Reagan's lasting legacy is both political and personal. Here in Washington, the evidence of Reagan’s policies is the most obvious of an administration’s since Franklin Delano Roosevelt’s New Deal. On a personal level, Reagan was the most charismatic president since John F. Kennedy, inspiring a generation of “Reagan Democrats” and leaving office with the highest personal approval rating of any president before or since.

The personal touch extends directly to the Mortgage Bankers Association. Cheryl Crispen, MBA’s senior vice president of communications and marketing, first met Reagan when she was seven years old; Crispen’s mother, Elaine Crispen, served as Nancy Reagan’s press secretary and senior advisor.

“President Reagan was a man of true integrity, great humor and humble leadership. He always had time to listen and, more importantly, he had the wisdom to provide guidance,” Crispen said.

Crispen recalls visiting Reagan regularly in his California office, where he would give her jelly beans and tell her jokes. The Crispen family often spent holidays such as Thanksgiving at the Reagan ranch in California.

"Whether he was leading a strategic policy discussion at the White House or carving the Thanksgiving turkey at the ranch in California, President Reagan always treated every single person with the utmost respect," Crispen said. "He was a truly good man."

Reagan’s political legacy is equally impressive. When he assumed office in January 1981, the nation’s inflation rate was 13.3 percent and growing; unemployment at more than 7 percent and mortgage rates stood at 12.7 percent. The ultimate “30,000 feet” person, Reagan launched an aggressive economic vision that came to be known as “Reaganomics,” creating a structure that centered on less government, lower taxes, fewer regulations and lower inflation.

Reaganomics took hold not without some fits and starts; unemployment briefly spiked at 10.8 percent and the economy plunged into recession in 1982; additionally, some analysts suggest that the Reagan Administration’s relaxing of regulations contributed directly to the savings and loan crisis of the late 1980s. HUD was so quiet during Reagan’s two terms that Reagan once failed to recognize his HUD Secretary, Samuel Pierce, at a Cabinet meeting.

But in the long run, noted MBA Chief Economist Doug Duncan, Reagan’s aggressive approach to combating inflation along with his landmark 1986 Tax Code reform—the most extensive overhaul of the nation’s tax code since 1913—stabilized inflation and despite then-record budget deficits, paved the way for the largest economic expansion in U.S. history.

“President Reagan's belief in a broadened tax base with a lower rate of taxation was completely consistent with and supportive of increased opportunity for homeownership,” Duncan said. “Homeownership is consistent with his belief in the ability of the American people to be self sufficient and to own a stake in the future of America and their community.”

Reagan’s tax reforms, including elimination of the deductibility of interest expense on non-mortgage debt, accelerated the process of investment in residential housing and its contribution to household wealth, Duncan said. Additionally, the elimination of usury ceilings allowed for the development of the subprime mortgage market thus broadening access to credit market to millions of people who previously were shut out, he said.

“The increased incentives for entrepreneurs in his core tax policies laid a foundation for the dramatic expansion of our economy, increasing household incomes, and spurring jobs growth,” Duncan said. “Job creation is fundamental to advancing homeownership opportunity.”

Reagan was at his shrewdest in his dealings with the Federal Reserve. Under former chairman Paul Volcker, the Fed aggressively attacked inflation, reducing the inflation rate from more than 13 percent in 1980 to just 3.8 percent by 1982. When Volcker’s term ended in 1987, Reagan appointed Alan Greenspan, whose continued guidance has led directly to nearly non-existent inflation, strong economic growth and record homeownership rates.

“Reagan’s support for the return of the Federal Reserve System to its primary responsibility of eliminating inflation and preserving the value of our currency resulted in a long term decline in nominal interest rates making housing more affordable for millions,” Duncan said.

In the long run, Reagan and his legacy have endured. His popularity rarely wavered and only increased; his simple messages and charismatic manner, said Kurt Pfotenhauer, MBA’s senior vice president for government affairs, resonated with the majority of Americans in a way that few achieve.

