With the U.S. government shutdown in effect and little progress made on an eventual reopening, mortgage lenders are busy measuring operational impacts while introducing strategies drawn on past experience to keep business flowing. As of Wednesday, many questions remain about the full extent of the impact on support provided to lenders, with most federal services coming to a halt. The disruption of services provided by government offices essential to home finance, particularly the Federal Housing Agency and ...

Group 1 - Fannie Mae has initiated foreclosure proceedings on a $61.5 million loan associated with two properties in New York City, citing default on payments since April 2020 [3][7] - The borrower, Fordham Fulton Realty Corp., has entered into multiple forbearance agreements but still owes payments due from October 2024 onward [3] - Legal issues for Fordham Fulton Realty include a lawsuit filed by The Legal Aid Society on behalf of 62 tenants seeking repairs for over 600 open violations in Fulton Towers [5][6] Group 2 - Tenants have reported severe neglect, including prolonged heat and water outages, and malfunctioning elevators, leading to allegations of falsified certifications by the landlord [6][7] - Fannie Mae's complaint seeks a receiver to manage the properties, foreclosure of the mortgage, and a monetary judgment against the borrower and guarantor for any remaining funds post-foreclosure [7]

Core Insights - A government shutdown has occurred due to partisan budget negotiations, impacting bond investor activity and potentially lowering mortgage rates while challenging the housing market [1] - The 10-year yield, which correlates with common mortgage types, decreased to 4.1% from 4.15%, influenced by a slow private payroll report [2] - Experts warn that prolonged shutdowns could raise concerns about U.S. debt credit quality, leading to higher bond yields and mortgage rates [3] Government Sponsored Enterprises (GSEs) - Fannie Mae and Freddie Mac have implemented workarounds for borrower data verifications, allowing for flexibility in the mortgage process during the shutdown [3][4] - These GSEs are also permitting servicers to extend forbearance to borrowers affected by the shutdown [4] Federal Housing Administration (FHA) - The FHA's Office of Single Family Housing announced limited operational capacity for some mortgage insurance programs during the shutdown [5] - The FHA's operational decisions are guided by legal frameworks established by the U.S. Constitution and other statutory provisions [6] Flood Insurance and Lending - The American Land Title Association highlighted the lack of authorization for federal flood insurance, which affects millions of Americans and jeopardizes home sales [6] - Regulatory agencies have re-released guidance allowing lenders to continue making loans subject to federal flood insurance statutes, even when the National Flood Insurance Program is unavailable [6][7] - Lenders are advised to evaluate safety and soundness and manage legal risks during the shutdown period [7]

Core Insights - The national home price growth is projected to average 2.4% in 2025 and 2.1% in 2026, following a growth of 5.3% in 2024, according to the Q3 2025 Fannie Mae Home Price Expectations Survey [1] - The latest estimates represent a downward revision from previous expectations of 2.9% for 2025 and 2.8% for 2026 [1] Group 1: Home Price Forecasts - A panel of over 100 housing experts provided forecasts for national home price changes, indicating a deceleration in growth rates [1][4] - The Fannie Mae Home Price Index (FNM-HPI) serves as the benchmark for these forecasts [4] Group 2: Survey Details - The Q3 2025 HPES included 114 respondents and was conducted between August 11, 2025, and August 25, 2025 [4] - The survey also explored factors influencing home price deceleration and the mortgage rate levels that could significantly impact home sales activity [1]

Core Insights - Fannie Mae's August 2025 Monthly Summary report is now available, detailing the company's activities in the mortgage sector [1] Group 1: Monthly Activities - The report includes information on Fannie Mae's gross mortgage portfolio, mortgage-backed securities, and other guarantees [1] - It provides insights into interest rate risk measures and serious delinquency rates [1]

Core Viewpoint - Fannie Mae has initiated fixed-price cash tender offers for the purchase of Connecticut Avenue Securities (CAS) Notes, with the offers set to expire on October 3, 2025, unless extended or terminated [1][2]. Summary by Sections Tender Offer Details - Fannie Mae is offering to purchase all listed CAS Notes, with BofA Securities and Wells Fargo Securities acting as dealer managers [2]. - The total original principal amount of the applicable classes of Notes is approximately $2.25 billion [5]. Pricing Terms - The table provided outlines the specific CAS Notes being offered, including their original principal balances and the consideration per $1,000 original principal amount: - Series 2017-C03, Class 1B-1: $26,045,000 at $1,063.13 - Series 2017-C06, Class 2B-1: $19,316,000 at $1,067.81 - Series 2017-C07, Class 1B-1: $27,201,000 at $1,068.44 - Series 2018-C04, Class 2B-1: $17,000,000 at $1,096.41 - Series 2018-C06, Class 2B-1: $25,087,000 at $1,091.88 - Series 2020-SBT1, Class 2M-2: $316,415,000 at $1,040.94 - Series 2021-R02, Class 2M-2: $283,566,000 at $1,011.72 - Series 2022-R01, Class 1M: $434,007,000 at $1,013.59 - Series 2022-R06, Class 1M: $332,500,000 at $1,023.28 - Series 2022-R07, Class 1M: $391,813,000 at $1,025.78 - Series 2022-R08, Class 1M: $377,927,000 at $1,025.47 [3][4]. Tender Process - Holders must tender their Notes by the expiration time to receive the Tender Offer Consideration, which includes accrued and unpaid interest up to the Settlement Date, expected on October 7, 2025 [6]. - Notes tendered via the Notice of Guaranteed Delivery will be purchased on October 8, 2025, with interest payments made only up to the Settlement Date [6]. Contact Information - For further inquiries, holders can contact Global Bondholder Services Corporation or the designated dealer managers [7].

