So, why is this news in MBA NewsLink? What does this have to do with the real estate finance industry? Well, according to Bob Egan, service director with TowerGroup, Needham, Mass., the impact could be immediate—and advantageous.

“As a result of the merger of Sprint and Nextel, small and large enterprises will be able to consolidate contracts for mobile voice telephony and push-to-talk services. In the short term, business clients should expect discounts and service bundles by competitors, in particular by Cingular and Verizon,” Egan said. “In the long term, the potential of this merger could redefine the economic fundamentals, access availability and services bundling of a significant portion of the telecom landscape, especially for intra-company use by large enterprises, the small and medium-sized enterprise (SME) market, and the small office, home office market, but not before 2007.”

In a TowerGroup analysis, Egan said in the immediate future, enterprise procurement centers can expect to see Cingular and Verizon offer service and/or device discounts, especially for PC card modems and adjunct service packs.

Another result of the merger, Egan said, is that “small and large enterprises that are customers of Sprint Nextel will be able to consolidate contracts for mobile voice telephony, push-to-talk (PTT) services, and mobile based wireless data services. In the long term, the merged company could redefine the landscape for last-mile broadband access, shaking up both wireless and wireline markets.”

According to Egan, financial services institutions and other companies may well ask: Will telecom carrier consolidation hinder or help their enterprise business objectives? He said it depends on how the institution plans to use telecommunication technology in the near future.

For example, Egan said, the merged entity has “formidable potential” because of its command of telecommunications spectrum. “Nextel and Sprint are the two dominant owners of spectrum in the 2.5 GHz frequency range. Nextel holds 2.5 GHz licenses in 60 of the top 100 markets, while Sprint holds licenses in 93 markets. 2.5 GHz is the radio spectrum for future broadband wireless for services like the much-heralded (and hyped) WiMax,” he said.

Thus, with a spectrum share that rivals Verizon’s, and an aggressive posture by the new Sprint Nextel entity, companies that plan to use wireless data extensively could see a very competitive market in the near future, Egan said.

“By the second half of 2006, expect to see prices for wireless data use collapse to about $35 per gigabyte as the competitive landscape begins to take shape,” Egan said. “CIOs and IT managers should brace themselves for wide adoption by individuals and specific business units at these price points, in line with what has happened in the Wi-Fi space.”

The report is available here.
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As chairman of MORPAC in 2004 she took the PAC beyond the $1 million goal for the first time. She recently led a successful company campaign at Broadview Mortgage for MORPAC and the MORPAC Administrative Fund totaling $6,575. 

“Marianne is a pivotal member of our organization and her dedication to strengthening the mortgage finance industry is beyond compare,” said MORPAC Chairman David Kittle, CMB.

Broadview Mortgage Company is a privately owned and operated regional mortgage banking company. With branch offices in Ohio, Kentucky, Pennsylvania and Michigan, Broadview provides a scope of first and second mortgage products including FHA/VA, conventional, rural housing, construction, bridge, seconds, home equity lines, renovation, first-time buyer, investment, balloon and more. Broadview Mortgage emphasizes its commitment to providing affordable residential and commercial mortgages in the Midwest.

Expanding the scale of company campaigns is a top priority for MORPAC. For more information on MORPAC and requirements for establishing a company campaign please contact Julie Eddy, MORPAC director at (202) 557-2808, jeddy@mortgagebankers.org; or visit www.morpac.org.

(This article does not constitute a solicitation of funds.)
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A sign of things to come? The County Recorder in Churchill County, Nev., issued a bulletin stating that its office “will no longer record any document that contains a social security number, unless the social security number is required to be included in a document pursuant to a specific state or federal law.”

The bulletin was issued in response to the recently passed Assembly Bill 334, which does not become effective until January 1, 2007. The law requires that all documents have an affirmation stating that either there are no social security numbers on the document, or, alternatively, if a social security number is listed, it is pursuant to some federal or state law and the submitter must cite the statute.

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MarketerNet LLC, Chicago, a provider of marketing services for the mortgage, credit union and automotive industries, announced that the company has moved its offices to the Sears Tower.

