Dominion Bond Rating Service (DBRS), New York, said NIMs are a popular financing option for subprime mortgage residuals because they allow conduits to securitize excess spread and prepayment penalty charges from existing subprime transactions. Other components of a NIM can include interest only certificates, interest reserve funds, and interest rate caps.

Scott Seewald, managing director at Fitch Ratings, said the Web site is “constantly evolving,” based on market trends. “Though Fitch projects flat to slightly lower NIM issuance in 2005, there are still more buyers of NIMs than ever before, which further increases the importance of timely surveillance of these deals,” he said.

Fitch said it became the first agency to launch surveillance and performance data exclusively for NIM in January 2004. The ratings agency said it will continue to notify the market of any additional enhancements made to the NIM platform.
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The bills are H.R. 1010, introduced by Reps. Mark Foley, R-Fla., and Earl Pomeroy, D-N.D., and S.580, introduced by Sens. Gordon Smith, R-Ore., and Kent Conrad, D-N.D. REMIC modernization is one of MBA's advocacy priorities for 2005. On March 10, MBA sent a letter to senators urging them to cosponsor the REMIC bill.

The bills would bring “crucial modernization” to the REMIC tax rules that govern commercial mortgage-backed securities (CMBS) transactions by updating a small section of the tax code and removing a large barrier to growth in the commercial real estate sector, MBA said. “By modernizing the REMIC law, the bills will allow property owners to make improvements or additions to the mortgaged real estate. These enhancements will protect CMBS bondholders and allow borrowers to increase the value of their property.”

In addition, the bills would “enhance greatly” the ability of commercial property owners to upgrade buildings after the mortgage has been securitized, without the need for costly and burdensome tax opinions.  Perhaps most importantly, by facilitating renovation of commercial properties, these bills will help spur new economic growth and employment.

For more information, go to MBA’s Capitol Assets Program Web site, http://www.mortgagebankers.org/wash_update/cap_assets/. The Capitol Assets Program is MBA’s grassroots membership initiative, designed to bring MBA members into the political process and strengthen the real estate finance industry’s political voice and lobbying power.
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No, Motor City is in Dubai, United Arab Emirates—a flagship project that plans multifamily residential and commercial development in and around an auto racing track. You’ve heard of golf course communities—this development is the kind that could bring tears of joy to the most diehard NASCAR or Formula 1 fan.

“It’s a challenge, but I wanted to develop the concept where people want to live by a race track,” said Simon Azzam, director of Union Properties PJSC, Dubai, UAE, which developed Motor City. “At night it’s quieter than a normal street, and during the day it’s fun.”

Motor City is just one of dozens of commercial projects pushing the envelope in scope and originality on display here at MIPIM, Europe’s largest commercial real estate convention. Dubai, a rapidly growing oil-producing country in the Middle East, appears to have plenty of imagination—and money—to accommodate these projects.

Dubai alone has more than 450 multi-story projects under construction, including the Burj Dubai Tower, which when completed will be the tallest building in the world at 2,625 feet--nearly 1,000 feet taller than the current tallest floored structure, the Taipei Tower in Taiwan. It will be the centerpiece of a massive, multi-billion commercial complex. Another project, The Hexagon, a $260 million mixed-use complex in central Dubai, will be a city within a city, including commercial, residential and hotel. All told, commercial investment in Dubai is expected to total $50 billion by 2010, compared to $10.5 billion today.

Another hot spot—in this case, a re-emerging hot spot—is Japan, which is undergoing a commercial renaissance. No fewer than four major projects are completed or underway, representing nearly 2 million square meters of office and residential. Among those completed is the Roppongi Hills complex in central Tokyo, a 54-story complex that includes a private club and a museum. The building attracted more than 45 million visitors last year.

“We share the notion for the 21st century and beyond—that Tokyo should be the place for work, life and entertainment,” said Toru Nagamori of Mori Building Co., Tokyo, which constructed Roppongi Hills.

Japan isn’t the only Far East locale experiencing strong growth. Hong Kong, already a city of skyscrapers, saw the opening this year of Langham Place, consisting of a 59-story office tower, a 42-story hotel and a 15-story retail complex featuring more than 300 shops. The complex already attracts more than 100,000 visitors a day.

And mainland China, gearing up for what it hopes is a successful 2012 Summer Olympics bid, has billions of dollars in infrastructure planned, including an 80,000-seat stadium, 10 new subway lines and a $2 billion expansion of the Beijing Airport. Among the unusual of 300 commercial projects planned is the CCTV Tower, a $600 million “Z”-shaped tower with more than 550,000 square meters of office space.

Europe will see its fair share of projects. Russia is planning the tallest residential tower in Europe, the 54-story Triumph Palace, with 300,000 square meters of living space and 13,500 square meters of retail.

