The surge in the index in June and the continued increase in July suggest solid economic growth in the second half of the year. However, any negative impact of higher oil prices on manufacturing activity could pull the leading index lower, since four of the ten components of the index are manufacturing-based.

The Philadelphia Fed survey for August confirmed a reaccelerating manufacturing industry. The index rose sharply to 17.5 from 9.6 in July—the highest reading since April. Details of the report were upbeat: shipments and employment increased and inventories continue to be pared down.

The survey is closely watched because it is released early in the month and is available before other important indicators. Coupled with the upbeat reading of the New York Fed survey for August released on Monday, the Philly Fed survey suggests an improvement in the Institute for Supply Management (ISM) national manufacturing industry survey for August, which will be released in two weeks.

One notable in the Philly Fed report is that both prices paid remained steady and prices received fell sharply. This adds to evidence that pricing pressures are still contained and that the bond market overreacted to the pick up in the core producer price index, which was largely caused by a sharp rise in motor vehicle prices.

There was also good news on energy prices. Natural gas futures dropped by about 4 percent to the lowest level in a week, and crude prices briefly dipped close to a two-week low before settling around $63 per barrel.

The bond market got hit from a sharp and unexpected increase in wholesale prices on Wednesday, reversing the previous day’s rally prompted by tame core consumer price inflation and weak industrial production. The yield on 10-year Treasuries steadily rose and closed at 4.28 percent on Wednesday. A weaker-than-expected reading in the Leading Indicators Index, positive news on inflationary pressures from the Philly Fed report, and easing energy prices erased the previous increase in the 10-year yield. The yield edged down to 4.22 percent by mid Thursday afternoon. 

(Orawin Velz is director of economic forecasting in the Mortgage Bankers Association’s economics and research department. She provides commentary and analysis on key monthly economic indicators. She can be reached at ovelz@mortgagebankers.org.)
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A report, “The New Corporate Reality: External and Market Considerations” is the second report in the series “Thinking Offshoring Through: A Framework for Decision Makers.”

Public backlash to offshoring, especially the reaction to job losses at home, has kept many businesses from taking operations abroad, The Conference Board said. Employment loss is not the only downfall of offshoring but also cost the loss of a local tax base and damage to their brand.

“The negatives don't only affect a company's home workforce; rapid growth in offshore destinations often strains local infrastructure and creates damaging cultural stresses,” the report said.

The effects of offshoring include employees are hurt through layoffs, suppliers lose business, communities lose tax revenues and the local economy loses the multiplier effects of direct spending. Areas lacking a deep economic base are particularly hard hit. The marketplace is strongly encouraging company executives to weigh the potential consequences for all stakeholders and assess whether the benefits outweigh the costs.

"Even for companies that believe they exist solely to create value for shareholders, the social or sustainability implications of offshoring warrant considerable consideration, since, on a practical level, companies' reputations—their brand, desirability as employer, and, therefore, their financial success—are at stake," said Ton Heijmen, senior advisor to The Conference Board on Offshoring and Outsourcing.

"In today's global economy, and in an era of heightened attention to corporate malfeasance, corporate behavior is under the microscope," said Janice Koch, author of the report. "The web of interdependencies among companies, suppliers, and partners; the market size of global companies; and the rapid changes that accompany globalization mean that the repercussions of decisions such as where to locate operations can be vast."

"Because many offshore destinations have only a rudimentary infrastructure and little or no environmental regulation, a sudden increase in business activity related to offshoring can often have a dramatic impact," Heijmen said.
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ABN AMRO Mortgage Group, Ann Arbor, Mich., appointed Michael Maher to executive vice president, responsible for AAMG’s quality and employee engagement initiatives as well as its group center.

Maher served previously as AAMG’s group senior vice president for group center. Before joining AAMG, he was group senior vice president and CFO at Standard Federal Bank, and was a consultant with Deloitte & Touche.

eAppraiseIT LLC, Poway, Calif., promoted David Feldman, SRA, to executive vice president of operations and hired Mark Cassidy as chief appraiser and director of the appraiser support division.

Working from the company's Danvers, Mass., operations center, Feldman previously served as senior vice president of operations. In his new capacity, he will oversee all of eAppraiseIT's internal operations in the U.S. and off-shore.