“During his two terms as President, Ronald Reagan completely reshaped the political landscape in our country, reminding Americans of our love for freedom and restoring our healthy distrust of big government,” Pfotenhauer said.

(MBA offices are closed today in observation of the National Day of Mourning for Ronald Reagan.)
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Act today, and you’ll reach an audience of between 5,000–10,000 potential homebuyers in one day and in one place.

The fairs are primarily targeted to first-time homebuyers, providing them with access to experts in the housing field. These are people who are looking for lenders, realtors and other experts in the housing industry. Don’t miss this incredible opportunity to market your products/services to this audience.

MBA is an exhibitor and will feature the Home Loan Learning Center (www.homeloanlearningcenter.com), a one-stop resource for potential homebuyers, with information on understanding the loan process, how to determine their credit score and more. The site includes an “Ask an Expert” area, as well as information every homebuyer needs to know, such as their legal rights in the homebuying process, exactly how much home they will be able to afford, and more.

Home Expo 2004 events will take place Saturday, June 19 at the Cashman Center in Las Vegas and on Saturday, June 26 at the Radisson Convention Center in Miami.

To register for the fairs, you must download the registration form(s) for each event (forms are in Word format).

Click here to download the registration form for the LAS VEGAS housing fair.
Click here to download the registration form for the MIAMI housing fair.

Complete the form(s), and e-mail or fax them to:

• For the LAS VEGAS home fair: Bernard Yergeau (Bernard_C._Yergeau@hud.gov; (702) 388-6244)

• For the MIAMI home fair: Judith Ayers (Judith_A._Ayers@hud.gov; (305) 536-5765)

If you have any questions, please e-mail Yergeau or Ayers directly. MBA is not a sponsor of this event; please direct any questions to Yergeau and/or Ayers.

We look forward to seeing you in Las Vegas and Miami.
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The announced Round A 2004 awards, in which Hanmi Bank participated, totaled nearly $19 million; the funds support the construction of 51 projects comprising nearly 3,100 affordable housing units.

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Stewart Mortgage Information (SMI), Houston, formed Stewart Default Solutions Inc. (SDS) to offer an array of default managements and technology products supporting the mortgage and consumer services industry.

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Loan Protector Insurance Services, Solon, Ohio, announced the addition of a new department dedicated to researching, processing and verifying insurance documents for escrowed and impounded loans serviced by Loan Protector.

The new department allows Loan Protector to more accurately and efficiently process bills for escrowed loans; research and verify payee and billing document exceptions; verify and audit data entry; communicate exceptions to clients; respond to client inquiries and provide feedback to product management on enhancements needed.

Within the department, all documents go through a thorough quality control process, including four instances of redundant data entry to ensure there are no discrepancies. Loan Protector's EasyTrack software enables lenders to access billing history and images of paper bills via the Web. In addition, EasyTrack's features include an automated bill review and a Web-delivered, collaborative bill-marking system.

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Lenders First Choice, Simi Valley, Calif., is now licensed in Nevada and North Dakota, enabling the firm to service loans in a total of 41 states. Despite a continued decrease in mortgage volume over the past year, the firm increased its total monthly orders more than 250 percent.
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Cohen, speaking at the Commercial Mortgage Securities Association annual convention, said that real estate was, at one time, a "buy and hold" asset for the borrower. But with interest rate movement and fallout from the 1980s and 1990s, the borrower is now an "asset trader."

"The mindset of the borrower has evolved," Cohen said. "The borrower is more sophisticated than he ever has been because there is more money, more products and more lenders with multiple products than ever before."

Richard Bassuk, president of Singer and Bassuk Organization (SBO), New York City, said that borrowers with experience in CMBS recognize that Wall Street, or the CMBS market, is an important source of capital. Although portfolio lenders have more flexibility, they are also unable to handle some of the transactions that Wall Street and the CMBS market could handle, he said.

