11.9.26 Fed Prominence; TXMBA’s Scott Norman on Advocacy; Post Payrolls Data

Robbie Chrisman:Welcome to the Chrisman Commentary, Daily Mortgage News Podcast. I'm your host, Robbie Chrisman. Topics on today's episode include worth scaling back on the Fed's prominence, what to look forward to on this week's economic calendar post-payrolls last week, and my interview with Texas MBA's Scott Norman on housing affordability as a bipartisan priority following the midterm elections, Texas MBA's continuing advocacy and education efforts on behalf of the mortgage industry, and its upcoming November 16th Texas Housing Summit in Austin. Here, take a listen, do a little preview. You talk just from a state association perspective, how it works working with elected representatives and that give and take and just how to get what you want done on a governmental. Obviously, you've been in this since 30 plus years. You alluded to your time in the Texas Senate. Scott Norman:The Texas MBA is a little bit of a different entity than a lot of associations around the country. We're coming up on 110 years old. Wow. And most of what we do deals with the Texas legislature. But certainly as it relates to housing, it's a bipartisan issue. And what happens in Washington, D.C. will affect what happens in Austin, Texas, or Dallas, Texas, or small town, Texas. So one thing that we look at is we like those that are supporting of housing. And housing is a bipartisan issue. And from a Texas MBA perspective, if it's Washington, D.C. or if it's Austin, Texas, our goals and our plans have not changed at all. There'll be some new people and we'll have some new chairs and we'll have some new members of committees. But our job is to make sure that we are educating those in the legislature and to some extent those in the Senate. Certainly Bill Killmer and the group at the MBA, they do just a magnificent job. And I want to make sure that the Texas MBA certainly stays in our lane from a federal perspective because the MBA is doing just a great job. But my experience in dealing with members in Congress or the members in the legislature is they're trying to be educated. And so an association like ours has a unique opportunity to educate members on what is a very bipartisan issue. Housing is an American story. It is a Texas dream. And so our job is to make sure that we are helping educate, provide information, making sure that we are a real resource to helping people have the information they need to make the decisions they need. Because, look, if you're a member of the Texas legislature, you're pulled in a lot of different directions. Texas is an extremely diversified state. It's a state that is growing by leaps and bounds. In a lot of ways, it really is the center of the financial universe now. I mean, the if you look at the trajectory, the trajectory is moving to Texas. I know people talk about the infrastructure of New York and how big California is, and those are both great states. But when you look at Texas, Texas has more Fortune 500 companies in it than any other state in the country. Think about that for a minute. We have a new stock exchange. So people are moving to Texas and it's continuing to grow. At some point in Q2 of next year, Texas will pass France to become the seventh largest economy in the world. So when you start thinking about that, those aren't just trivial comments and those aren't kind of talking points to let people talk about Texas. Texas is in a very unique state, and housing is going to become a bigger and a bigger issue in this state because Texas is going to grow. We're growing by about 1,400 people a day. And to make sure that we are working with our friends in the legislature and our friends in Congress is an important piece of what we do at the Texas MBA. It probably represents about 50 to 60% of everything we do and every decision we make during the year. Certainly when Texas is in a legislative session, that probably goes to about 80 to 90% of what we do because we really are the voice of mortgage lending in the state. And so that's going to be our goal. Regardless of what happened last night, our plan this morning is still the very same thing. We're not rechanging anything. We're not pulling out a new white paper. We're not erasing anything off of the blackboard. Our job is to educate and to be a good resource and to make sure that we're doing our job to represent our members in a way that other associations that may not have the resources can or can't do. Robbie Chrisman:Thanks to this week's podcast sponsor, Truework, the checker company. The one verification solution to replace in-house waterfalls. Verify any borrower with a VOIEA solution that automates the entire process to quickly deliver the most accurate and complete reports with broad GSE coverage. To learn more, visit Truework.com. The democratic sweep in the U.S. midterm elections could bring changes in trade, spending priorities, and artificial intelligence policies. But major economic forces like affordability pressures and government spending will persist, economists say. If high rates cut off spending, we could easily veer toward a recession. While Democrats may seek to reverse spending cuts and address affordability issues, most U.S. economic policy is driven by the executive branch, limiting legislative impact. Not much was said on the campaign trail about possible solutions to housing shortages, costs of homeownership, and