The average contract interest rate for 30-year fixed-rate mortgages increased by 10 basis points to 5.72 percent from 5.62 percent one week earlier, with points decreasing to 1.14 from 1.26 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The 30-year fixed rate is up by 25 basis points since June 24. 

The average contract interest rate for 15-year fixed-rate mortgages increased to 5.28 percent from 5.21 percent one week earlier, with points decreasing to 1.26 from 1.28 (including the origination fee) for 80 percent LTV loans. The average contract interest rate for one-year adjustable-rate mortgages (ARMs) increased by seven basis points to 4.63 percent from 4.56 percent one week earlier, and is at its highest level since May 2002. Points decreased to 0.99 from 1.01 (including the origination fee) for 80 percent LTV loans. 

The survey’s major seasonally adjusted indexes were largely unchanged from the previous week. The seasonally adjusted Market Composite Index stood at 801.1, an increase of 1.2 percent on a seasonally adjusted basis from 791.9 one week earlier. On an unadjusted basis, the Index increased by 26.5 percent compared with the previous week and was up by 28.6 percent compared with the same week one year earlier. 

The seasonally-adjusted Purchase Index decreased by 0.1 percent to 488.7 from 489.0 the previous week, while the Refinance Index increased by 2.5 percent to 2618.2 from 2554.3 one week earlier. Other seasonally adjusted index activity includes the Conventional Index, which increased by 0.8 percent to 1206.8 from 1196.9 the previous week, and the Government Index, which increased by 6.9 percent to 124.2 from 116.2 the previous week. 

The four-week moving average for the seasonally-adjusted Market Index is up by 0.4 percent to 806.2 from 802.6. The four-week moving average is up by 0.5 percent to 494.0 from 491.7 for the Purchase Index and is up by 0.4 percent to 2622.5 from 2611.7 for the Refinance Index.

The refinance share of mortgage activity increased to 45.7 percent of total applications from 45.1 percent the previous week.  The ARM share of activity increased to 28.5 percent of total applications, after hitting a 16-month low of 27.9 percent the previous week.

The survey covers 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.
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The NHP Foundation is a national nonprofit organization formed in 1989 to increase the quality and quantity of affordable housing. NHPF has a portfolio of more than 6,500 units.

Freddie Mac, McLean, Va., elected 13 directors to the company’s board of directors and ratified the re-appointment of PricewaterhouseCoopers LLP (PwC) as the company’s independent auditor for the fiscal year ending December 31.

The elected board members are:

• Barbara Alexander, independent consultant;
• Geoffrey Boisi, chairman and senior partner of Roundtable Investment Partners LLC;
• Joan Donoghue, senior vice president, general counsel and corporate secretary of Freddie Mac;
• Michelle Engler, trustee of the JNL Investor Series Trust and JNL Series Trust and member of the board of managers of the JNL Variable Funds;
• Richard Karl Goeltz, retired vice chairman and chief financial officer of American Express Co.;
• Thomas Johnson, retired chairman and CEO of GreenPoint Financial Corp.;
• William Lewis Jr., managing director and co-chairman of investment banking at Lazard Ltd.;
• Eugene McQuade, president and COO of Freddie Mac;
• Shaun O’Malley, chairman emeritus of Price Waterhouse LLP;
• Ronald Poe, president of Ronald F. Poe & Associates;
• Stephen Ross, Franco Modigliani professor of finance and economics at the Massachusetts Institute of Technology;
• Richard Syron, chairman and CEO of Freddie Mac; and
• William Turner, manager of Signature Capital Inc.

Syron was re-elected as chairman of the board of Freddie Mac, and O’Malley was re-elected lead director. The board of directors also appointed Boisi as chairman of the Compensation and Human Resources Committee.

Oak Street Mortgage LLC, Indianapolis, announced that Glenn Brunker, previously executive director of marketing and retail sales, will assume the role of president, responsible for the company’s day-to-day operations and growth.