"It's a tool and you need to apply it," Cohen said of the CMBS market.

Cohen added that while the industry is real estate and mortgage bankers represent the finance aspect of the industry, the finance aspect has one capital market, and that capital market has a subset of people who hold the loans and sell the loans.

"There's an intersection there," Cohen said.

However, in some cases, borrowers could find a loan originally with a portfolio lender later sent to securitization. But some borrowers could want a particular lender for the reason of keeping the loan in a portfolio.

"Go back to every mortgage that has been written," Cohen said. "No lender has ever said 'I will hold this loan in perpetuity.'"

Bassuk said SBO negotiates restrictions with a lender who could place a borrower's loan into securitization rather than retain it in a portfolio. He said there is no premium built in the loan for lenders who must hold the loan in portfolio.

"We have successfully been able to resist that," Bassuk said. "It is in every portfolio deal. I can't think of one where it doesn't start out that way. It is constantly being negotiated by us to get it to the point where it is successful."

Bassuk noted that lenders understand they must retain the loan in portfolio as part of the cost of doing the deal.

"The pricing on the transactions has not been different, street to portfolio, in any kind of meaningful way," Bassuk said. He added that his firm's clients are "highly sophisticated" and SBO works with Wall Street to introduce different approaches and ideas on deals, especially if there is a need to be creative on a deal. "We try to put it together in a way that would make the whole thing work," he said.

Michael Van Konynenburg , president and CEO of Secured Capital Corp. , Los Angeles, said the most time in negotiations pertains to flexibility, substitution rights and replacing collateral.

"We're doing a lot more deals that have fixed and floating components," Van Konynenburg said. "The fixed component which is the piece that the [lender] will maintain longer term and the floating components may go up and down in terms of proceeds to satisfy releasing them."

Cohen said the CMBS market still needs to address borrower satisfaction issues with regard to servicing and post-closing methods. And Van Konynenburg noted that a disconnect between originators and servicers leads to a loss of control in the relationship with the borrower.

"They [borrowers] rely on us to guide them through this process," said Richard Horowitz, vice president at Cooper-Horowitz, Inc., New York City. "Some of them will allow an institution to get a slight premium if they are going to get a break somewhere else. But every borrower wants something. And even when they have something, they want more. That's just the way it is. Otherwise, they don't need us."
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In May, the company announced a stock repurchase program of up to 400,000 shares of its outstanding common stock contingent on the anticipated sale of its mortgage asset portfolio. The shares authorized for repurchase represent nearly 5 percent of the common shares outstanding at March 31.  Repurchases may be made from time to time at prevailing market prices through open market or negotiated block purchase transactions at the discretion of the company. The timing of the repurchases will depend on market conditions and corporate requirements.

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CWCapital LLC, Needham, Mass., launched of a new conduit platform, offering a set of services to its customers. 

CWCapital Investments' ability to purchase B Pieces on CWCapital conduit loans allows CWCapital to maintain control over its capital and to offer its borrowers and network of mortgage brokers increased certainty of execution. The new platform would also position CWCapital as a vertically integrated lender.
 
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Potential terrorism attacks (51 percent) and the economy (35 percent) are the biggest threats to a full recovery of the worldwide hospitality industry, according to respondents of a survey of executives attending New York University's 26th Annual International Hospitality Industry Investment Conference.

A majority (62 percent) said overall recovery of occupancy and average daily rate to 2000 levels is one to two years away, and 51 percent said an increase in the revenue per available room is the measure to watch, indicating when a recovery is under way.

Revival of corporate travel (63 percent) and the rate of job growth (22 percent) were the factors cited with the greatest effect on the pace of recovery. Respondents said that real estate investment trusts (REITs), both public and private (40 percent), and opportunity funds (20 percent) will be the most active buyer groups for hotels during the recovery.

