Forecasters warned this year would be worse than last year, and indeed, the hurricane season, which runs from June 1 to November 30, had already seen 10 named storms before Katrina. But Carolyn Gorman, vice president in the Washington, D.C. office of the Insurance Information Institute, noted that the Atlantic hurricane season kicks into gear in late August, September and possibly October. “This is not the last of the hurricane season,” she said. “This is [really] just the beginning of it.”

Gorman said the institute would not have any solid dollar volume in damages until later this week, but with widespread damage in New Orleans, Mobile, Ala., Biloxi, Miss., and other Gulf coast and inland cities, she said the storm could be the costliest in insurance history. 

Fitch Ratings, New York, said Katrina likely will be the largest insured loss from a single event since the terrorist attacks of September 11, 2001 and the largest U.S. hurricane loss since Hurricane Andrew in 1992.

Donald Thorpe, senior director at Fitch Ratings, said the magnitude of the loss from Katrina would likely be "considerably greater" than any of the individual losses from the four major land falling hurricanes in 2004. And, at the high end of the range of current estimates, Katrina would exceed the combined insured losses from the 2004 hurricane season and would represent the largest insured hurricane loss ever.

The insurance loss due to Katrina will be material to both the primary insurers located in the U.S. and to the reinsurance industry, much of which is domiciled outside of the U.S., Thorpe said.

"Total losses--insured losses plus uninsured losses--are often double the insured loss and Fitch notes that flood losses are generally not covered by homeowners' policies," Thorpe said. "The range of loss estimates is necessarily wide because this event is still ongoing. Fitch expects loss estimates to be refined once the areas affected are safe enough to physically inspect damage and when the National Weather Service publishes detailed information about the storm track, central pressure and wind speeds."
 
Thorpe said Fitch expects the spread of loss through the insurance industry to be different than the 2004 hurricane season, with reinsurers taking a greater proportion of the loss than in 2004, because the insured loss from Katrina will be from a single event, which means primary insurance companies will share losses with their reinsurers once losses meet their respective deductibles. This contrasts with 2004 when insured losses were the result of four hurricanes, which meant primary insurers had to pay four deductibles.

Insurance companies filed for rate increases on premiums following last year’s hurricanes. Insurance companies were going to charge multiple deductibles, from 2 to 5 percent, for homeowners with more than one hit from a hurricane. Florida Department of Insurance officials estimated residential property damage at $5 billion to $11 billion from Hurricane Charley last year. For all hurricanes last year, total damage costs were $27.5 billion, according to the Insurance Information Institute.

“Insurers have known of the exposure of catastrophic storms in Louisiana and they have been working with regulators in order to spread the losses by doing such things as hurricane deductibles,” Gorman said.

Congress, however, passed a law prohibiting insurers in Florida from charging multiple deductibles. Congress approved one deductible per year in Florida rather than multiple deductibles, such as a 2 percent deductible for each hurricane hit. “Some insurance companies plan to leave Florida all together,” Gorman said. “Others have filed for rate increases. I believe one of them wanted a 23 percent rate increase.”

And for Louisiana residents, the insurance safety net might not be available. “I don’t know that Louisiana has any kind of a similar financial mechanism [as Florida] for homeowners there,” Gorman said.

As with last year, standard business and homeowners policies will cover wind damage from Katrina, according to the Insurance Information Institute. Such policies, however, do not cover damage from flooding. National Flood Insurance Program (NFIP) covers flood damage.

Bernard Brown, president of Insurance Advisors LLC, Stamford, Conn., said multifamily properties in Lousiana, Mississippi, Florida and other states hit by Katrina face bigger potential problems from flooding. "It can be a problem as far as [time] that multifamily properties are unoccupied and no rents are coming in," Brown said. "That can present a problem for the owners."
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Saksena has 17 years of experience in establishing and managing risk frameworks in organizations of varying size, complexity and cultures.  Most recently, he led Enterprise Risk Management at General Motors Acceptance Corp., (GMAC), a global financial services subsidiary of General Motors. In addition, Saksena founded Enterprise Risk Advisors LLC in Minneapolis, a risk management consultancy that focused on the development and implementation of enterprise-risk solutions for financial and non-financial organizations.  He has also held risk and portfolio management positions of increasing responsibilities at Société Générale in New York, Royal Bank Financial Group in Toronto and Great-West Life Assurance Co. in Winnipeg.

Charles "Hank" Williams was named acting deputy assistant secretary for multifamily housing at HUD. He replaces, on a temporary basis, Stillman Knight, who resigned in July.

