|10 year government bond yield||1.78%|
|30 year fixed rate mortgage||3.93%|
Stocks are higher this morning after China agreed to take more steps to protect US intellectual property. Bonds and MBS are flat.
The upcoming week should be relatively quiet with the Thanksgiving holiday. SIFMA is recommending early closings for Wednesday and Friday. Wednesday will have some important economic data with GDP and personal incomes, but with the Fed on hold, economic data is going to take a backseat. Note Jerome Powell is expected to give a speech tonight after the market close.
The CFPB is taking a look at loan originator compensation, and is thinking about relaxing some of the rigid rules regarding variations in compensation. The biggest issue surrounds state loan programs, which are meant to make a mortgage more affordable and help get people into homes. Most of these programs have strict limits on how much the originator is permitted to make on a loan, and is often well below what the lender will make on normal conforming loans. This rule change will allow loan officers to lower their compensation to make these programs work financially for the lender. The Bureau is also looking at allowing lenders to decrease LO comp on loans where there are errors due to LO mistakes.
The investment community (firms like Blackrock, PIMCO, and Fidelity) are encouraging the Trump Administration to include an explicit government guarantee for Fannie and Freddie loans in its housing reform. The Trump Administration’s plan to privatize the GSEs does not contemplate an explicit government guarantee – and they would like to reduce the size of the government’s footprint in the mortgage market. Note they never had one – the GSEs were “government sponsored” entities, which doesn’t mean “government guaranteed.” Fannie and Fred were always public-private hybrids. Any sort of explicit government guarantee would require legislation, and that is probably going to be almost impossible absent another crisis.