Cassidy owned his own appraisal company for more than 20 years before joining eAppraiseIT. He will focus on promoting professional development and ensuring appraisal, independence and integrity, overseeing the quality and concerns of more than 10,000 appraisers.

Impac Mortgage Holdings Inc., Newport Beach, Calif., announced the appointment of William Morris to the newly created position of executive vice president of mergers and acquisitions. He will focus on examining strategic options, potential acquisitions and evaluating post-acquisition integration.

Morris has been involved with middle market merger and acquisition activity for more than 15 years was most recently executive vice president and CFO of Media Arts Group. Prior to that, Morris headed Citigroup's Middle Market Group in New York.

Walker & Dunlop, Bethesda, Md., announced that William McKinney joined the company as vice president of marketing. He will be responsible for all strategic marketing and branding activities for Walker & Dunlop as well as its sister company, Green Park Financial.

McKinney comes to Walker & Dunlop from TeleTech Holdings Inc., a publicly traded global customer services firm. He spent nearly six years as part of TeleTech's management team, serving in a number of roles including vice president of product management and strategy and vice president of marketing and sales support. Prior to TeleTech, Mr. McKinney was a management consultant with McKinsey & Company.

Oak Street Mortgage LLC, Indianapolis, appointed Chip Bartley as wholesale area sales manager for the company’s Southern California region. He has more than 15 years of expertise in our industry in sales, marketing and operations.

Bartley began his industry career in the retail channel for Continental Savings of America followed by a stint at Long Beach Mortgage, where he specialized in nonprime originations. 

The Center for Housing Policy announced the appointment of Jeffrey Lubell as executive director, effective January 2006. He will succeed Robert Reid, who plans to retire at the end of this year after serving as head of the Center since 1993 and as executive director of the National Housing Conference from 1993 to 2002.

Lubell currently works as an independent consultant specializing in analyzing and developing recommendations for strengthening national, state and local housing and community development policy. He also served as director of the policy development division of the Office of Policy Development and Research at HUD. Prior to HUD, Lubell worked as a housing policy analyst for the Center on Budget and Policy Priorities.
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The refinance was funded through Collateral’s Fannie Mae Convertible loan product. Collateral was able to overcome challenges on the deal based on cost concerns and an expiring bridge loan, by adjusting the structure of the deal from a Fannie Mae Credit Enhanced Bond financing to a Fannie Mae Convertible ARM.  The note rate, based on floating rate over one month LIBOR, has a 75.78 percent loan to value and a debt service coverage ratio (DSCR) of 1.29. The deal carries a 10-year term, with one year interest-only, and a 29-year amortization period.

“Key to the transaction was Collateral’s ability to successfully underwrite higher loan proceedsthe property tax abatement associated with the borrower’s non-profit status,” stated Collateral Director Phil Melton.

“Collateral was able to underwrite the affordability restrictions of the community, which set aside 20 percent of the units to those residents earning 50 percent of area median income [AMI], along with 75 percent of the units to residents earning 80 percent of AMI,” said Colin Whittier, senior real estate analyst at Collateral.

Amenities to the 12 acre, 321-unit community include built in computer desks and bookshelves, garden tubs, crown molding, built in wine racks, full size washer/dryer connections, ceiling fans and patio/balconies with outside storage.

Select units feature vaulted ceilings and fireplaces. Common area amenities consist of a clubhouse, leasing office, fitness center, two outdoor pools, a spa area, limited access gates, barbeque grills, garages and carports.
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Pulitzer Prize-winning newspaper columnist George Will keynotes the annual Chairman’s Luncheon, which takes place on Monday, October 24. Will shares his insight of the political players in Washington, D.C., and sheds light on some of our nation's top news and sports stories. Will has been syndicated by The Washington Post since 1974 and is a regular contributing editor of Newsweek magazine.

Tickets for the Chairman’s Luncheon, sponsored by Citi, are $125 per person.

The annual Sports Luncheon, on Tuesday, October 25, features Pat Riley, president and former head coach of the National Basketball Association Miami Heat. Riley is professional basketball’s second most successful coach; his philosophy is based upon winning, leadership, mastery, change and personal growth, as well as understanding and controlling the shifting dynamics of a team—any team, whether it is a small company, a giant corporation, a city or a group of athletes. His books “Showtime” and “The Winner Within” have appeared on the New York Times bestsellers list.