Williams is currently head of the Office of Affordable Housing Preservation (formerly the Office of Multifamily Housing Assistance Restructuring or OMHAR).

Sperry Van Ness, Irvine, Calif., appointed Matthew Leighton as senior advisor in its Kalamazoo, Mich., office. With nine years of commercial real estate experience, Leighton specializes in the sale and lease of commercial properties.

Prior to joining Sperry Van Ness, Leighton owned Leighton Real Estate, a full service brokerage company, which he started in 2001. Previously, he served as associate broker for Kersten-Morris Real Estate.

Sperry Van Ness also appointed Andrew Bauman as senior advisor in the company’s Fort Myers, Fla., office. With 25 years of commercial real estate experience, Bauman specializes in the sale of apartment buildings.

Prior to joining Sperry Van Ness, Bauman served as broker/salesman for Kinsey Associates Inc. in Fort Myers. Previously, he was COO/CFO for Focus Engineering/GCF Project Management Inc.

ABN AMRO Mortgage Group, Ann Arbor, Mich., named Randy Conte as chief operations officer, responsible for integrating operations across all AAMG locations.

Previously, Conte served as executive vice president and corporate controller for AAMG’s parent company, LaSalle Bank Corp. He also served as director of information technology and global head of business management for SBC Warburg, and as a senior manager with the consulting practice at Arthur Anderson.

Capitol Federal Financial, Topeka, Kan., announced the retirement of CFO Neil McKay, effective next March. Kent Townsend will assume the role at that time. Townsend has been employed with the company since 1984, most recently as its controller.
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In Grand Rapids, Mich., Green Park Financial arranged a $23.365 million refinance loan for Woodfield Apartments . The loan has an early rate lock program in 10 days from receipt of the application.

The 10-year loan has a nine and a half years yield maintenance followed by a 30-year amortization schedule. It was underwritten at an 80 percent loan-to-value (LTV).

The Woodfield Apartments, built in 1987, feature more than 720 garden style units in 32 buildings. Common area amenities include garages, recreation areas and car care areas. Troy Zapolski of Housing Elements originated the loan for Ted Patch of Green Park Financial.

Green Park Financial provided a $13.2 milliion permanent loan for Apartments at Pine Brook, located in Newark, Del. The loan was structured as a nine-year fixed rate with one-year floating rate extended maturity with the first two years interest only, followed by a 30-year amortization.

Green Park Financial offered AE-Newark Associates LP, the borrower, an additional supplemental loan option for a total of three during the term and one upon assumption. The loan was underwritten to a 78 percent loan-to-value (LTV).

Apartments at Pine Brook , built in 1977, includes 14 apartment buildings with 308 garden-style units. The buildings are all brick and block construction with mansard roofs. Property amenities include a swimming pool, playground and a fitness center. 

AE-Newark Associates LP renovated 168 of the 308 units in recent years. Renovations include new kitchen appliances and dishwashers to the units, cabinets and new bathroom fixtures. Renovations will continue on each of the units in coming months. 

Pine Brook is about a half mile from the University of Delaware . Its tenant base of Pine Brook consists of 25 percent undergraduate students, and 20 percent graduate students. Joseph Topley of Carey, Kramer, Pettit & Panichelli, Wayne, Pa., a Green Park Financial preferred correspondent, originated the loan.

Green Park Financial structured a $7.8 million refinance loan of Grand Reserve Apartment in Cedar Rapids, Iowa, for Timberland Partners. The five-year interest only loan has a 15-year term followed by a 30-year amortization with an 80 percent LTV. 

The garden style community consists of 170 units with a clubhouse that includes a full kitchen, 24-hour health center, outdoor swimming pool, recreation areas, garages, walking trails, and a playground area.

Jason Rice of Quantum First Capital, Dallas, a Green Park Financial preferred correspondent, originated the loan.
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You want your loan agents and brokers finding and closing loans, not dealing with mundane, tedious tasks such as collecting, filing, faxing, shipping, or validating documents. But proper documentation is the life-blood of the loan process.
 
In "Paper Pusher No More,” industry expert Jim Henderson will discuss methods to enhance productivity of your employees. Topics will include:

• Time studies and task analysis : Old-fashioned industrial engineering is a great place to start;

• System boundaries: Eliminate paper pushing and mundane tasks by choosing the right computer systems for your processes;

• New technologies: An overview of new technologies that might help and where they are typically a fit; and
 
• The ultimate buy-in: Making your employee's job easier.

