Ahead of next week’s MBA Advocacy event in Washington DC, I received this note from an industry vet. “With the continued consolidation into the large non-banks, are you hearing any rumbling about the level of risk building in these less regulated and less capital-intensive entities? If we are likely to face a recession, with rising delinquencies but rising refinances due to lower rates, are we ready for that as an industry? For the most part big banks have reduced their servicing portfolio size, but is the Trump Administration looking to weaken regulation right into a potential crisis?” Good questions for next week in DC. The headlines are certainly dominated by tariff policy, which, along with the impact of tariffs, is out of the hands of the Federal Reserve. Tariffs may, over the long term, help the trade numbers, but what about our budget? U.S. Treasury Secretary Scott Bessent has warned that the federal government could reach the debt ceiling as soon as May or June, in line with the Congressional Budget Office's estimate that the Treasury may exhaust its accounting measures by August or September. So, lenders can keep an eye on the impact of that on interest rates and demand for our securities. (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 NAF’s Miguel Villegas on how cash borrowers are driving bidding conditions for various metros around the nation.)

Products, Software, and Services for Lenders

Merchants Bank, one of the nation's top warehouse lenders and a growing Correspondent Investor, is expanding its product suite with a new non-Agency platform. The Merchants Premium Program introduces three new products: AUS Jumbo Elite, High-Balance Elite, and Conforming Elite, designed to provide greater flexibility and liquidity for Residential Mortgage Finance Partners. With $19 billion in assets, Merchants Bank remains a strong, consistent counterparty committed to supporting the mortgage industry. Contact Rob Wilson to learn more about the Merchants Premium Program or to schedule a meeting with the Merchants team at the upcoming MBA Secondary & Capital Markets Conference.

In a shifting mortgage market, LoanCare® stands out as the experienced subservicer you can trust. Its expertise across products, including HELOCs, ensures seamless servicing, tailored solutions, and exceptional customer support. Leverage LoanCare's account-based marketing and advanced data analytics to identify potential HELOC customers before they look elsewhere. Recent market dynamics mean more changes ahead, but with LoanCare you can navigate uncertainty with clarity and confidence. Ready to improve your subservicing experience? Meet the team in NYC at the MBA Secondary Conference this May, or contact David Vida, Chief Revenue Officer, today! LoanCare: Experience, Reliability, Excellence.

Today’s Last Word has Brian Vieaux, Christy Soukhamneut, Kevin Peranio, and Courtney Thompson discussing the impact of Rocket’s acquisition of Mr. Cooper on mortgage servicing and what it means for consumers and lenders. They also cover the recent drop in interest rates, the latest jobs report, and the political significance of the massive tariffs.

Wholesale News and Non-Agency Offerings

Investors change, guidelines change, market share changes, Agency doctrine changes, interest rates change. Who can keep track? Let’s see what going on out there with regulations, Agencies, retailers, and wholesalers alike.

For those who follow trigger lead developments, abusive or otherwise, it is well known that the State of Texas has already passed its own trigger lead law. Thank you to Geoff Snyder who wrote saying that Texas is the first state to pass a “trigger lead” action in the nation: §56.202 and §57.202 Fraudulent, Misleading and Deceptive Practices. It is a misleading or deceptive practice for an originator, mortgage company or mortgage banker to fail to provide the five (5) items when contacting a purchased trigger lead.

“If a trigger lead is used by a mortgage company/banker, or sponsored originator, the initial communication (advertisement or solicitation) to the consumer must include a) The originator’s name and NMLS ID number and Name of the Mortgage company/banker and it’s NMLS ID number; b) A brief explanation of how the company/banker obtained the consumer’s contact information, i.e. explain lead was purchased… c) A statement that the contacting originator is NOT affiliated with the company the consumer made application with that resulted in the trigger lead, an explanation that the call is to solicit “new” business for the mortgage company/banker; and d) a firm offer of credit compliant with FCRA must be given to the consumer.”

In Massachusetts, Gen Laws Ann. Ch. 140, §114B allows for “a delinquency charge on any payment not paid in full within fifteen days of its due date in an amount equal to ten percent of the outstanding balance or ten dollars. Compliance posted Late Fee Updates on Massachusetts HELOC.

From Arizona, thank you to Steve Kaye who wrote, “’The HECM for Purchase program does not tap into the equity of their home and convert it to cash.’ While the regular HECM reverse mortgage loan does do this, the HECM for Purchase program allows a senior-aged buyer to purchase the home with a reverse mortgage that covers a portion of the homes purchase appraised value (in today’s current environment) approximately 36%-40%). This can be especially valuable for those seniors who were looking to avoid a mortgage payment by paying all cash. As an example, a 68-year-old buyer considering an all-cash purchase on a $500,0000 home would retain, after closing costs, a benefit of approximately $165,000.”

As Rocket Mortgage, the nation’s largest mortgage lender and a part of Rocket Companies, expands its reach up and down the residential food several people have mentioned its RocketRentRewards program, “the homeownership industry’s first offer to provide closing cost credits for renters” introduced a couple months ago.