MarketerNet, which officially moved in July, leased 18,000 square feet of office space on the 18th floor of the Sears Tower, the tallest building in Chicago.
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IO loans are a rapidly growing aspect of CMBS, reaching nearly two-thirds of all CMBS conduit loans in the second quarter, according to a new report from Moody's on its rated loans for the last quarter. Moody's said the increase in the CMBS conduit loans it rated in the second quarter of this year are "a huge jump" from the 7 percent share of IO loans rated in the first quarter of 2003.

"Of these second-quarter 2005 IO loans, approximately 60 percent were IO for a portion of their term and 40 percent were IO for their full term, and this trend toward more IO loans creates a credit issue for investors," said Sally Gordon , vice president and senior credit analyst at Moody's and author of the report.

IO loans gained in popularity as commercial building prices rose and because loan payments with little or no principal component allow buyer-borrowers to pay higher prices while keeping monthly payments at lower levels relative to a building's cash flow.

"The issue for investors is that CMBS pools with more IO loans inherently have less margin for error to allow for underperformance in the supporting collateral," Gordon said. "IO loans have little or no benefit of amortization, which would normally reduce the principal balance of the loan over time."

IO loans also pose additional credit challenges when they are refinanced, or on the balloon date, when investors receive the return of most or all of their initial capital investment, the report said. "Limited or no equity build-up through amortization means the amount to be refinanced at the end of the loan's term is the same, or nearly the same, as at the initial loan date," Gordon said. "Therefore, if interest rates were higher at the time of refinancing than they were when the loan was initially made, the borrower has less ability to refinance the entire amount of the existing loan, increasing the risk of a balloon default."

Gordon noted that more IO loans in CMBS transactions could affect the performance of CMBS tranches at many levels for several years to come. Deals with a large share of IO loans would build up less credit support as they embed less margin for error should collateral performance not live up to expectations, she added.

"Clearly, amortization in CMBS pools provides investors with additional protection to help withstand collateral under-performance," Gordon said. "That extra margin for error is eroded by increasing the share of interest-only loans in a pool."

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Financial Industry Computer Systems, Inc. (FICS), Dallas, announced the implementation of in-house commercial servicing technology at Chicago-based Cohen Financial.

Cohen Financial purchased FICS' multifamily and commercial real estate loan servicing system, Commercial Servicer, to replace its existing DOS-based commercial loan servicing system. The company successfully implemented the product in March 2005.

Cohen Financial also purchased FICS' Commercial Accountant. The product automates daily cashbook balancing and month-end reporting, as well as the distribution and movements of mortgage funds, P&I advances and recovery, bank account reconciliation and ACH distribution. 

Steve Spayer, managing director of loan servicing at Cohen Financial, said the FICS products are scalable for small and large organizations and it is "extremely user-friendly."
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CMMC provided $19.45 million in mortgage financing for the property in the form of variable tax-exempt bonds that were credit enhanced by Freddie Mac . A 10-year interest rate swap accompanied the financing to hedge the floating rate exposure. Another $605,000 was provided by CMMC in the form of a fixed-rate conventional mortgage with a 5.08 percent interest rate.  The two combined loans, structured to amortize over a combined 30-year period, are with the smaller loan structured to amortize over a 26-month period. 

Proceeds of the loans were used to refinance the existing mortgage on the property and fund bond issuance costs. The financing was originated by Robert Walsh in CMMC’s New York office.

CMMC started to show greater interest for investment in the area after population and employment growth created a need for affordable housing. “The greater Kansas City area has been an increasingly important region for our business and we continue to monitor the area’s solid and steady market,” said Neil Cullen, national sales director at CMMC. 

The Mansions Apartments consists of 38 two- and three-story buildings, plus an historic 1920s plantation style clubhouse. The property has amenities more typically associated with a market-rate property, including two tennis courts, two racquetball courts, a rose garden and a fitness center. The majority of the units target residents who earn 80 percent or less of the area median income.