other issues that impact our housing markets. The Democrats have control of the House and Senate, which initiate legislation. Most expect multiple investigations, hearings, and impeachment attempts on President Trump and members of his administration. Hearings and investigations, which very well could be what voters want, and not much new legislation, which ironically could also be what they want. Don't look for a lot of veto overrides. Recall that President Trump oversees the agencies which create regulations and establish comment periods. One thing to keep an eye on is state level activity. Changes at the state level may be much more relevant to lenders as much of the enforcement activity has moved into this sector as during Trump II activity at the federal level has been cut. Housing in the economy. Well, the federal government has a forty trillion dollar plus deficit. Is anyone going to do anything about it? It helps to fuel inflation, requiring borrowing trillions of dollars annually to pay for the interest on the deficits. The government is paying high rates to fund spending and also to refinance debt from prior deficits. With government split between the White House and Congress as a result of Tuesday's election, we can look forward to each party accusing the other of blocking agendas. Many prefer gridlock to what we have now. We can expect that the federal government will continue to run extremely high deficits and a growing total federal debt, leading to more borrowing. Most will be hopeful, but few truly expect major changes in the housing or mortgage markets as a result of the midterms. What will the financial press do without relying on talking about the Fed and rates? Perhaps rely on economic news. The Federal Reserve will begin transitioning to fewer rate setting meetings in 2027, with two of its eight annual meetings dedicated to broader strategy discussions. By 2028, Chair Warsh says the change will allow policymakers to focus on longer-term economic issues rather than incremental rate decisions. Supporters cite more time for deliberation, while critics warn that fewer rate decisions could increase market volatility. U.S. Treasuries and agency mortgage-backed securities posted modest losses to close last week, largely concentrated in shorter maturities, but still secured a fifth consecutive week of gains despite continued volatility in global technology stocks. Stronger than expected October employment data with payrolls rising 165,000 versus 70,000 estimates. Unemployment unexpectedly declining to 4.1% despite an increase in labor force participation, and wage growth accelerating 0.4% month over month, pushed rate hike expectations higher and reinforced December Fed tightening as the market's base case. Keep in mind that BLS employment reports have remained unusually volatile throughout the year. At a high level, markets shifted decisively toward risk-off sentiment last week, concerns over a potential AI bubble, increased regulatory uncertainty following Democratic or the Democratic midterm sweep, and equity market weakness triggered a flight to safety, pushing Treasury yields lower despite stronger than expected October payrolls and renewed expectations of further Fed tightening. The 10-year Treasury yield fell seven basis points to 4.86%, while mortgage-backed securities finally gained some traction. The Fannie Mae current coupon declined nearly 14 basis points to 5.92%. Spreads tightened, and the modeled par mortgage rate fell below 7%, 6.99%, signaling improving mortgage pricing and recovering investor demand for specified pool. For today's interview, I wanted to welcome to the show Texas MBA's Scott Norman to talk about housing affordability as a bipartisan priority following the midterm elections. The Texas MBA's continued advocacy and education efforts on behalf of the mortgage industry and its upcoming November 16th Texas Housing Summit in Austin, bringing together leaders across mortgage lending, home building, banking, and title services. In 2010, he became the youngest president of the Texas Mortgage Bankers Association. But he's been around mortgage banking for more than 30 years. He'll outline a little bit of his background here in the interview. We are recording this on Wednesday the 4th. Big day in Texas yesterday. Texas is finally blue. People have been talking about this for decades. Totally non-housing question here. It's probably split, you know, 51-49 type of thing, but in general, just uh live from Texas at Scott Norman. What's the dispatch? Scott Norman:Well, I think that it certainly says that Texas is a is a new state and the legislature is going to look very different this coming January than it's looked at any time in 32 years. So, you know, look, every every statewide office holder turned blue. That is something that there's not a prediction market in the country that predicted anything even remotely similar to that. But I think it says a couple of things. One, elections have consequences, and affordability really does matter. And I think that that stuck out loud and clear last night. And I think that what we're going to see in the coming months, and frankly, I think in the coming years, is kind of a return to what's good for the state of Texas, what's good for the country. And I think one thing that continues to prevail is housing is important. And affordability is not just a buzzword. It really is something that's not this