Trending Thursday is a roundup of the stories shaping the week and what’s yet to come through the weekend — also taking into account social media reaction. Think of it as a midweek Monday Morning Cup of Coffee, but with extra caffeine.

Home construction down in the early summer? Blame it on the rain. In Texas, that is, which accounts for 15% of all new single-family construction. That’s what Wells Fargo says anyway in its July 2015 Housing Chartbook.

"We believe some of the weakness in new home sales and single-family starts is tied to unusually wet weather in Texas and other parts of the Southwest that slowed sales and new home construction in June. We have trimmed our forecast, however, to incorporate growing concerns that slowing global growth will weigh further on the energy sector, mining, agriculture and manufacturing. We look for economic activity to cool off further in Texas and moderate from its recent pace in Colorado and parts of the Midwest," the banking giant says.

The Mortgage Bankers Association reported today that mortgage applications for July 2015 for new home purchases decreased by 4% relative to the previous month. It’s been dry in Texas for the last month, so how that will affect August will be telling. Spoiler: in the last week, the MBA reports apps are becoming a total non-mover.

And speaking of mortgage originations, here's a breakout of mortgage originations by credit score from Liberty Street Economics.

Overall, originations picked up in the second quarter of 2015 and have been rising over the last year. However, as the chart makes clear, this new mortgage borrowing has been driven by borrowers with credit scores above 660. Originations by borrowers with credit scores below 660, shown in dark blue and yellow, fell sharply after the Great Recession and have not recovered. Originations to borrowers with these low scores exceeded $650 billion in 2006, but have remained below $150 billion since 2010 as subprime mortgage lending has all but dried up.

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Mortgage REITs are looking more attractive to analysts at Compass Point Research & Trading. The sector valuation, improved fundamentals, combined with a reversal in benchmark interest rates (in particular the 10-year Treasury), and a change in group sentiment have led Jason Stewart at Compass Point to upgrade the firm’s opinion on this out of favor group.

“We upgrade our view of the Agency Mortgage REIT space to positive and our ratings on NLY and AGNC to Buy from Neutral. NLY, AGNC and CYS stand to benefit the most,” Stewart says in a client note. “With incremental ROEs in the low double digits and modest QTD appreciation in book value, we believe shares can trade to 90% of 2Q15 BVPS (slightly lower on current estimated BVPS) and still maintain double digit yields.”

John Carney kicked off a great Twitter discussion yesterday with his column in yesterday's Wall Street Journal headlined "Banks Rediscover Their Homing Instinct."

Carney makes the case for getting rid of Fannie Mae and Freddie Mac as guarantors of mortgages.

As a free market guy, I can’t disagree in principle with his argument that in their absence, banks would step in to fill the gap.

But the problem is, most of the banks with the wherewithal to do just that are currently still either paying out hundreds of millions for mortgage fraud, and/or buying up legislators left and right and entrenching themselves in the Federal Reserve system to ensure they keep their Too Big To Fail status.

There’s also the question of what the purpose of housing policy should be and if there’s a role for government or quasi-government in ensuring those on the margins have a chance to get a piece of the American Dream of homeownership, and ensuring products like the 30-year-mortgage remain viable.

Either way, the TBTFs want nothing to do with mortgages for a variety of reasons Carney fails to even mention. But, then again, he's been known to avoid bringing up, shall we say, exculpatory evidence.

GSE investors take issue with Carney’s take. Long-time Carney critic Investors Unite says this:

Carney's analysis of the share of U.S. mortgages held by the banks notes that the "long-term trend of banks unloading mortgages has reversed," which will help banks and hurt the GSEs. He calls this "boring banking." We call it putting the dream of home ownership into the hands of a privileged few who can meet the banks' standards.   

The thing is, banks have a terrible track record of lending to underserved communities where otherwise qualified potential homeowners struggle to establish credit under rigid guidelines or just don't have the means to pull together a down payment large enough for the typical mortgage. In addition, the GSEs have played an important role in creating the 30-year mortgage. Their role is not to make risky or fraudulent loans but to provide financing options to make homeownership attainable for working Americans.

Regardless of that, the column touched off a pretty interesting discussion on Twitter among some of our favorite mortgage finance and housing industry Tweeters.

Here are some highlights, from some usual suspects:






It’s going to be interesting to see how the day treats some of the bigger banks in the mortgage space. On Wednesday, the financial sector finished well behind the broader market amid growing expectations the Fed may be inclined to delay its first rate hike past September. Word is central bankers are most concerned about what’s happening with the People's Bank of China. They're not the only ones. Bankrate reports more on how the China situation is driving down rates Stateside.

Here’s one for the legal minds. The New Jersey Supreme Court ruled that a homeowners association is liable for a resident who sustained injuries on a sidewalk in the neighborhood saying that the standard immunity that property owners enjoy for injuries on a public sidewalk doesn't extend to what happens on private sidewalks.