Kaufman and Arrowhead Stadiums , home of the Kansas City Royals and the Kansas City Chiefs, respectively, are near the complex. One- to three-bedroom units at the Mansions range in size from 549 square feet to 1,157 square feet, with fireplaces in larger units, French doors and washer/dryer hook-ups. Rents start at $506 per month, slightly less than the average rents of the sub-market. The complex, originally built in 1987, is 95 percent occupied.
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The CDL Awards recognize mortgage banking companies that that have successfully incorporated diversity initiatives into their everyday business practices.

Awards will be given in two categories.  The Best Overall Corporate Diversity Program Award category recognizes the corporate diversity programs within real estate finance companies that best exemplify innovation and effectiveness, and include both employee- and customer-focused initiatives. The Diversity Champion of the Year Award category recognizes an industry professional who facilitates, advocates and promotes diversity within the industry, his or her company and the community.

Each category will also be divided into national impact and local/regional impact.

All entries must be postmarked by August 18 and be accompanied by an application fee of $100 ($150 for nonmembers). All fees are donated to the Path to Diversity Scholarship program. Visit www.campusmba.org/CDLawards to download the application.

Nominations will be reviewed by a selection committee comprising representatives from MBA’s Commercial and Residential membership, the chair of the MBA Diversity Task Force, a representative from the U.S. Department of Education and a representative from Department of Finance of Howard University.

Winners will be notified in September and award presentations will take place at MBA’s 92nd Annual Convention & Expo from October 23–26 in Orlando, Fla. All winners will also be recognized during MBA’s Commercial Real Estate Finance/Multifamily Housing Convention & Expo from February 5–8, 2006 in Orlando.
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The Workshop features valuable sessions, such as "Innovative Membership Strategies," "Legislative and Regulatory Highlights" and "Non-Dues Revenue Solutions." All aim to provide new ways to remedy old challenges. New to the program is a session, "Building for the Future," which addresses changing industry demographics and the need to stay relevant through diversification of members and employees. Also, MBA's public affairs staff presents "Managing Media Relations," using Home Mortgage Disclosure Act (HMDA) data and resulting reports as a test case. 

On October 21, working group breakouts are followed by an integrated recap session. On October 22, executives and managers have the opportunity to interact with their peers and hear from Doug Duncan, MBA's chief economist, who offers an economic forecast and a discussion on trends and their impact on the industry.

Renew acquaintances or make new contacts at the Welcoming Reception, and enjoy the Chairman-Elect Luncheon featuring Regina Lowrie, CMB, the first woman to chair MBA.

Click here to register online. If you have any questions contact Lisa Hazell at lhazell@mortgagebankers.org or (202) 557-2761.
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A BC/DR plan provides a framework for the decisions made and actions to be taken by company officials in order to insure that operations can continue while the incident is occurring. In addition, the BC/DR plan serves to ensure that companies affected by a disaster will be able to recover and return business activity (hopefully) to pre-incident levels.

There is a saying in the risk management/disaster recovery community, "It's not if disaster will strike, but when." Mortgage banking offices are certainly of no exception. Florida, home of the hottest real estate market in the country, is also Ground Zero for hurricane and flood risks. California and the Southwest, which are also very active real estate markets, are very susceptible to wildfires and mudslides.

And of course there is the universal and ever-present threat of fire, accidentally caused or otherwise. A simple wire spark behind a wall, a copy machine undergoing an electric surge, a cigarette not properly extinguished, or even arson performed by a disgruntled buyer, seller, or employee can start a disastrous fire that will cause irreparable damage to an office that is not properly prepared.

The First Step in Disaster Planning is Records Protection
Data is of course critical to a realty business and installing a process for the storage of (and retrieval of) data is considered to be a basic operational requirement for all businesses. Since the U.S. economy is mainly a service economy, comprising companies that provide services, as opposed to manufactured goods, information and data are the key assets that need to be protected.

To state it as simply as possible, the first step in disaster planning is records protection. The safeguarding of vital and irreplaceable company records and documentation is absolutely crucial to company survival and recovery in the event of a disaster. If vital records that fall into certain categories, such as financial documentation records, or sales records-are lost, and can not be replaced quickly enough, a realtor could lose serious business as competitors move in to grab market share.

