1.14.26 Benign Inflation; Key Mortgage Services' Jen Poniatowski on Borrower Expectations; FHA Delinquencies

Welcome to The Chrisman Commentary, your go-to daily mortgage news podcast, where industry insights meet expert analysis. Hosted by Robbie Chrisman, this podcast delivers the latest updates on mortgage rates, capital markets, and the forces shaping the housing finance landscape. Whether you're a seasoned professional or just looking to stay informed, you'll get clear, concise breakdowns of market trends and economic shifts that impact the mortgage world.

In today’s episode, we look at some data trends we are seeing, namely benign inflation and strong retail sales. Plus, Robbie sits down with Key Mortgage Services' Jen Poniatowski for a discussion on how lenders should adjust borrower expectations in a falling rate environment, how buyer leverage is shifting as inventory rises, and how economic uncertainty is shaping first-time buyer confidence and product choice. And we close by examining a slew of economic data that was released this morning.

Thank you to Figure. Figure is shaking up the lending world with their five-day HELOC, offering borrower approvals in as little as five minutes and funding in five days. Figure has hundreds of partners in the Banking, Credit Union, Home Improvement, and of course, IMB space embedding their technology. 

Transcript

“There is going to be a merger between FedEx and UPS. Yep, they're going to be called ‘FedUp.’ Perhaps Saks, which declared bankruptcy last night, will merge or be acquired by another retailer. In our world, no one expects lender and/or vendor mergers and acquisitions to diminish in 2026, and in today’s Mortgage Matters at 2PM ET, presented by Lenders One, Garth Graham, Senior Partner at STRATMOR Group, will break down key M&A trends, recap the pivotal developments of 2025, and share insights on what lenders can expect in 2026. (Garth leads the firm’s M&A practice and advises many of the industry’s top independent and bank-owned mortgage lenders.) We’ve all seen the M&A that is going on in banks. Cashless banks? People get confused and society is going to the dogs when it’s full of caffeine-free coffee, gluten-free bread, and alcohol-free beer. (Today’s podcast can be found here and this week’s are sponsored by Figure. Take advantage of Figure’s technology and products like its fixed HELOC, DSCR loan, piggyback loan, and direct debt paydown, helping you serve more of your existing network and expand into new markets. Hear an interview with Key Mortgage Services' Jen Poniatowski on how lenders should adjust borrower expectations in a falling rate environment, buyer leverage is shifting as inventory rises, and economic uncertainty is shaping first-time buyer confidence and product choice.)

Partner sought, employment, and transitions

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A national title Insurance agency in New York State is looking for a partner to increase its sales. The title & escrow agency has been around for over 20 years. The ideal partner is someone with many banking and real estate connections looking to either merge, joint venture or become partners with the sole principal of the title agency. This individual or company understands the profitability within the title industry and is looking to get involved on the title side. It's a dream scenario for someone(s) to walk in here and use this national platform to get involved in the title industry. Interested principals should send a confidential note of interest to Chrisman LLC's Anjelica Nixt to pass it along to the president of the company; specify opportunity.

LeaderOne Financial Launches Brand Refresh to Support Modern Homebuyers and Future Growth! LeaderOne Financial, a nationally recognized mortgage lender with more than 30 years of experience, today announced an exciting brand refresh that reflects the company’s continued growth, modern vision, and people-first approach to lending. Founded in 1992, LeaderOne has grown into a trusted nationwide partner for homebuyers and real estate professionals. The refreshed brand builds on that strong foundation while reinforcing the company’s core values; People First, Empowered Collaboration, Accountability, and Continuous Innovation, and introducing a modernized visual identity and refined messaging. “Our brand has always stood for leadership in service, trust, and expertise,” said Randell Gillespie, President of LeaderOne Financial. “This refresh reflects who we are today and supports the future we’re building for our clients, partners, and teams.” The update also includes enhanced marketing, technology, and client-experience tools designed to simplify the homebuying journey and expand access to homeownership nationwide. To learn more, visit LeaderOneFinancial.com.

January is a fresh start in Distributed Retail. It’s okay to begin the year in the same place: last year was busy and comfortable, and the pace of business made it easy to postpone essential conversations. Now is the time to reflect with clarity. What worked? What didn’t? What became acceptable simply because it was familiar? What quietly held you back? Time-tested wisdom reminds us that real progress begins with honest evaluation. Planet spent the final 90 days of 2025 intentionally building its Distributed Retail strategy and vision for 2026, with a disciplined focus on long-term growth. It’s worth asking: were you included in your company’s strategy? Does one even exist? A new year calls for you to reflect on where you’ve been, consider where you’re going, and choose a path with purpose for the year ahead. We are happy to share our strategy. Contact Matt Payan, SVP National Production Distributed Retail at 972-898-8577.

In a move that was somewhat expected given Rocket’s acquisition of Redfin nearly a year ago, Glenn Kelman, Redfin’s CEO of 20 years, announced that he is leaving the firm in a LinkedIn post. “After 20 years, I’m leaving Redfin. I gave it my all! Leaving was my decision. I love my colleagues. We saved consumers a billion dollars in commissions. I hope to use all that I learned to do something as good as Redfin, in a different field.”

