’s Paul Jones, SVP of Non-QM Business Development, and Aaron Samples, COO, will share insights on borrower profiles, DSCR growth, and shifting demographics, while busting the myth that non-QM is limited to select markets. If you’re looking to grow your pipeline with confidence this year, this session is the foundation. Reserve your spot here.
Today, on Now Next Later, Sasha and Jeremy explore key data on first-time homebuyers and strategies for getting them approved. They'll also discuss product innovations in low and no down payment options and how co-buying is creating new pathways to homeownership.
Did you know in February, national house price growth slipped to its slowest pace since March 2012, amid ongoing affordability constraints and rising inventory? It's true! In case you missed it, First American Data & Analytics recently released its February 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, “While mortgage rates retreated in February, the softening home price growth reflects sales that went under contract earlier, including when demand softened amid mortgage rates that surpassed 7 percent. The good news is that slowing price growth is creating more favorable conditions for buyers in some markets, offering more potential opportunities for those looking, just in time for the spring home-buying season." Download a full copy of First American’s report to learn more valuable insights.
Save $1500 per loan with Maxwell Private Label Origination. Are high fixed costs eroding the profitability of your mortgage division? Rather than being at the mercy of the housing market's fluctuations, consider a cost-per-closed-loan structure that allows you to manage your expenses more flexibly. Maxwell Private Label Origination (PLO) offers everything you need to originate a mortgage, all at a simple, per-closed-loan cost. “We integrate the technology, personnel, and your mortgage products into a seamless, fully white-labeled experience. Schedule a call to learn how our cost structure can save the average PLO customer $1500 per loan and find out if this is the right fit for you.”
Mergers and Acquisitions: Rocket/Mr. Cooper
Rocket Companies has agreed to acquire Mr. Cooper, America’s largest mortgage servicer. Together the companies will have a combined servicing book of $2.1 trillion across nearly 10 million clients, representing one in every six mortgages in America.
“The transaction is expected to generate annual run-rate revenue and cost synergies of approximately $500 million, contributing to organic revenue growth while increasing operating leverage and maintaining significant capital and liquidity. This announcement follows Rocket’s recent agreement to acquire digital brokerage platform Redfin which owns Bay Equity.
It is an all-stock transaction for $9.4 billion in equity value, based on an 11.0x exchange ratio. “Following the acquisition of Mr. Cooper, Rocket will gain understanding of nearly 7 million additional clients and 150 million annual customer interactions… Rocket will drive earnings growth from high-margin recapture opportunities on the combined servicing portfolio, which together generated $4 billion of servicing fee revenue in 2024… The transaction is expected to generate $100 million in additional pre-tax revenue from higher recapture rates and attaching Rocket’s title, closing and appraisal services to Mr. Cooper’s existing originations. Rocket projects $400 million in pre-tax cost savings from streamlining operations, corporate expense and technology investments.
“The combined company will be led by an experienced board and leadership team that leverages the strengths and capabilities of both companies. Upon closing of the transaction, it is expected that Mr. Cooper Group’s Chairman and CEO Jay Bray will become President and CEO of Rocket Mortgage, reporting to Krishna. Dan Gilbert will remain Chairman of Rocket Companies. Upon closing, the Board of the combined company will consist of 11 members, 9 of whom will be from the board of Rocket and 2 of whom will be from the board of Mr. Cooper.
“Under the terms of the agreement, Mr. Cooper shareholders will receive a fixed exchange ratio of 11.0 Rocket shares for each share of Mr. Cooper common stock. This represents a $143.33 per share value based on the closing price as of March 28, 2025, and a premium of 35% over the volume weighted average price (VWAP) of Mr. Cooper’s common stock for the 30 days ending March 28, 2025. Upon completion of the transaction, Rocket shareholders will own approximately 75% of the combined company on a fully diluted basis pro forma for the Redfin transaction, while Mr. Cooper shareholders will own approximately 25%. The all-stock transaction is intended to be tax-free to Mr. Cooper shareholders. In connection with the completion of the transaction, Mr. Cooper will declare and pay a dividend of $2.00 per share of Mr. Cooper common stock.
“The transaction has been unanimously approved by the Boards of Directors of both Rocket and Mr. Cooper. It is expected to close in the fourth quarter of 2025, subject to approval of Mr. Cooper shareholders and the satisfaction of other closing conditions, including customary regulatory approvals.”
Disaster and Catastrophe News
While the world watches as the death toll from the earthquake in Myanmar and Thailand is tallied and going up, weather, events, and regulatory moves in the United States are attracting the attention of those in the residential lending business. It is certainly attracting the attention of commuters on roads around the nation this morning.
Whether manmade or natural, few disagree that extreme weather events are increasing. This paper is highly readable and still relevant, discussing extreme weather events in the context of climate change.
If you want a new passport, a tiny island country is selling citizenship for $105,000 to save itself from rising seas
Last week the FHFA (Federal Housing Finance Agency, overseer of Freddie and Fannie) rescinded an advisory bulletin (on X) that had directed the Federal Home Loan Banks to consider impacts from climate risks. FHFA’s order justified the change by stating that climate risk is a “transverse risk” that’s accounted for in existing risk types, including credit risk.