In fact, all businesses that have something to lose need a vital records protection strategy plan, and one that especially incorporates measures to protect against fire. To lend some perspective to the question of how much are your vital records worth, according to statistics from the National Fire Protection Association, 47 percent of all businesses that suffer a catastrophic fire cease operations inside of one year. Ninety percent of those firms whose records are destroyed are no longer in business a year later.

So, to develop a vital records protection strategy, you must first assess the threats to your vital records. The first step is to identify specific risks, such as: facility and equipment hazards that can result in flooding to records storage areas, risky storage practices that increase the risk of fire, and periodic electric storms or tornados that could endanger digitally stored vital records. With electronic data you also need to consider poor care or storage - simple things such as spilled coffee, poor handling, etc.

What to Protect
It would be foolish and costly to attempt to protect every bit of data to the utmost. To determine an effective-yet-cost-efficient strategy, set out to determine which data constitutes a vital record to the organization.

First, audit and review business processes and activities, then figure out what your most critical functions are, then identify those records needed for the performance of those functions. Next, take the process a step further and identify which records are required to support both those critical functions and the reconstitution of normal operations in the event of a business interruption. (Remember to assess all records, including electronic records.)

To put it a bit more formally, identify which records series or electronic information systems contain information necessary to protect the legal and financial rights of the company and persons affected by the company's actions.
 
How to Protect it
Standard filing equipment is believed to offer fire protection by a large majority of consumers. This thinking, attractive to management because it "seems" cheaper, is erroneous and potentially dangerous. It is imperative to seek products that are tested by Underwriters' Laboratory (UL) or other nationally known independent testing labs-absolutely steer clear of equipment with manufacturers' or non-independent ratings. UL, in particular, is the best, as no other testing and standards organization matches their reputation.

(Editor's note: Underwriters Laboratories Inc. is an independent, not-for-profit product safety testing and certification organization that tests products for public safety.)

Most consumers don't understand the difference between a fire rating versus a classified fire rating. This simply means that the vault will protect the media stored inside it for at least two hours, and that the product has been tested and classified by Underwriters' Laboratory (UL) or another independent testing lab. This basic lack of awareness leads to the destruction of many vital records and media involved in a catastrophic fire.

Any agency that can properly assess and then prepare for the inherent risks that they are possibly facing is a business that has the ability to make their clients feel better about taking the risk involved in buying or selling a home with that particular agency. Storing vital records either in fireproof containers or sending them to an off-site facility will demonstrate to clients that your firm can appropriately plan for the future.

Patrick McCalman of Murphy, Murphy, & McCalman P.C., in Andalusia, Ala., is an expert when it comes to the legal details of the real estate processes. He is well aware of what these agencies should do to maintain secure documents into the future.

"We've had a fireproof container for years and recommend that all businesses, not just those in real estate, use them to protect important items," McCalman said. "Most of our real estate clients' final documents are housed by the court that closes them, but other things like IRS forms, bank statements, etc. are kept in fireproof containers to satisfy legal retention requirements imposed on us as a real estate closing firm."

The process of installing well maintained fire suppression systems and using fireproof containers to house vital records and other important items is an essential way for realtors to insure that the least amount of damage will occur to internal or client documents in the event of an unexpected disaster. 

Regardless of the size of your business or the industry that you are in, proper risk management is one of the most important steps that a business can take to protect its future from disasters that could have been easily avoided. Installing effective fire suppression systems and storing important items and other documents in fireproof containers is the best a business can do to ensure that minimal damage will occur in the case of a fire. The cost of adding this equipment is negligible when compared to the cost of replacing what has been lost in a devastating fire.

(The views expressed in Tech Spotlight do not necessarily reflect the views or policies of the Mortgage Bankers Association. MBA NewsLink welcomes your contributions. Articles and inquiries should be submitted to Mike Sorohan, editor, at msorohan@mortgagebankers.org.)
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