The Chrisman Job Board is the go-to platform for employment opportunities across the mortgage industry. For employers, adding a job listing is easy. Simply create an account and drop in your existing application link, or forward the details to our team and we’ll take care of it for you. For job seekers, joining our Talent Community is completely free. Upload your resume to be visible to hiring companies across the industry and stay connected to new opportunities as they go live.

Products, services, and software for brokers and lenders

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It's 2026, and AI is expected to undergo rapid evolution this year. That’s why lenders should gear up for the new year with tools that will evolve too. Floify’s Dynamic AI brings next-generation intelligence directly into your POS, functioning as a skilled digital assistant that manages document recognition, data cleanup, extraction, and automatic verification. Borrowers upload a document once (such as a paystub or W-2) and see verified data flow through their application without repeated steps or frustrating password resets, resulting in a smoother path to pre-approval. Lenders get cleaner files, fewer abandoned applications, and lower processing costs. And because Dynamic AI is embedded inside Floify’s platform, you gain all the benefits of advanced AI without adding new systems or rebuilding workflows. Yes, AI will move fast during 2026, but with Dynamic AI you’ll be ready to keep pace. Experience tomorrow’s workflow: request a future-ready demo.

Our friends at Optimal Blue are ringing in the new year with some welcome news: the company’s just-released December Market Advantage report shows mortgage lock volume finished 2025 30% higher than a year ago. Refinances led the way, with rate-and-term volume running more than 170% above last December, and the purchase market proved more resilient than many expected, ending the month up 7% year over year. December trends also included continued growth in non-QM lending and meaningful shifts in execution strategy, with renewed movement toward bulk aggregation and rising MSR values. Published monthly, each Market Advantage mortgage data report is chock full of insights your team can use to make better capacity, pricing, and capital markets decisions in 2026. Get yours here.

“Increase your coverage on HELOCs in 2026 with the BETTER Wholesale 2nds Program powered by Tinman AI. Price sensitive clients? Better offers low rates with no lender origination fees or application fees. Self-employed borrowers? We offer 12- & 24-month Bank Statement programs. If you’d like to make higher comp than most programs, earn up to 3% in BPC. What else? Up to 90 percent CLTV, 75 percent minimum draw, and up to a 10-year IO period on HELOC. Better Wholesale offers an easy digital pricing experience featuring an approval process that takes as little as three minutes, and its speed is backed up by a real underwriting process. Better’s program is open to brokers and lenders of all sizes: work with us and get lender-direct pricing! Visit Better Wholesale or contact Patrick Kandianis directly. Let’s do some loans in 2026!”

Wholesale lending company Flyhomes is hosting a live webinar on Jan 21 to share how Buy Before You Sell with the Flyhomes Guaranteed Backup Contract can help your borrowers reduce DTI and qualify for up to 50 percent more. With this solution, borrowers can buy before they sell and make stronger offers without home sale contingency. This nationwide solution requires no loan, offers a competitive tiered flat fee, and can be ready in 24 hours. Save your spot for the webinar now or book a call today to learn more. Flyhomes has helped 5,000+ buyers over the past 10 years, and LOs using this program close an average of 1.2 more loans per month.

“Meet the Axos Warehouse Lending team at MBA’s Independent Mortgage Bankers Conference (IMB26), Feb. 2–4, at The Ritz-Carlton, Amelia Island, FL. We help IMBs fund pipelines efficiently through a responsive, service-driven partnership, so you get focused attention from your RM, funding team, and credit decision-makers. Finance a broad mix (Agency, Jumbo, Non-QM, DSCR, second liens, and reverse mortgages) with flexibility as products and market conditions evolve. Count on disciplined credit oversight and consistent funding execution, plus stability across market cycles. Attending IMB26? Email Eric Nelepovitz or Justin Castillo, AMP. Not attending the conference? We’re still ready to answer your questions. Visit Axos Bank Mortgage Warehouse Lending to learn more.”

The Chrisman Marketplace is a centralized hub for vendors and service providers across the mortgage industry to be viewed by lenders in a very cost-effective manner. We’re adding new providers daily, so check back often to see what’s new. To reserve your place or learn more, contact us at info@chrismancommentary.com.

Capital markets: FHA delinquencies continue to be a problem

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Are you considering all costs in your best execution analysis? While many costs may seem insignificant at the loan level, they become meaningful in the total gains from hedging a mortgage pipeline. ViceEx tools allow users to easily assign trades to investors and other broker-dealers. Saving on or eliminating the bid-ask spread can be achieved by assigning trades for investor delivery or trading with a dealer that has an axe for a specific coupon. Nearly all UMBS and GNMA hedge trades are TBA and can be easily assigned between dealers to maximize execution as trades are combined or business is directed to an active dealer. Manual tasks such as printing, signing, and tracking trades are automated in ViceEx, allowing users to quickly assign trades and improve execution. Vice Capital Markets experts provide the tools and guidance to help maximize execution. Reach out to Troy or Chris to learn more.