The U.S. Securities and Exchange Commission (SEC) announced last week that it has voted to end its legal defense of its climate disclosure rules, effectively walking away from its regulation requiring companies to report on climate risks and greenhouse gas emissions, without actually having to rescind the rules. In a statement announcing the Commission’s decision, SEC Acting Chairman Mark Uyeda, who had voted against the initial rule, called the rule “costly and unnecessarily intrusive.” Uyeda was appointed Acting Chair after the resignation of prior Chair Gary Gensler in January, following the election of Donald Trump. Trump’s nominee for SEC Chair, Paul Atkins, currently undergoing the confirmation process, has also opposed the climate reporting rule.
David I. sent an article debunking the man-made climate change claims titled, “The Climate Scam is Over.”
The UCLA Ziman Center for Real Estate, the USC Lusk Center for Real Estate and the nonprofit Urban Land Institute Los Angeles released a comprehensive plan aimed at helping to guide Los Angeles–area rebuilding efforts in the wake of January’s wildfires. The in-depth Project Recovery report, which incorporates the recommendations and technical analyses of some 100 prominent experts, a number of which hail from UCLA, in land use, urban planning and economic development, covers a broad array of topics, from debris removal and labor and supply chain issues to advice on fast-tracking rebuilding, property insurance, mortgage forbearance, funding for infrastructure restoration and the creation of community rebuilding authorities to help coordinate recovery efforts.
On 3/14/2025, with Amendment No. 6 to DR-4860, FEMA declared federal disaster aid with individual assistance to Kentucky counties of Woodford and Leslie affected by severe storms, straight-line winds, flooding, landslides, and mudslides from 2/14/2025 and continuing. AmeriHome Mortgage 20250304-CL Disaster Announcement for inspection information.
On 3/19/2025, with Amendment No. 7 to DR-4860, FEMA identified an Incident Period End Date of 3/7/2025 for Kentucky counties affected by severe storms, straight-line winds, flooding, landslides, and mudslides from 2/14/2025 to 3/7/2025. Inspection requirements are described in AmeriHome Mortgage 20250307-CL Disaster Announcement.
Capital Markets
The clock is ticking down to April 2nd, the date on which President Trump said the United States will implement a slew of tariffs, including newly announced ones last week for the auto industry. Starting on April 2, the U.S. will apply a 25% tariff to imported passenger vehicles and light trucks, as well as key automobile parts (engines, transmissions, powertrain parts, and electrical components). It's an announcement that has upset the car industry, and its stock prices, which has spent decades integrating supply chains with Canada and Mexico, as well as elsewhere across the globe. Whether or not a car or truck is “Made in America” is complicated. There are many stages of production that cover the thousands of parts that go into a vehicle, including the raw material procurement, melting and castings, parts manufacturing and finishing, and quality control and testing. It's not just the final assembly of components, or installing them into a vehicle, which is what most people think about when picturing auto manufacturing and production.
Proponents say that the tariffs will right-size our trade imbalance and reduce our deficit, which should help rates including mortgage rates. Critics say it will increase the cost to consumers and foster an environment for stagflation. The newly signed tariff order appears to recognize some of the complexities, some of which are addressed in the White House Fact Sheet. "Importers of automobiles under the USMCA will be given the opportunity to certify their U.S. content and systems will be implemented such that the 25% tariff will only apply to the value of their non-U.S. content."
Yup, trade policy dominated headlines last week as the U.S. announced a 25 percent tariff on foreign-made autos and parts, with additional trade measures expected in the coming days. The economic impact of these policies remains uncertain, as negotiations, enactment, and potential revisions play out. Accordingly, consumer sentiment has fallen to its lowest level in 12 years, driven by rising inflation expectations. February’s core PCE rose 2.8 percent year-over-year, surpassing forecasts and fueling concerns of stagflation, which could complicate the Federal Reserve’s ability to manage inflation and employment effectively.
Long-term inflation expectations have surged to a 32-year high, reflecting growing anxiety over President Trump’s economic policies. Consumers now anticipate a 5 percent increase in costs over the next year, the highest since 2022, and are increasingly worried about the labor market. Personal income in February exceeded expectations, rising 0.8 percent month-over-month, while personal spending remained flat versus an anticipated 0.5 percent increase. The PCE Price Index met expectations, rising 0.3 percent month-over-month and 2.5 percent year-over-year, though the core rate exceeded forecasts at 2.8 percent. Additionally, January's personal income growth was revised downward, adding to the broader picture of economic uncertainty.
This week should bring clarity about details of tariff policies, as well as the March payrolls report on Friday, with prior releases including PMIs, construction spending, JOLTS, ADP, factory orders and trade. Coupon supply is limited to Treasury bills. On the MBS front, Agency prepayments will be released after Friday’s close and Class A 48-hours is next Thursday (April 10). The week gets off to a relatively quiet start with Chicago Purchasing Manager’s Index for March kicking it off later this morning (a tertiary number, it never moves rates). The only other release of note is Dallas Fed manufacturing for March. The week starts with Agency MBS prices better by .125-.250 versus Friday’s close, the 2-year yielding 3.84, and the 10-year yielding 4.19 after closing last week at 4.26 percent.
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