Jim Henderson has spent the past 10 years in business process automation, first as a systems engineer and architect and then in the president's role at KeyMark. KeyMark began with scanning, OCR and automated forms processing at state department of revenues and moved to automation of electronic and paper billing and mortgage loan processes using integrated business rules engines, workflow, unstructured forms processing and document management.
 
Jim has served with the HIPAA Electronic Claims Attachment Subcommittee and has spoken at numerous industry events including AIIM, ARMA and AICPA. He is a Certified Information Capture Professional and Certified Document Imaging Architect.

It's never been easier to train your staff on the most current topics relevant to your business. Listen in to a 60-minute presentation by an industry expert, followed by a 30-minute interactive question and answer session. Just dial in from your conference room speakerphone to train your staff—whether there are two or 20 employees in attendance.
 
ThePowerPoint presentation that accompanies the audio program will be sent via email one week prior to the program date, and can be reproduced for all attendees.
 
CampusMBA Audio Programs are a timely, convenient and cost-effective way to train your entire staff on the latest topics. Why register for an Audio Program?

• Inexpensive—$225 for MBA members/$325 Non-member per site;
• Timely topics—regulatory and sales strategy issues brought directly to your speakerphone and conference room;
• Quality Program—program and presentation materials developed by industry experts;
• Simple—just use your speaker phone; and
• Current—latest topics brought to you in a timely way.

For more information, visit the CampusMBA Web site at www.campusmba.org; call (800) 348-8653 or email cbuzolich@mortgagebankers.org.
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MBA also reported that year-to-date loan originations were 31 percent higher than they were last year at this time.

"Capital continues to flow into the commercial and multifamily real estate markets on both the debt and equity sides," noted Doug Duncan, MBA chief economist and senior vice president of research and business development. "And so far, no significant obstacles to that flow have appeared, whether in the form of higher interest rates, declining loan performance or declining property performance."

Second Quarter 25 Percent Higher than Year Ago
The increase in commercial/multifamily lending activity during the second quarter was across all property types. The $8.9 billion increase over the second quarter of 2004 included a 26 percent increase in loans for office buildings, a 14 percent increase in loans for multifamily properties, a 27 percent increase in loans for retail and a 34 percent increase in loans for industrial space. The largest percentage increase in lending was for hotel properties which saw a 189 percent increase from the second quarter 2004.

Among investor types, commercial banks and commercial mortgage-backed securities (CMBS) conduits drove the overall increase. Mortgage bankers' originations for conduits increased 91 percent from the second quarter of 2004; originations for commercial banks increased by 83 percent; and originations for life insurance companies increased 3 percent. Originations for Fannie Mae dropped by 13 percent; originations for Freddie Mac dropped by 47 percent; originations for FHA dropped by 34 percent; and originations for pension funds dropped by 75 percent.

Multifamily was again the dominant property type, representing 35 percent of total second quarter originations. Office properties were the next most active property group, with 24 percent of the total, followed by retail properties with 18 percentl.

CMBS conduits purchased the largest share of loans originated during the second quarter, 43 percent of the quarter's total. Originations for commercial banks were 23 percent of the total; loans for life insurance companies were 18 percent of the total; and the combined originations for Fannie Mae and Freddie Mac were 11 percent of the total.

Second Quarter 41 Percent Higher than First Quarter
The $12.9 billion increase in lending activity between the first and second quarters reflects the industry's usual rise in originations as the year progresses. The quarter-over-quarter increase was led by large increases in multifamily, office and retail lending, which grew by 32 percent, 44 percent, 62 percent respectively. The gains were widespread, with all property types and almost all investor types recording increase.

Year-To-Date 2005 31 Percent Higher than YTD 2004
Originations by commercial/multifamily mortgage bankers in the first two quarters of 2005 were 31 percent higher than they were at the same time last year, led by loans for multifamily properties and for CMBS conduit investors.

Year-to-date originations of multifamily loans increased by 31 percent compared to last year's first two quarters, while year-to-date lending for office properties increased 28 percent and for retail by 17 percent.  Lending for hotels grew by 154 percent.

The year-to-date loan originations for commercial banks increased by 74 percent; for CMBS by 73 percent; and for life insurance companies by 13 percent. Year-to-date originations for Fannie Mae increased 9 percent compared to last year's first two quarters, while originations for Freddie Mac and FHA each fell.

The average loan size increased for all property types between the second quarter of 2004 and the second quarter of 2005, including a jump in the average loan size for hotels from $22 million to $32 million. A robust market in the sale and purchase of hotel properties drove the increase.
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