Brunker has held several senior leadership roles at Household International, Bank One and Boatmen’s Bank prior to joining Oak Street. He has more than 20 years experience in sales, marketing and operations.

RBC Mortgage Co., Houston, appointed Randy Lightbody as managing director of its wholesale division, responsible for managing RBC Mortgage’s wholesale sales and operations throughout the U.S.

Most recently, Lightbody served as national production manager and executive director of lending at Morgan Stanley. Previously, he served as senior vice president and national sales manager of Bank One’s wholesale and correspondent businesses.

Lenders One, St. Louis, announced the appointment of Jeff McGuiness as executive vice president. He will manage existing mortgage banking relationships and develop new business opportunities.
 
Previously, McGuiness was executive vice president and managing director of correspondent lending at CitiMortgage.

Trinity Partners, Tucson, Ariz., named Joe Nagy as western regional sales manager, responsible for sales of the company’s products to mortgage companies in the Western U.S.

Before joining Trinity, Nagy was the western regional sales manager for BankServ, a U.S. provider of payment and electronic funds transfer products for financial companies.
 
Hypo Real Estate Capital Corp., New York, announced the promotion of Evan Denner to deputy CEO. He joined Hypo Real Estate Capital in February 2004 as head of real estate finance. He will be responsible for all day-to-day operations. 

Prior to joining Hypo Real Estate Capital, Denner spent the previous 15 years in the real estate industry in various positions. He is a member of the Mortgage Bankers Association.

goodmortgage.com, Charlotte, N.C., added three members to its Loan Processing group and its Loan Specialist team

Brian Yeager comes to goodmortgage.com with experience in funding and as a post-closing auditor for sub-prime mortgages with a major lender. He also has experience in several customer-service centric fields.
 
Laura Stoner brings four years of experience specializing in trailing documents in post-closing for an industry leading closing company. She also has customer service experience in online lending-related services.

Tara Hrab brings two years of experience as a mortgage loan officer for a large financial institution that specialized in conforming loans and their own portfolio products. She also has previous experience working as a loan processor.
 
eAppraiseIT LLC, Poway, Calif., announced the appointment of Lynn Effinger as operations manager at its Poway headquarters. Effinger, who has held senior REO (real estate owned) management positions with Washington Mutual, Citicorp and Fidelity Residential Solutions, will help the company expand its REO offerings.

Community Mortgage Group Inc., Denver, promoted Todd Binkley to national director of business development, responsible for development and integration of new wholesale, retail and affiliate branch offices.

Before joining CMG in 2004, Binkley was an owner at Reliance Home Mortgage in Houston, and as a sales manager with the Professional Mortgage Alliance in Denver.
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The council examines what diversity means within the organization, seeks ways to ensure inclusion for everyone and determines how to carry that out in its business practices.

To be eligible for the scholarship, a representative of the mortgage company must have attended the Option One-sponsored CampusMBA program Creating New Customers before July 31 and conducted a community seminar by September 16.

Creating New Customers is a free, three-hour seminar providing instruction and materials loan originators can use to conduct seminars in their communities to educate first-time buyers about the home purchase process. Seminars are held across the United States. Borrower materials are available in English and Spanish.
Attendees of the course receive a marketing tool kit that includes a CD-ROM with customizable templates, a PowerPoint guide to the process, brochures for prospective buyers and other support materials. Visit www.campusmba.org under “Brokers and Originators” for seminar dates and locations.

Nominees will to describe how the mortgage company has leveraged the Creating New Customers program to better serve and help expand the dream of homeownership among diverse communities. Option One’s Diversity Council will award the scholarships to loan originators who have the most compelling stories.

Loan originators interested in being nominated for the scholarship should contact their Option One account executive by visiting the company’s Web site at www.optiononemortgage.com.

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The Housing Plus Partnership for America Project , a Florida-based non-profit organization, announced a new housing and real estate funding initiative designed to combat the prospect of a large-scale housing market crash in the U.S.

