Wells Fargo sells $50B of mortgage servicing rights

Good morning! This is Mortgage Nuggets. We make it easy for you to get smarter about the mortgage industry in less than 5 minutes. Every Mon, Wed, and Fri morning.

1. Most buyers want 5.5% or lower

According to a recent John Burns Research and Consulting survey, 71% of potential homebuyers refuse to accept a 30-year fixed mortgage rate over 5.5%. Interestingly, according to Freddie Mac, the historical average mortgage rate since 1971 is 7.75%, much higher than what many buyers expect.

Potential home sellers, likewise, find the current rates to be unacceptable, contributing to the severe lack of supply on the market. New listings in the four weeks ending April 9 were 25% lower than the same week the year before, according to Redfin.

“Even if the Fed chooses not to hike interest rates next month, which would likely bring down mortgage rates, the limited supply of homes for sale would remain a major obstacle for would-be buyers,” wrote Daryl Fairweather, chief economist at Redfin, in the report. “Rates dipping below 6% would probably pique the interest of more buyers.”

2. FTC and SEC can be sued

The U.S. Supreme Court has issued a unanimous decision permitting businesses to sue the Federal Trade Commission (FTC) and the Securities and Exchange Commission (SEC) over alleged constitutional violations in their oversight.

The ruling allows parties to seek relief in district court before losing in administrative proceedings, potentially providing businesses with more leverage in negotiations with regulators and leveling the playing field in disputes with federal agencies.

3. More Nuggets

👩‍💻 The CFPB on Friday announced a revised version of its “Methodology for Determining Average Prime Offer Rates" (APOR). The revision describes the calculations used to determine APOR for purposes of federal mortgage rules. (CFPB)

📉 New listings of homes for sale are down 25% from a year ago, marking the eighth straight month of double-digit declines. That’s making it difficult for buyers to find homes but giving some sellers a competitive edge. (Redfin)

4. Charted: The latest home price data

According to an analysis of Zillow Home Value Index data, the home price correction in the US is fizzling out, with only 23% of the nation's largest housing markets experiencing a month-over-month home price decline in March 2023.

This is a significant decrease from September 2022 (the height of the housing correction), when 79% of the nation’s 200 largest housing markets saw a month-over-month home price decline.

What happened? The average 30-year fixed mortgage rate came down a bit, from 7.37% in early November to 6.50% as of Friday, just as we entered the seasonal spring period when housing demand increases. Additionally, some house price decreases, coupled with inventory remaining tight, has helped to stabilize the housing market in many parts of the country.

5. Wells Fargo sells $50B of MSRs

Wells Fargo has finalized the sale of a $50 billion mortgage-servicing rights (MSR) package, with the deal expected to close later in the year.

The bank's CFO, Mike Santomassimo, confirmed the sale during the first-quarter earnings call, stating that they will continue to explore opportunities to simplify and reduce the size of their servicing business.

The MSR sale was conducted through an open auction with pre-qualified bidders. The specific details of the $50 billion MSR portfolio have not been disclosed.

☀️ See you on Wednesday!

1 fun thing: Latin and Tex-Mex overtake Italian as America's go-to food order (Axios)

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