Turning to the markets, after a volatile reaction to the $200 billion MBS announcement, mortgage markets seem to be calming down as trading conditions look more normal and orderly. Even though mortgage bonds weakened a bit yesterday, that wasn't alarming given how much they had already rallied, and things feel stable as long as no new surprise headlines shake bond markets again.

Yesterday’s release of the CPI report for December was generally encouraging: Core CPI rose less than forecast (holding steady at 2.6 percent, improving from 3.1 percent in August and 3.2 percent in December 2024), largely due to a smaller-than-expected rebound in core goods after November’s unusually soft, shutdown-delayed print; data is expected to be viewed cautiously due to technical distortions in recent CPI calculations. Those same measurement issues will likely contribute to lower PPI inflation in the delayed reports for October and November.

The inflation report strengthened conviction that it will continue progressing toward 2 percent in 2026, and the odds of a January Fed rate cut have plunged to near zero. Concerns about Federal Reserve independence eased after Republican lawmakers and a bipartisan group of former Fed leaders publicly criticized the DOJ’s subpoena of the Fed, helping keep U.S. interest rates stable despite political tensions.

Additionally, investor confidence was reinforced by strong demand at Monday’s 10-year Treasury auction, even amid broader risks that typically pressure bonds. The government’s sale of 30-year bonds yesterday went smoothly, showing healthy demand from investors. Buyers were willing to accept a slightly lower yield than expected, and overall interest was a bit stronger than average. As a result, long-term bond prices rose and 30-year interest rates edged lower after the auction. All in all, it is a strong finish to this week's good note and bond auction slate

Want more good news? New home sales strengthened in September and October as mortgage rates eased and builders increased incentives, with sales averaging a 737k annualized pace, the strongest of the year. Despite this pickup, inventory declined only modestly and months’ supply remains elevated at 7.9 months. With unsold homes still plentiful and prices down 8 percent year over year, builders are likely to stay cautious about meaningfully ramping up production.

Okay, maybe some concerning news now. Severe delinquencies among FHA borrowers have surged in recent months, sharply outpacing those in the VA market, largely reflecting FHA borrowers’ much lower average credit scores and recent policy changes that have increased stress in this segment. FHA severe delinquencies have climbed to about 4.7 percent, more than four times pre-QE4 levels, and are now the primary driver of rising distress across Ginnie Mae II 30-year pools, especially in lower-coupon bonds where unpaid balances are heavily FHA weighted. While VA delinquencies are also elevated versus history, they have risen far less, and current buyout activity in FHA pools remains limited, suggesting a growing backlog of deeply delinquent loans that could eventually be forced out of discounted, low-coupon pools. This dynamic creates potential opportunities for investors, particularly in lower-coupon FHA bonds, with 2022-vintage borrowers emerging as the most at-risk and likely candidates for future buyouts.

Today’s economic calendar kicked off with mortgage applications from MBA surging 28.5 percent in the week ending January 9, rebounding from the New Year’s holiday, and reflecting strong increases in both refinancing and purchase activity. Refinance applications jumped 40 percent week over week and were up 128 percent year over year, while purchase applications rose 16 percent on a seasonally adjusted basis and were 13 percent higher than a year ago. We’ve also received the November Producer Price Index (+.2 percent, about as expected, +3.0 y-o-y), and November retail sales (+.6, slightly higher than expected; +.4 percent ex-food and energy). Later today brings October business inventories, existing home sales for December, Treasury conducting a buyback for up to $2 billion 20-year and 30-year coupons, and remarks from five Fed speakers (Paulson, Miran, Bostic, Kashkari, and Williams) before the latest Beige Book is released ahead of the January 27-28 FOMC meeting. Bank earnings also continue, with Bank of America, Citigroup, and Wells Fargo reporting. After the inflation and retail sales data, Agency MBS prices are a few 32nds better than Tuesday’s close, the 2-year is yielding 3.52, and the 10-year is yielding 4.16 after closing yesterday at 4.17 percent.

A Scotsman was looking for a room to rent for the night.

While walking through a rather dilapidated neighborhood, he came upon a sign outside of a rooming house:

MCPHERSON'S INN
For Only $20 Ye Get
A Room
20 Course Dinner
Dancing Girls
A Bottle of Whiskey
All for $20
The Scotsman walks up to the rooming house, knocks on the door, and asks the lady that answers, "Would that be a pint or a quart of whiskey?"

Visit www.ChrismanCommentary.com for more information on our industry partners, access archived commentaries, or subscribe to the Daily Mortgage News and Commentary. You can also explore the Chrisman Marketplace, a centralized hub connecting mortgage professionals with trusted vendors and solutions. If you’re interested, check out my periodic blog on the STRATMOR Group website. This month’s piece is titled, “Artificial Intelligence in Mortgage Lending.” The Commentary’s podcast is available on all major platforms, including Apple and Spotify.

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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes, visit the Chrisman Job Board. This newsletter is intended for sophisticated mortgage professionals only. There are no paid endorsements by me. For the latest mortgage news, visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.ChrismanCommentary.com. Copyright 2026 Chrisman LLC. All rights reserved. Paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman. The views and opinions in this newsletter are mine alone unless otherwise specifically stated herein.)