Lower to the ground—much lower—is the five-story, 800-meter long building in Leidsche Rijn, The Netherlands, simply to be known as The Wall. When completed next year, the bright red building will be the longest structure in Europe. The Wall includes retail, leisure and food hospitality facilities.

Another structure, in England, is unusual not for what it does, but how it gets its energy. The $36 million, 8,500 square-meter police headquarters in Gloucestershire will feature one of the world’s largest geothermal heat pumps. An even larger geothermal heat pump will be used on another project at the University of Worcester’s expansion.
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Mack-Cali acquired the remaining 37.5 percent interests in One River Centre for nearly $10.5 million. The transaction gives Mack-Cali 100 percent ownership interest in the Middletown, N.J. property, a three-building, class A office complex that totals 460,000 square feet.

In November, Mack-Cali acquired a controlling interest in the property through the conversion of its mezzanine loan on the property from 2003. At the time of the loan, the owner wanted Mack-Cali to provide property management and leasing services for the complex, which was then 52.2 percent leased. The complex is now 90.4 percent leased.

"Through our successful lease up, we were able to convert our initial low-risk investment into what is today full ownership of a prime office complex in one of the state’s top submarkets,” said  Mitchell Hersh, president and CEO of Mack-Cali.

One River Centre consists of two four-story, 120,000 square-foot buildings and one three-story, 220,000 square-foot building. The property, situated on a 35.2-acre site, is located near exit 109 of the Garden State Parkway.

Earlier this month, Mack-Cali acquired all the interests in 101 Hudson Street, a 1.2 million square-foot class A office tower on the Jersey City waterfront. The 42-story building was purchased for $329 million from a joint venture composed of affiliates of LCOR Inc., The State Teachers Retirement System of Ohio and Merrill Lynch .

Mack-Cali owns more than 4.3 million square feet of class A office properties along the Jersey City waterfront, representing more that 25 percent of the submarket’s total class A office space. The firm manages an additional 1.2 million square feet of class A office space withiin the submarket.

Eastdil Realty Company L.L.C. represented the seller in the transaction.
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Employers–from member companies to MBA itself–can post job openings and search the resumes of potential employees for a small fee, and job seekers can review those job opportunities and submit their resume free of charge. Plus, employers can now post internships for free for 60 days. Those looking for an internship can search those listings for free. At any one time, 400 or more jobs are posted to the site and the Lender Careers database can contain 250 or more resumes.

In addition to these posting tools, Lender Careers offers access to a broad range of free services and publications to provide guidance to managers and job seekers as they go through the hiring process. A salary wizard is also available to help guide the salary negotiation process.

For more information, go to http://jobboard.lendercareers.com/search/results/index.cfm?job_company_id=76246.
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"One of the FBI's first investigations to utilize the material support of a terrorist organization statute evolved from a criminal investigation of Hezballah operators utilizing credit card scams, cigarette smuggling and loan fraud to support the purchase of dual use equipment for Hezballah procurement leaders in Lebanon. The FBI used the criminal RICO statute to fully neutralize this terrorist cell."

Mortgage fraud in America is now a top priority for the FBI. Mueller ranked mortgage fraud as one of the FBI's top 13 investigative priorities in combating converging criminal threats and terrorism.

Mortgage fraud is also a part of mainstream culture. Perhaps you caught the episode of HBO’s The Sopranos when Tony and his “family” were yielding profits in a HUD loan flipping scheme. Mortgage fraud is not a victimless crime. It not only affects the consumer, it also affects the lender who has been duped by unscrupulous parties and their scams.

Generally speaking, mortgage professionals understand that there’s a mortgage fraud problem. Jackie Dreyer is an industry expert and managing director of LoanCert, a division of The Prieston Group (TPG), San Francicso, a diversified mortgage risk consulting company. She points out that acknowledging the problem is the first step, but risk managers in fact need to drill down and review their policies and procedures, as well as their overall operating controls to ensure their company’s bottom line is protected from the fraudsters.

“Fraud is prevalent,” Dreyer said. "And it’s a threat to our economy and the fabric of our neighborhoods. As an industry, we need to attack fraud from all angles in order to prevent and deter it.”

To that end, mortgage industry professionals share the same goal of increasing homeownership in America. They also share the same obstacle to meeting that goal: mortgage fraud. “For example, the industry takes serving emerging markets very seriously, and strives to meet the homeownership needs of these communities,” Dreyer said. “Yet I hear from quality assurance professionals all the time that it is a challenge to identify accurate identification of immigrant status. In fact, there’s a black-market for false identification. Lenders shouldn’t be afraid to make emerging markets loans; rather, they should learn how to verify their customers’ identification records and make every good loan they can make.”