This new funding program, Housing Plus, provides more affordable real estate financing for buyers while eliminating some of the most common risks investors face today, including foreclosure risk.

The Housing Plus Partnership concentrates on alternative forms of financing for housing purchases. The Housing Plus treats the housing purchase as an equity investment made by the housing industry investors together with the homebuyer in a way that eliminates risks and increases the overall financial leverage of both buyers and housing investors.

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Credit Plus Inc., relocated to a larger facility Salisbury, Md. The 50,000-square-foot office was designed to meet the needs of Credit Plus’ customers. To better service customers on the West coast, the customer service department in the centralized location offers extended hours from 8:00 a.m. to 8:00 p.m. EDT.
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In the case of a recent decision affirming the use of “eminent domain” for private development (Kelo v. City of New London), an advocacy group has asked the Supreme Court to reconsider its decision—an action that has occurred only a few times in recent decades.

The Institute for Justice, a Washington, D.C.-based advocacy group, filed a petition on behalf of New London, Conn., homeowners asking the Supreme Court to reconsider its 5-4 ruling from June 23 in Kelo that allows the City of New London, Conn., to use eminent domain to permit a private company to convert the city’s Fort Trumbull neighborhood for redevelopment.

Attorneys for the Institute for Justice admit the petition is a long-shot. Short of actually rehearing the entire case, it asked the Court to at the very least “vacate” the judgment of the Connecticut Supreme Court and allow more evidence to be submitted about the takings in this case.

“We will be the first to admit that our chances of success with this motion are extremely small, but if there is any case that deserves to reheard by the Supreme Court, it is the Kelo case,” said Scott Bullock, senior attorney with the Institute.

The Kelo case arose in 1998, when pharmaceutical company Pfizer built a plant next to Fort Trumbull. The City of New London decided as part of an urban renewal program to rezone the Fort Trumbull neighborhood and gave the New London Development Corp., a private company, the right to use eminent domain to take the entire neighborhood for private development.

Fort Trumbull residents, some of whose families have owned homes in the neighborhood dating back to the 1880s, sued, asserting that governments could not use eminent domain in the name of “economic development” to assert that some use plans were better than existing situations. The case wended its way through various appeals, up to the June 23 Supreme Court decision in the city’s favor.

The Institute for Justice said the Supreme Court ruling was too broad and puts homeowners and small businesses in danger of a “floodgate” of eminent domain cases. It cites post-Kelo cases in which the city of Freeport, Texas, filed legal papers authorizing the seizure of two family-owned seafood companies so that an $8 million private boat marina can be built, and in Sunset Hills, Mo., where 85 homes and small businesses have been approved for condemnation to give way to a $165 million shopping mall.

The decision has spurred a backlash in legislation. Several states have drafted bills that would narrow the definition of “public use” in the case of property seizures. In the U.S. Senate, Sen. John Cornyn, R-Texas, recently introduced S. 1313, the “Protection of Homes, Small Businesses and Private Property Act of 2005,” which would prohibit such transfers of private property, without the owner’s consent, if federal funds were used, and if the transfer was for purposes of economic development rather than public use.

“It is appropriate for Congress to take action, consistent with its limited powers under the Constitution, to restore the vital protections of the Fifth Amendment and to protect homes, small businesses, and other private property rights against unreasonable government use of the power of eminent domain,” Cornyn said. “This legislation would declare Congress’s view that the power of eminent domain should be exercised only ‘for public use,’ as guaranteed by the Fifth Amendment, and that this power to seize homes, small businesses, and other private property should be reserved only for true public uses. Most importantly, the power of eminent domain should not be used simply to further private economic development.”

The legislation would also clarify government’s exercise of its power of eminent domain to be limited only for public use. “‘Public use’ shall not be construed to include economic development. This standard of protection would apply only to (1) all exercises of eminent domain power by the federal government, and (2) all exercises of eminent domain power by state and local government through the use of federal funds,” according to the bill.