lazy phrase, but it really is kind of a way of life. And it doesn't matter if you're in Dallas or Houston, Texas, or if you're in small town Texas or small town USA, affordability is a big deal. And I think that what we're going to see is kind of a push towards putting people in homes that they can afford and that they can stay in their homes. And there's a lot, there's a lot of reasons that that last night happened for sure. But from a Texas MBA perspective, our platform hasn't changed. We've always supported Republicans and Democrats. We've always supported those that support those that group that touches the GDP, which in Texas represents about 15 to 16 percent of the entire GDP. So housing is an important issue. Our role hasn't changed. We're going to continue to support those that support housing. But to answer your question specifically, it is a it's a fascinating night. I was a staffer in the Texas Senate the last time Texas was this blue. And it's been a it's been a long time. And uh there'll be some good to it. I think there'll be some really good to it, there'll be some bad to it, but there'll be a lot of moving parts that we'll see over the next 60 to 90 days that will retool the state in a lot of different ways. But uh it's kind of a fascinating night for sure. Robbie Chrisman:Yeah, the natural segue would be what does it mean for housing and some of the bills that you'd like to get passed? And please feel free to answer that. But I guess on a larger level, and you alluded to this, housing is a bipartisan issue. And with a divided national government, it's a great opportunity to get an easy win working across the aisle to get some housing bills moving forward and passed. Thoughts on uh yes, or just a small bit on what this means for Texas, more broadly speaking. The the overall housing as a bipartisan issue that's come to the foreign is really on the minds of everyday Americans. Scott Norman:Sure. I appreciate the question. And once again, I appreciate you allowing the Texas MBA to have a little bit of a time on your forum. This is a a great podcast that I look forward to watching all the time. But like you said, housing is bipartisan. So it doesn't really matter if you're a Republican or a Democrat, everybody is trying to do the same thing. I mean, one thing I think is unique about last night, everything is relative. Doesn't matter what state you're in, you want to be able to be a part of the American dream. You want to be able to have a house that you can afford. And with taxes where they are, insurance where they are, just overall inflation makes it expensive. But the one thing that I will I will say that'll be very interesting, maybe on the federal side, that I think has kind of been glossed over, is the mortgage industry is going to lose French Hill as the chairman of the House Financial Services Committee. Now, it looks like sitting here today, Maxine Waters will probably become the the chair again of the House Financial Services Committee. But regardless if you're a Republican or Democrat, personally, I've got a great deal of respect for chair uh designee uh Waters. Uh I've always had a very good working relationship with her. I think she's great. She's been a chair, so she's done it before. But to lose someone like French Hill, who simply has more knowledge and more background on the mortgage markets than any chairman we've ever had. And so you don't just lose that type of experience and that type of an overall understanding of the marketplace, not only from a congressional side, but on a main street side. That's a loss that I'm a little concerned more people aren't talking about it just simply because of his background. Like I said, it's got nothing to do with Ms. Waters. I think she's I think she's actually good. And the fact that she is so experienced, I think helps. But we will be losing a voice in housing and certainly be ranking member he won. But that's going to be something that's going to be very different. But we're going to have a new chair, we're going to have a new staff, you're going to have a new speaker, you're going to have new policies. Clearly, there are already some tweets floating around the country as it relates to investigations against the president. So the world of housing could look very different next year from a legislative perspective. I do think there are probably some good signs that the Democrats will embrace housing and will embrace affordability. So you can probably look around the corner a little bit to see that maybe there's some opportunities here. And uh I think Ms. Waters is up for the challenge. And I think she's she's certainly the right person to be the next chair on the Democratic side. But the storyline that I am concerned with that more people aren't talking about is to lose French Hill as the current chairman, because that that is a significant loss, and that's really a big loss for the country. Robbie Chrisman:Well, with all that as the backdrop, I'm very excited, and I implore people listening to this podcast to register for the 2026 Texas Housing Summit, which takes place a week from today, Monday, November 16th, at the LBJ Presidential Library in Austin, Texas. Great venue, great speakers in lineup, but I'll let you fill the people in on that. Scott Norman:We're really excited. So this will be our second annual housing summit. And one thing we want to do with the Texas MBA, we don't just want to be a trade