Sixty-four percent of the respondents said that upper upscale and upscale will be the service segments that will experience the greatest investment activity over the next six months. Urban (52 percent) followed by suburban (33 percent) will be the most active geographic segments during the same six-month period.

Further, Asia/Pacific (55 percent) followed by North America (29 percent) are predicted to experience the greatest percentage increase in lodging investment over the next five years.
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The mortgage is subject to a 30-year principal amortization schedule.  The borrowers are N.J. Metromall Urban Renewal Inc. and J.G. Elizabeth LLC, which are wholly owned subsidiaries of GRT.  Net proceeds from the refinancing were used to repay $162.1 million of existing mortgage debt on the property and to reduce outstanding borrowings on the company's credit facility.

Glimcher also announced that GM Olathe LLC, a wholly owned subsidiary of GRT, completed a $30 million two-year bridge facility with three one-year extension options on The Great Mall of the Great Plains in Olathe, Kan. The 811,678-square-foot, enclosed mall, which opened in August 1997, is currently being redeveloped as a conventional enclosed regional mall.

The loan bears interest at London interbank offered rate (LIBOR) plus 200 basis points and the proceeds were used to repay an existing $25 million mortgage with a variable rate of LIBOR plus 388 basis points and to reduce outstanding borrowings on the company's credit facility.

"With the funding of the Jersey Gardens and Great Mall loans, we have completed all of our major refinancings planned for 2004.  These refinancings will allow us to maintain approximately 85 percent of our debt at fixed interest rates," said Michael  Glimcher, president.  "The weighted average interest rate for our fixed rate debt has now been reduced to 6.41 percent."
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Armed with the right information, a single informed underwriter can negotiate the kind of deals that not only are successful in their own right, but will lead to more business opportunities. CampusMBA's Multifamily and Industrial Underwriting seminar prepares you with the information you need. The conference takes place July 14-15 at the Fairmont San Francisco.

This one-and-a-half day interactive seminar uses a combination of classroom and web-based training to hone in on the important details of multifamily and industrial properties

The seminar includes:
• Analysis of actual case studies featuring property types, loan structure, and borrower structures
• Lectures on key issues in underwriting commercial loans
• Opportunities to network with your peers
• Online activities that complement your training—this program has been coupled with the Multifamily Underwriting Web course.

Who should attend?
• Underwriters
• Investment analysts
• Credit analysts
• Professionals in commercial loan administration
• Commercial loan production professionals
• Legal representatives of commercial properties

Attendees of this event will earn four points toward the MBA's Certified Mortgage Banker  designation. Additionally, accountants can earn 11 CPE credits by attending this entire live seminar. Web-based components are not applicable for credit.

Click here  to register online, call (800) 348-8653, or download  the registration form, and fax it to (410) 672-3504.
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The recent rash of corporate scandals has turned the business pages of newspapers into a crime blotter. The names are now very familiar: Enron, Tyco, Adelphia, WorldCom, and Arthur Anderson.

We have seen unimaginable activities like a major accounting firm being convicted of obstructing justice and a leading brokerage firm caught misleading its clients. Once high-flying companies and their senior management are disgraced and are paying the penalties. On the corporate side, firms are suffering a loss of clients, falling stock prices, and bankruptcy. On the personal side, there is not only disgrace but large fines and prison sentences.

So, what do these stories and scandals have to do with you? The way you do business? Your company? The answer is simple–these scandals were the result of actions taken by people in those companies! An ethical error on your part can cost you your job and your reputation (and thus the ability to find another job), or even land you in legal troubles. And you, in turn, shape your company’s practices and its reputation through your actions. As such, you have the power to determine whether your company acts ethically and legally.

Join industry expert Ira Sockowitz on Wednesday, June 23 at 3:00 p.m. EDT, to learn what you need to know about ethics in the mortgage industry and how to stay out of the headlines.