Core Viewpoint - A federal judge has dismissed the last remaining claims in the litigation against global banks accused of conspiring to manipulate Libor, concluding one of the longest financial antitrust cases in U.S. history [1][13]. Legal Ruling - U.S. District Judge Naomi Reice Buchwald issued a 273-page ruling, stating that investors failed to prove collusion among banks to keep Libor artificially low, indicating that the evidence did not exclude the possibility of independent actions by the banks [2][7]. - The ruling marks the end of over a decade of litigation that began in 2011, with plaintiffs seeking to recover losses linked to the alleged manipulation of Libor [3]. Impact on Investors and Banks - The decision concludes private antitrust claims related to Libor, removing the last legal uncertainty for banks after global investigations resulted in approximately $9 billion in fines [4][9]. - The investor group involved included various entities such as Principal Financial Group, cities like Baltimore and Houston, and mortgage financiers Fannie Mae and Freddie Mac, alleging that banks' actions inflated profits and distorted borrowing costs during the 2008 financial crisis [5][6]. Evidence and Findings - Over the years, investors presented various forms of evidence, including emails and expert analysis, but the judge found that it did not establish a coordinated effort among banks [7]. - Despite uncovering manipulation by traders during investigations, civil courts did not find sufficient evidence to prove a broad conspiracy [9][10]. Libor's Transition - Libor, which influenced interest rates for over $300 trillion in loans and derivatives, was phased out in January 2022 and replaced by the Secured Overnight Financing Rate (SOFR) and other benchmarks [8][14]. - The transition to new benchmarks aims to prevent future manipulation, addressing the issues highlighted by the Libor scandal [14].

Core Point - Fannie Mae board member Karin Kimbrough resigned from her position on September 22 [1] Company Summary - The resignation of Karin Kimbrough marks a change in the leadership structure of Fannie Mae [1]

Mortgage Rates Overview - Mortgage rates have lost downward momentum, with the national average 30-year mortgage rate increasing by four basis points to 6.30% and the 15-year fixed mortgage rate rising by eight basis points to 5.49% [1][15] - The 10-year Treasury yield has also seen an increase, rising from 4.02% to 4.17% following the Federal Reserve's first rate cut of the year [2] Current Mortgage Rates - Current national average mortgage rates include: - 30-year fixed: 6.43% - 20-year fixed: 6.05% - 15-year fixed: 5.69% - 5/1 ARM: 6.76% - 7/1 ARM: 6.67% - 30-year VA: 5.94% - 15-year VA: 5.57% - 5/1 VA: 5.82% [6] - Another set of current rates shows: - 30-year fixed: 6.56% - 20-year fixed: 6.12% - 15-year fixed: 5.88% - 5/1 ARM: 7.13% - 7/1 ARM: 7.51% - 30-year VA: 6.08% - 15-year VA: 5.66% - 5/1 VA: 5.82% [7] Market Trends - Despite the increase in mortgage rates, purchase and refinance applications have risen compared to the same time last year [2] - Mortgage rates have remained stable or decreased since July 17, but are still about a quarter-point higher than the previous year [13] - Forecasts from Fannie Mae and the Mortgage Bankers Association suggest that mortgage rates will remain at or just above 6% through 2026 [13][16] Future Projections - The Mortgage Bankers Association expects the 30-year mortgage rate to be 6.5% by the end of the year and near 6.4% throughout 2026 [16] - Fannie Mae predicts a similar trend, with the 30-year rate at 6.4% by year-end and around 5.9% by the end of 2026 [16] - Most industry forecasts indicate that mortgage rates will likely remain close to current levels, if not slightly lower, by 2026 [17]

The Federal Reserve has decided to hold off on further cuts to short-term interest rates for an undetermined period. Meanwhile, a new Fed chairman is waiting in the wings. What does all this mean for mortgage rates? What happens when the Fed lowers interest rates First of all, the Federal Reserve and mortgage rates are working on two ends of a timeline. The Fed steers short-term interest rates, and mortgage rates are influenced by long-term bonds. When the Fed cuts its federal funds rate, as it did by ...