Tickets to the Sports Luncheon, sponsored by Bank of America, are $125 per person.

Club MBA, on Tuesday, October 25, features a ‘70s revival night with KC and The Sunshine Band, featuring hits such as Get Down Tonight, That's the Way (I Like It) and Shake Your Booty. Joined by The Sunshine Band, KC's unique fusion of R&B and funk has a hint of a Latin percussion groove.

KC’s last album, "I'll Be There for You," came out in the fall of 2001 and proceeds from the title song, released as a single, were donated to the Sept. 11 relief effort. His work includes sales of 100 million records, nine Grammy nominations, three Grammy Awards and an American Music Award.

Tickets for Club MBA, sponsored by Washington Mutual Home Loans, are $199 per person.

For more information about the ticketed events, go to http://events.mortgagebankers.org/92nd_annual/ticketed_events/. The MBA Annual Convention & Expo Web site is http://events.mortgagebankers.org/92nd_Annual/default.html. Keynote speakers for the Annual Convention include Gen. Colin Powell (Ret.); former President Jimmy Carter and HUD Secretary Alphonso Jackson.
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HUD’s initial efforts to reform the Real Estate Settlement Procedures Act in 2002 produced more than 43,000 comment letters. This summer, HUD officials acknowledged that the debate at the first six roundtables has been “lively.”

“We understand there are some diverse points of view,” Brian Sullivan, spokesperson at HUD, noted in an understatement.

Charles Field, a senior research fellow at the University of Maryland School of Public Policy and facilitator of yesterday’s discussion, called yesterday’s roundtable “as lively if not more lively than the first two [in Washington].”

While much of the debate has centered on the necessity and/or composition of a guaranteed mortgage package at the time of settlement, yesterday’s discussion centered on what a Good Faith Estimate (GFE) could or should look like. And in the closest point of consensus over this series of roundtables, participants yesterday largely told HUD that the GFE should look as much like the HUD-1 Settlement Form.

[The Mortgage Bankers Association supports comprehensive reform of RESPA and the Truth In Lending Act that would “improve access to mortgage finance and accommodate technological changes that can benefit consumers, while at the same time quelling essentially fruitless litigation that continues to plague the industry and increases costs to consumers.” MBA also supports efforts to make the mortgage transaction much more transparent to the consumer, which in turn would reduce the possibility of abusive lending practices.]

Advocates of national and state organizations participating yesterday appeared to agree with small businesses in keeping GFEs and HUD-1 forms as similar as possible. Joe Falk, chair of government affairs at the National Association of Mortgage Brokers, said the HUD-1 form and the GFE should “mirror” each other.

“It would allow for additional terms and conditions to be disclosed: the rate, the term, the types of loans, prepayment penalties—yes and no.” Falk said. A NAMB proposal would require mandatory disclosure of any change in the interest rate and mandatory redisclosure requirements if settlement costs, exclusive of escrows, “are more than 10 percent higher than the Good Faith Estimate.”
 
Michael Faust of the California Association of Mortgage Brokers said the GFE should be presented at point of sale, rather than a three-day waiting period.  “[Consumers] want to have a better amount of what the costs are going to be,” he said. “Make the Good Faith Estimate line up with the HUD-1. That way, they can compare apples to apples, not apples to oranges, bananas and grapes.”

HUD spokesman Sullivan said HUD understands the industry sentiment. “We heard that loud and clear, especially in Chicago and Fort Worth,” Sullivan said, noting previous roundtables held outside of Washington.

[MBA supports developing a new GFE that facilitates competition among industry players, but also includes simplicity, standardization and consumer understanding of interest rates, fees and total costs.]

But HUD Secretary Alphonso Jackson has also noted that the roundtables are not “negotiated rulemaking;” and Sullivan warned that “when it comes to RESPA, too many cooks do spoil the broth.” Among industry participants, the question remains as to whether HUD can make the mortgage process better, noting that HUD’s most recent attempt to reform RESPA in 2002 after key industry players withheld support for the department’s plan.

HUD has scheduled one more RESPA Roundtable for next Thursday, August 25 in Washington, D.C.
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