In an effort to address these issues, revisions have been made to CampusMBA’s Advanced Fraud Workshop to best serve students. As a follow-up to the Detecting and Avoiding Mortgage Fraud Workshop, the session is now appropriately titled The Next Step in Combating Mortgage Fraud. During the last three offerings of this program, Dreyer and co-instructor Ryan Thomas from Lanahan & Reilley LLP spent two solid days examining the different types of fraud, calculation and tracking of damages, where fraud is occurring, how to pursue recovery, and if all else fails, litigate.

“While these topics are all very important and are still on the agenda, our upcoming class has been designed to examine additional current trends facing quality assurance and risk managers,” Dreyer said. “So we asked participants – risk managers, legal counsel, quality assurance and quality control managers – to share with us what they wanted to see as a part of the class curriculum. We took those ideas and worked them into this session.”

The two-day session now consists of more interactive breakout and networking sessions. For example, students will separate into groups and share their stories and experiences. They then develop a list of hotspots and the latest and greatest fraud schemes. The groups then reconvene, share their findings with the class, with the instructors filling in the gaps.

“TPG affiliate company PBIS Insurance Services Inc. is the only insurance company that pays losses as a result of material misrepresentation,” Dreyer said. “So we have the definitive statistics and can provide students with an inside look at what we see as hot button topics in the industry.”

A panel session with representatives from the U.S. Immigration and Naturalization Service (INS), the Social Security Administration (SSA) and a Florida-based mortgage lending institution takes place to address identification related challenges within emerging markets.

“This panel in particular was requested by class attendees at our Scottsdale session and viewed as a necessary element for discussion. The panelists will provide students with the characteristics and examples of what is valid identification and what may be fraudulent identification,” Dreyer said.

Atlanta is one of the top mortgage fraud hot spots in the country and has a prominent mortgage lender base, so it serves as a perfect venue for a program on Advanced Fraud. The next program will be offered at The Westin Buckhead Atlanta, May 17-18. Gail McKenzie, assistant U.S. Attorney in Atlanta, is a presenter.

"One of her office’s top priorities is mortgage fraud and she is very dedicated to this cause,” Dreyer said. McKenzie will discuss what makes her so successful in convicting mortgage fraud criminals, what her office does differently, and how she works with the FBI and mortgage lenders to combat fraud.

In addition to these topics, the workshop instructors will present and examine the latest statistics, including claims and severity of loss, as well as recovery successes. A summary of MBA’s upcoming Fraud Summit will be presented, and pending fraud legislation will be discussed.

“Pending legislation is a hot topic. Recently, Senate Bill 100 passed in the Georgia Senate and was sent to the House for consideration – it’s the Georgia Residential Mortgage Fraud Act,” says Dreyer.

Arthur Prieston, CMB, chairman of TPG and also chairman of the Mortgage Banking Group at Lanahan & Reilley, added “This legislation is both good and bad. It is reminiscent of the state laws on predatory lending. But it points up the problem of state-to-state legislative inconsistency, and argues for the need for a single comprehensive federal law on mortgage fraud.”

After it’s all said and done “quality loans come from quality lenders,” Dreyer said. “Nobody wants to do fraudulent loans. Quality lenders manage their risk. The Next Step in Combating Mortgage Fraud Workshop is a chance for the fraud fighters to come together, get current information on current issues, and further develop a quality process back in their offices. Combating mortgage fraud starts with recognizing it.”

To learn more about The Next Step in Combating Mortgage Fraud, visit the program web site. To register, click here, download the registration form, or call (800) 348-8653.
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• Provide mandatory availability for terrorism coverage for policies written in the final two years of the program;

• Make terrorism reinsurance coverage available to group life insurance policies; and

• Require the Treasury Department to develop recommendations on long-term solutions to the terrorism reinsurance program.

Last month, Sens. Christopher Dodd, D-Conn., and Robert Bennett, R-Utah, introduced S. 467, a Senate bill that also proposed an extension of TRIA. As recently acknowledged by Federal Reserve Chairman Alan Greenspan, the private market alone cannot adequately insure against the continued threat of terrorism.

It is with this urgency that MBA sponsors and participates in the National Chamber Foundation's presentation. Attendees at the Chamber's March 17 TRIA Summit will hear updates and outlooks from the unique perspectives of Congressional leadership members, including:

Kanjorski is chief deputy Majority Whip and ranking member of the House Financial Servcies Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises. Also scheduled to participate are Reps. Eric Cantor, R-Va., Pete Sessions, R-Texas and Senate Minority Leader Harry Reid, D-Nev.

Business leaders will also participate in a panel discussion.