Sockowitz has combined a career in law, politics, communications and logistical planning to obtain a unique blend of strategic planning and management know-how. By integrating skills in initiative management, public policy research, strategic communications, and project administration, Sockowitz has earned a reputation as an effective leader who achieves his employers’ and clients’ mission-critical goals.

As a principal and founding member of The Phoenix Consulting Group, Sockowitz provides strategic counsel to clients on public affairs, intergovernmental, legislative, and communications issues. In addition, he provides protocol and dignitary management services to senior officials of governments, corporations, and associations. Under his direction, an experienced team of associates has planned and executed numerous domestic and foreign special events and led trade and relationship-building missions abroad.

Prior to starting the Phoenix Consulting Group, Sockowitz was managing director of Strategic Planning Group (SPG), which provided public affairs and business advocacy services to corporations and associations. As well, he planned and managed several special events ranging in size and scope from the Presidents of the eight industrial world powers (the 1997 Denver Summit of the Eight) to a three day festival for 150,000 people (as the Black College Reunion) while with SPG. Sockowitz has also worked as a special counsel at the Commerce Department, as a senior advisor with the Small Business Administration and as an administrative law judge.

CampusMBA audio programs are a timely, convenient, and cost-effective way to train your staff on the latest topics. Why register for an audio program?

• Inexpensive - train your entire staff (at one site) for $69 (members) / $79 (nonmembers)
• Quality Program - experts brought to your conference through the phone
• Simple - just use your speaker phone
• Easy - presentation materials provided to your prior to the event
• Current - latest topics brought to you in a timely way

To register for this audio program, please call (800) 348-8653 or click here to download the PDF registration form.
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Hudson-Wilson, speaking this week at the Commercial Mortgage Securities Association annual convention, said rising interest rates could create “good scenarios and bad scenarios.”

“Inflation has got to be on your radar from now on,” she said. “It’s a serious, serious risk.”

In a “bad scenario,” rising inflation would increase with construction and interest rates that would lead to “stagflation” and a drop in gross domestic product growth. In this scenario, “sales are slow, absorption is off, household formation slows down. To add insult to injury, expenses rise with inflation and NOI [net operating income] gets crushed,” Hudson-Wilson said. Materials would rise in cost and slow construction, but Hudson-Wilson said it would not be enough to prevent deterioration of property fundamentals that would cause a drop in value.

In the “good scenario,” however, Hudson-Wilson said investors would hedge funds flowing into real estate. Interest rates and cap rates would rise at the same time with rising total returns and values. While funds flow into real estate, the fundamentals of real estate would not support the hedge and discourage greater flows.

“The discount rates rise and the income outlook deteriorates, especially so for apartments,” Hudson-Wilson said. “Risk premiums must stay high or even high so as interest rates rise, the cap rates need to accompany them.”
 
The result, Hudson-Wilson said, would be flat to rising cap rates, rising returns and “nice, safe loans getting safer.”
 
Hudson-Wilson said the “echo boomer” demographic would play a greater role in the labor force as they move into the 35 to 54 year-old spending range, while the “baby boomer” generation moves out of the workforce and spends less. Also, with immigration factored into the job growth equation, Hudson-Wilson said job supply should increase by as much as 10 million jobs by 2010.

“Outshoring? We better have outshoring,” Hudson-Wilson said.

For property markets in commercial mortgage-backed securities, Hudson-Wilson said apartments are more at-risk in the current period than office, although a supply risk is looming in the future. While demographics show echo boomers a couple of years away from renting, office developers continue construction at what they believe to be a disciplined pace. However, Hudson-Wilson said that pace would still lead to over-construction in the office market.
 
“They’ll do less, but they won’t do less enough,” Hudson-Wilson said. “This is going to be a problem.”
 
But Hudson-Wilson found hotel properties as favorable compared to any property type in the next 5 years as long as there is not a major terrorist event in the country. She called warehouse properties a “slam dunk” with the inventory and sales ratios at historic lows.
 
“That’s a pretty happy, safe place,” Hudson-Wilson said.
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