The Supreme Court has the option to rule in favor of the rehearing or to vacate the petition. It is not immediately known when, or if, the court will address the petition.
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Overall, rating activity had a slightly positive bias. However, event-driven rating activity was modestly negative, due in part to the highly leveraged nature of mergers and acquisitions announced during the period. Issuance for both REITs and homebuilders was up during the recent quarter, climbing by 51 percent above first quarter levels and by 76 percent over second quarter 2004 levels.

Despite strong year-to-date issuance in 2005, volume could soften for the remainder of the year, as many rated REITs have already taken advantage of the existing refinancing opportunities within their balance sheet, and homebuilders could see some modest cooling of the very strong U.S. housing market, said Beth Campbell, a director in S&P’s Real Estate Companies Group.
     
"Second quarter rating activity was high for U.S. homebuilders, and displayed a generally positive bias," Campbell said. "Two homebuilders were upgraded during the quarter, including NVR Inc., which made the transition to investment-grade from high-yield status. There were also three home builder outlooks that were revised top positive, generally reflecting profit margins that have steadily improved through this remarkably strong housing cycle."

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S&P also reported that partially enhanced asset-backed commercial paper (ABCP) outstanding in the second quarter reached $600.4 billion, which is nearly unchanged from that of the prior quarter ($601.0 billion) as well as year-over-year ($600.5 billion).

Looking back two years, however, reveals a significant increase, S&P said. Rated partially enhanced ABCP outstandings rose by 2.7 percent from the first quarter of 2003, said S&P credit analyst Aaron Jones. The recent growth is likely a result of increased issuance of extendible notes out of single-seller mortgage warehouses, he said. 

"And the stage is being set for this trend to continue—in the first quarter, we rated three conduits that are mortgage loan warehouse facilities with the capability to issue extendible notes," Jones said.
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The non-recourse financing enabled the developer to recover all equity on the property and have no further cash remaining in the transaction. The facilities had a brief history of stabilized operations, but the loan moved through with a 10-year term and a 25-year amortization. It was placed a rate less than 110 basis points over the 10-year treasury.

Jason Gabbard, an associate director at AFC, originated the loan. Gabbard and Michael Sonnabend , principal of AFC Realty Capital, placed it with a European financial institution. The Hilton Garden Inn, which features 189 rooms, "represented an aggressive per room loan for a non-CBD asset,” Gabbard said.

The Hilton Garden Inn Arlington Courthouse Plaza is located two miles from Washington, D.C. The hotel features a beauty salon, gift shop/news stand, restaurants and lounges and meeting facilities.

AFC Realty Capital also arranged $4 million in mezzanine financing for the acquisition of Norwood Apartments, a 230-unit rental community in Norwood, Conn.

“This financing package had several obstacles to overcome,” said Joseph Fatony, managing partner at AFC Realty Capital. Fatony and Sonnabend originated and placed the loan. “The property was subject to  HUD guidelines that presented limitations towards the lending options we could pursue. The owners also needed a loan that could close in a tight time frame, enabling them to purchase the property in a timely manner.”

According to Fatony, he and Sonnabend used “creative financing methods” and drew from AFC’s network of lenders to get the deal done.
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"Education keeps mortgage professionals up to date on the latest developments in the industry and helps us serve our customers better," said Larry Gilmore, AMP, chair of MBA's Diversity Task Force and vice president of government of housing and industry relations for Option One Mortgage Corp. "The Path to Diversity scholarships provide opportunities for these industry professionals to extend their knowledge and enhance their careers, while ensuring that the industry meets the needs of the diverse communities we serve."

The Path to Diversity program continues through a sponsorship provided by the Research Institute for Housing America (RIHA), a trust fund subsidiary of MBA. The following companies have also provided scholarship funds: Irwin Mortgage, Option One Mortgage, SunTrust Mortgage and Wells Fargo Home Mortgage.Companies can participate in the Path to Diversity program by enrolling as a participating company or by sponsoring 10 or more scholarships. Additionally, member firms providing internships to qualified college students are eligible to receive free distance-learning courses for each intern through CampusMBA.