Kieran Quinn, president and CEO of Column Financial, Inc., Atlanta, and vice chair of MBA’s Commercial Real Estate/Multifamily Finance Board of Governors (COMBOG), will represent the commercial real estate finance community. Other panelists include Jeffrey DeBoer, president & CEO of The Real Estate Roundtable; Lloyd Dixon, senior economist at RAND Corp., and Bradley Wood, senior vice president of risk management at Marriott International, Inc.

Click here for the agenda and registration form for this summit or you can find the Chamber’s event homepage at: http://events.uschamber.com/conference/brochure/index.cfm?ConferenceID=65 .

For additional information on MBA’s participation, please contact Josh Denney, MBA's director in government affairs, at jdenney@mortgagebankers.org or (202) 557-2816.
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“The simple structure that allows for REITs to develop and the simple tax structure makes REITs very attractive [globally],” said Martin Cohen, co-chairman of Cohen & Steers Capital Management, New York, speaking here at MIPIM, Europe’s largest commercial real estate conference. “Over the past couple of years the most important development has been the ability for money to travel across borders. Investors and intermediaries and owners of properties worldwide recognize the purpose.”

Globalization has emerged as an important trend for REITs, said Steven Weschler, executive director of the National Association of Real Estate Investment Trusts (NAREIT). “A structure that resembles the U.S. REIT model certainly makes sense globally,” he said. “We’ve learned a lot of lessons in the U.S. over the past 45 years as to what works and what hasn’t. I would commend you to look at what has worked in the U.S. in crafting your own models.”

Currently, eight countries have adopted REIT structures: Australia, The Netherlands, Belgium, Canada, Japan, Singapore, France and Hong Kong. Five others—Finland, Germany, Spain, Italy and the United Kingdom—plan to have REIT structures in place by 2007. The U.S. leads with nearly 200 REITs that represent nearly 10 percent of the U.S. commercial mortgage market, with managed assets of more than $3 billion and total equity market capitalization of $290 billion.

“Over the past 10 years, the REIT market has quadrupled worldwide, mostly in the U.S. and Australia. We have also seen considerable returns worldwide,” said Graham Hill, CEO of the Investment Property Databank (IPD), London. “Part of it has to in part of the underlying growth of real estate pricing, but much of it must also be attributed to the popularity of the REIT concept.”

In Japan, “J-REITs” made their first appearance in 2001. That year, two J-REITs were listed on the Tokyo Stock Exchange; today there are 15. In 2003, the total amount of commercial assets acquired for securitization was 18 billion yen, five times higher than in 1999.

“The introduction of J-REITs has made for more attractive leverage and liquidity,” said Shuji Tomikawa of Mitsui Fudosan Investment Advisers Inc., Tokyo. “And there are more players in the market. Higher loan-to-value [LTV] is also allowed now by lenders, with a compressing spread of which investors can take advantage.”

John Richards, CEO of Hammerson, London, said the REIT structure has a lot of growth potential. “The long term demographics call for a long-term investment, and real estate fills that bill,” he said. “We are seeing a re-establishment of real estate as a core holding in an investment portfolio, and if that is true then we are witnessing the start of a positive trend.”

Cohen said the simple structure that allows for REITs to develop and the simple tax structure makes REITs very attractive. “Over the past couple of years the most important development has been the ability for money to travel across borders,” he said. “Investors and intermediaries and owners of properties worldwide recognize the purpose. There’s a $700 billion market for REITs, and less than half of it is in the U.S. We expect other countries to grow substantially over the next several years.”

Some discussion has centered on the concept of a unified REIT structure in Europe—a “EuroREIT” of sorts. Legislation has been introduced in the European Union that would create such a structure, but few experts expect it to be approved.

“REITs tend to get more dedicated and specialized, and thus they lose some of their risk flexibility,” said Reinhard Kutsher, of DFA Deutsche Immoblieren Fonds AG, Hamburg, Germany. The national REITs in France and the U.K. will put money into that market. It's logical that they would follow the rules of their own country to their advantage.”

“I don’t expect that there will be a European REIT policy—I think the markets are still too fragmented for that to happen in the near term,” said Andrea Amadesi, managing director of AEW Italia.

Despite fears that the future of REITs worldwide will have large players getting even larger, with a number of smaller REITs carving out a niche at the expense of mid-sized REITs, panelists expressed optimism.

“Momentum is building and we think in the next decade we will see an onrush of investing worldwide through the REIT model,” Weschler said. “The future of REITs in real estate investment is very bright.”

Cohen agreed, although less enthusiastically. “The future is very difficult to predict. We believe it’s a good strategy. It has created more transparency and it is better that it exists than not. We hope it will spread in Europe,” he said. “There are opportunities, and as the demand for capital in real estate continues to grow, REITs will continue to see growth.”
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