“With a Rocket mortgage, homebuyers earn 10% back on the last 12 months of rental payments, receiving up to $5,000 in lender credits toward closing costs. With the national average rent at $1,800, that translates to $2,160 applied toward a client’s closing costs, one of the biggest financial hurdles for first-time homebuyers… RocketRentRewards eases those concerns by rewarding clients for simply doing what they do every month, making their rent payment.”

“The company makes it easy for homebuyers to take advantage of RocketRentRewards. Rent payments from the past 12 months can be verified through documentation confirming their current rental amount. Once validated, the credit will be directly applied to closing costs.”

United Wholesale, as noted in yesterday’s Commentary has an offer whereby the broker can refinance it and receive an extra 100 basis points through Refi Shield 100, separate from other deals (like “60 bps for 60 days” and other offers).

The federal bank regulatory agencies announced, in light of pending litigation, their intent to issue a proposal to both rescind the Community Reinvestment Act (CRA) final rule issued in October 2023 and reinstate the CRA framework that existed prior to the October 2023 final rule. The agencies will continue to work together to promote a consistent regulatory approach to their implementation of the CRA.

Pennymac updated its AUS Jumbo program with several key changes, effective with new applications dated on or after 3/24/2025. View Pennymac Announcement 25-33 for details.

Pennymac Announcement 25-34 describes Fannie Mae’s Hybrid Appraisal Expansion.

Pennymac Announcement 25-35 describes changes due to FHA Mortgagee Letter 2025-09 revisions to residency requirements.

USDA Rural Development sent a bulletin announcing Interest Rate Decrease for SFH Direct Programs.

FHA published Mortgagee Letter (ML) 2025-09, and Title I Letter, (TIL) TIL-490, Revisions to Residency Requirements. These letters align FHA’s residency requirements with President Trump’s recent Executive Orders that prioritize the use of federal resources to benefit U.S. citizens and ensures the integrity of government loan programs. Specifically, the updated residency requirements will remove eligibility for illegal aliens from accessing FHA-insured mortgages by eliminating in its entirety the “Non-permanent Residents” category in both the Single-Family Title I and Title II programs.

Discover how you can leverage Ask Poli to uncover insights that help reduce risk and enhance quality control (QC) efforts. This issue of Quality Insider explores Ask Poli, Fannie Mae’s self-serve business tool designed to answer policy-related questions, and how this resource can help inform your QC process.

Fannie Mae updated In Case You Missed It resource, which provides an overview of policy changes, including Selling Guide updates, Servicing Guide updates, Lender Letters, and Desktop Underwriter®/Desktop Originator® release notes.

Capital Markets

Because it is difficult, and expensive, to hedge a pipeline with this headline risk. Tariffs were announced by President Trump on Wednesday, and then yesterday the financial markets were “slammed” for lack of a better term. But unfortunately for lenders hoping for a huge refi boom, most capital markets personnel, bond traders, and analysts will tell you that mortgage rates won't fall as hard as you think, but probably enough to trigger renegotiation policies. Rates for home loans have dropped slightly but may not go much lower as uncertainty from Washington shrouds the housing market.

Treasury bond yields have fallen dramatically, but mortgage rates have fallen less. Mortgage rates and prices are determined by supply and demand, which in turn is determined by several factors including the perceived risk of the asset. If a financial product is seen as riskier, the issuer must pay more (a higher rate) to attract an investor. Anxiety about Trump’s policies and implementing those policies has led investors to sell riskier assets, like stocks, and buy those seen as less risky, like bonds. But if we begin seeing more signs of a recession, or stagflation, mortgage rates are unlikely to fall as quickly, or as much, because the market is navigating a lot of uncertainty in terms of borrowers whose jobs are impacted by a slowdown.

Despite expectations of the Federal Open Market Committee rate cuts later this year, the Fed's stance remains cautious, even restrictive. Lenders know that mortgage rates are most likely to hit a bottom when things are bad and the economy is weak enough that many people won't want to, or won't be able to, buy homes. But we all know that lower interest rates could improve the buying power for well-qualified borrowers but at the same time tighter credit conditions and job market instability may widen the gap between those ready to buy and those pushed out of the market.

Today brought the March payrolls report, which may seem like old news given the tariff announcements, though could send sentiment flying in any direction. Headline nonfarm payrolls were surprisingly +228k with unemployment at 4.2 percent. The report was expected to show a modest increase in employment (+130k for the month) and a small uptick in the unemployment rate (to 4.1 percent). Wages were +.3 percent, month over month, as expected. Equally important is Fed Chair Powell’s speech this afternoon, and markets will also receive remarks from Governor Barr and Governor Waller. After the employment data Agency MBS prices are better than Thursday night by about .5 but all over the map based on maturity and coupon, the 2-year is down to 3.54, and after closing Thursday yielding 4.06 the 10-year is at 3.89 this morning, the lowest since September, 2022.