association. We really want to be a destination in a lot of different ways. Because Texas is such a unique state and it's growing in such a unique way. We want to make sure that we are bringing in the best thought leaders, not only in the state of Texas, but in the United States, to come to Austin, Texas, come to the LBJ Library. As you said, it's a fascinating library. It's a great backdrop to really talk about housing in the United States. What does it look like today? What's it going to look like a year from now? And frankly, what's it going to look at look like five or 10 years from now? And so to that point, we've brought in bankers, home builders, title companies, people from all walks of life to come to Austin and talk about what what housing looks like. You know, certainly one thing that's unique about housing, residential real estate in Texas represents about 16% of our GDP. And if you look at it from a nationwide perspective, it's about the same basic percentage numbers. So housing is important. Affordability is important. And it really stuck out pretty quickly last night during the election. And so our job is to bring in these real thought leaders to talk about it. And so if you come to our housing summit, if you take the time to come to Austin, invest in a ticket, invest in what we're trying to build for you, we think that you'll leave better educated and better networked than you would at almost any conference like this in the country. And if I may even go out on a limb, this is not just a traditional mortgage conference. This is a true housing conference. And we don't think there's another conference like this anywhere in the United States. Robbie Chrisman:Yeah, I told I told you offline that I think it's a phenomenal event. I might have even used my favorite event on the calendar, but I don't want to gloss over the agenda here too much. Can you give us a little more detail on the people that are speaking and uh then at the end just where people can go register? Scott Norman:Yeah, I mean, we've got John Hedlund's coming in, Mindy Stearns is coming in, Bob Broeksmit's gonna be there, uh our own Nolan Turner and Pam Jenkins with the Texas MBA, uh Mark Updegrove, who's the chair of the LBJ Foundation, and I think it's important we give them a shout out because they're gonna be co-partnering with us with us. And so that's that's an exciting opportunity. Um, Wes Clickley, Brian Pittman, April Whitaker, Karen Klimke. I mean, we're gonna have speakers talking about really a little bit a little bit of everything. What does home building look like? We're gonna have the other Scott Norman, who's the CEO of the Texas Association of Home Builders, coming. Chris Furlow, who is the CEO of the Texas Bankers Association, will be there. So we we want this to be a unique opportunity to come in, even if you're on the mortgage side. And I know most of your viewers are on the mortgage side, but you're gonna be able to kind of tap into what the home builders are doing. You're gonna be able to tap into a little bit about what the bankers are thinking about and what the title associations are thinking about. And so, like I said, this is a housing summit. This is certainly tilts towards the mortgage side. This really hits every corner of residential real estate. And we think that's a very different way to look at a conference of this nature. And I think that's one reason we're seeing so many realtors that are have registered, so many title companies that are coming. And we're really trying to expose a lot of people around the country, the Texas MBA, maybe for the first time, come to the library, come to a very unique vantage point, come to an opportunity for you to really maybe be educated in in a way that some of these conferences don't always do. A lot of these people come to these conferences, I hang out at the lobby, I do a lot of networking, I have a lot of meetings, but this is an opportunity for you to do the same thing. You can still certainly network. We've got a big giant networking room right next door to our auditorium, but it also gives you the opportunity to really hear from real thought leadership. And so we don't want to just be worried about what kind of chicken we're gonna serve at lunch, or in our case, barbecue. But we want to make sure that this is an opportunity for you to network, but you've got to also be able to learn something. If you're gonna invest in the Texas MBA and you're going to invest in a ticket, come down here. We want to make sure that you leave thinking that was a conference I didn't expect. I learned something here that I don't learn at some of these other conferences. We're gonna have a big kickoff party at uh what is called Scholz's Beer Garden on Sunday night, that's the 15th from four to six. Scholz is uh is the oldest operating business in the entire state of Texas. There's probably been more cold beer consumed there than probably any any place in the entire state of Texas. So if you're a fan of the University of Texas football team, odds are you've been there. If you're a fan of Texas politics and you've ever been in the state capitol, you've probably been to Scholz's. And so this is a very Texas way to kick off our Texas Mortgage Bankers Association housing summit. And I would encourage anybody that's uh watching this video, book a ticket, come to Austin, allow yourself to be educated and allow yourself to be networked, and hopefully