To date, 147 scholarships have been awarded since the program's inception in 2001. 

Visit http://www.mortgagebankers.org/pathtodiversity to download the scholarship application. For more information, contact Joanna Truitt at (202) 557-2835 or jtruitt@mortgagebankers.org.
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For additional information please contact Beth Percynski at 202-557-2866 or bpercynski@mortgagebankers.org. This call is open to MBA members only and is closed to the media.
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The survey found that the majority of consumers do not fully understand the importance of a credit score, how that score is determined and the steps one can take to improve credit scores.

"Having good credit is critical to securing a favorable mortgage rate, so it's extremely important that consumers understand their credit score. With proper long-term planning, consumers can improve their credit rating to avoid higher interest rates, and as a result larger monthly payments on their home," said Paul Fein, senior vice president and southeast divisional manager with GMAC Mortgage. "A good credit score requires more than timely bill payment; consumers must be conscious of their debt reduction efforts and outstanding revolving credit before they begin the mortgage process."

The survey polled more than 1,000 consumers nationwide on the impact of credit on the entire home financing process.

According to the findings, 62 percent of respondents did not know that a score above 620 out of 850 is necessary to secure the most favorable mortgage rate. One-fifth of respondents (20.9 percent) think that a credit score of more than 700 is needed and 16.8 percent of respondents believe that a credit score of less than 700 is needed to obtain the best mortgage rate.

In addition, many respondents misperceived the factors that affect credit scores. More than 50 percent of respondents incorrectly answered the question that increased income level will raise one's credit score.

Forty-two percent of respondents knew that payment history was a critical determinant to a credit score. When asked to name the steps they have taken or are taking to improve their credit, the majority of respondents (84.8 percent) said that they pay bills on time. Further, more than half of respondents said that they are reducing current balances on their credit cards (54.8 percent) and increasing their income level (51.7 percent). Only 8.1 percent of respondents report that they are not doing anything to improve their credit. Additionally, 64 percent of respondents said they would check their credit only six months before purchasing a home.

"Potential homebuyers should not view credit ratings as the last step in the home financing process. Credit scores are essential to the mortgage lending process and it's important that homebuyers start evaluating their credit scores early in the process so they can get above the 620 mark before their formal application is processed," Fein said. "We are encouraged to see that 92 percent of consumers polled are taking some action to improve their credit; however consumers must be educated on what actions will and will not affect their ability to secure home financing."

The Mortgage Bankers Association has taken steps to educate homebuyers of the mortgage process.

"MBA has a commitment to bring the benefits of homeownership to more Americans and education is the key," said Jonathan Kempner, MBA president and CEO. "The Home Loan Learning Center provides those people interested in becoming homeowners with the knowledge they need to more confidently approach the mortgage transaction process."

Seeing a lender is the first logical step in the home buying process for consumers, as it will help consumers understand what they can afford to buy, the rate they may receive and what loan products meet their lifestyle requirements.

Valuable consumer tips for first time homebuyers can be found on the Home Loan Learning Center Web site (www.homeloanlearningcenter.com). They include:

• Check your credit report . Get your credit history in order before beginning the home buying process.
• Develop a monthly budget based on your income and expenditures so that you can determine what is realistically affordable in terms of a mortgage payment.
• See a lender first . Shop around--compare various mortgage lenders and find one that will work well with you and your situation and more.

Additional information will be released today on a new study, "Giving Underserved Consumers Better Access to the Credit System: The Promise of Non-Traditional Data," examining potential for consumers with little or no credit history to gain access to credit.

GMAC Mortgage and CARAVAN Opinion Research Corp., Princeton, N.J. conducted the national telephone survey of 1,057 households nationwide between May 13 and May 16. The margin is plus or minus three percentage points.
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