we'll have some real Texas hospitality for everybody to come in and we'll buy you everybody a cold beer at Scholz's on that Sunday night. Robbie Chrisman:That sounds great. Yeah, I attended last year and I remember walking away thinking this was phenomenal to get a holistic look at housing rather than just the same old mortgage tropes that seem like they're trotted out at every conference. And on top of that, I will also corroborate what you said about the venue. It's a beautiful auditorium where everything is sloped down toward the stage. The acoustics are beautiful. You can think about all the former presidents that have been on that stage. It's just designed for a great experience for people attending a lot of people. Scott Norman:Can I comment on that? Because that is interesting. Every president since LBJ, with the exception of President Trump, has been in that auditorium. So it's a very unique presidential library because so many people have come to Austin to go to that library to speak, talk about the issues of the day. And we really thought what better. Place in the entire state of Texas, maybe with the exception of the Alamo, to talk about what does housing look like? Because it affects all of us. You know, we talk about the rising cost of homeowners insurance. It doesn't matter if you're in a $5 million home in Los Angeles or a $50,000 home in small town Texas, it's all relative. And so rising costs, inflation, gas prices, diesel prices, grocery prices, they all affect residential housing. And so if you're a home builder or if you're a realtor, we think that there's something for you not only at this conference, but frankly within the Texas MBA. Because, like I said, while we are the oldest statewide mortgage bankers association in the country, we want to be more than just an association. We want this to be something where we're a destination and that people can come here, they can feel at home here, and really call the Texas MBA home, or maybe even, uh depending on where you live, maybe a second home. So the LBJ Library is a perfect place for us to have this event because it's going to allow people to get a little education from the library. I encourage everybody to maybe come early or stay late and take a little bit of a trip around the library because it's a gorgeous library. It's right on the campus of the University of Texas. So it's it's literally catty-corner from DKR Memorial Stadium. So if you're a college football fan, you can kind of check that off your box a little bit as well. So it's just it's a it's a very special event. And with interest rates where they are right now, it's probably is more important now to come to an event like this. Don't buckle down and maybe tighten your tighten your belt and get through this year as it relates to your profit and loss. We would say unbutton your belt, loosen it up a little bit, come to Austin, because we really are bringing the best thought leaders in the United States to Austin to talk about residential housing. And it's just an event that doesn't take place anywhere else in the country. Robbie Chrisman:I will be there in my bolo tie and boots for other people that might be interested in registering, go to TexasMBA.org. And I will extend a special invitation for podcast listeners. If you are listening to this podcast, you hear me say this. My offer to you is I know a lot of backways into DKR Memorial Stadium that you're not really supposed to go. I will give you a private tour of the stadium. We will be in there. Zero people in the seats if it's a hundred thousand little private tour from yours truly. So that's a bonus for people listening to this. Scott, really appreciate the time, man. Looking forward to seeing you. Scott Norman:Robbie, thank you so much. Hook 'em horns. And I look forward to seeing everybody in Austin, Texas on Sunday the 15th or Monday the 16th at the LBJ Library for our Texas Mortgage Bankers Association Housing Summit. So thank you so much. Robbie Chrisman:The highlight of this week's economic calendar will be tomorrow's consumer price index report, with no year-over-year readings available because of last October's shutdown-related data. Softer core inflation would offer some relief after September's upside surprise, but would likely leave a December rate hike intact. Other releases of note this week include October NFIB Small Business Optimism, October existing home sales expected to fall 5%, October PPI, three-year, 10-year, 30-year Treasury note auction. Though the Treasury market will be closed for veterans day on Wednesday, there will still be a commentary and podcast for you. Today's economic calendar has September wholesale inventories of little consequence, followed by the $58 billion three-year treasury note auction. We begin the week with agency MBS prices, little change from Friday's close, the two-year yielding 4.53, and the 10-year yielding 4.85 after closing last week at 4.86%. Let's wrap up with the joke and some housekeeping. What did the surgeon say to the patient who insisted on closing up her own incision? Suit yourself. Thanks again to Truework, a checker company, for sponsoring this week's podcast. Truework is the one verification solution to replace in-house waterfalls. You can verify any borrower with a VOIEA solution that automates the entire process to quickly deliver the most accurate and complete reports with broad GSE coverage. To learn more, visit Truework.com.