Downward revisions in consumption, nonresidential fixed investment and imports more than offset upward revisions in exports, government expenditures and inventory investment, resulting in a modest net reduction in estimated GDP growth.

Inflation news improved slightly in the GDP report, as the Federal Reserve’s favorite gauge of inflation was downwardly revised. The personal consumption expenditure (PCE) price index excluding food and energy (or the core PCE) increased by 1.6 percent, slowing from 1.8 percent in the advance report.  

Another report yesterday showed that the manufacturing sector contracted in a regional market. The Chicago Purchasing Managers Index (PMI)—a measure of manufacturing activity for the Chicago area—dropped by more than 14 points to 49.6 in August. This marks an end to the 27 consecutive months of readings above 50, a reading that indicates an expansion in the region’s manufacturing sector. 

The decline in the index was largely due to significant drops in new orders, backlog orders and production components. The sharp drop in the Chicago PMI starkly contrasted the Philly Fed and the New York Fed's manufacturing surveys, which showed significant improvement in those regions’ activities in August. The Kansas City Fed manufacturing survey released yesterday also showed that the area’s manufacturing sector improved in August, as the index jumped to the highest reading since March.

Better core inflation news from the GDP report boosted the Treasury market. The yield on the 10-year Treasury notes declined by three basis points from Tuesday’s close to 4.07 percent. The yield dropped further after the release of the Chicago PMI and hovered around 4.01 percent by mid-Wednesday afternoon.

According to the federal funds futures, the Fed is expected to raise rates two more times this year, with the funds rate reaching 4.00 percent by year end. Earlier this week, the futures market placed the odds that the Fed would hike the rate to 4.25 percent by the end of the year at about 50 percent.

(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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The Northeast region—including all New England and mid-Atlantic states down to North Carlina, as well as the District of Columbia and Puerto Rico—becomes eligible today to request a free credit report. Consumers in the Western states were first eligible in December 2005; earlier this year, consumers in the Midwest and Southern states became eligible.

The Mortgage Bankers Association believes that making this information readily available to consumers is a good way to encourage personal financial responsibility.
 
As part of its continued outreach efforts, MBA helps to educate consumers on the importance of credit reports and other aspects of the home buying process through its consumer-friendly, educational website, www.homeloanlearningcenter.com , where various tips for consumers are highlighted.

Of the tips, the importance of seeing a mortgage lender first can be extremely beneficial to consumers as they attempt to understand the meaning of their credit report in terms of what they can afford to buy, the rate they may receive and what loan products meet their lifestyle requirements. A home purchase can be the most significant investment consumers make. Making smart financial choices requires sound investment advice from mortgage banking professionals.

Valuable consumer tips for first time home buyers can be found on the Home Loan Learning Center Web site. 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.

• Needs vs. Wants – What features do you need in a new home versus what you want?

• Take time to learn some of the industry jargon.

• Once you’ve found a lender, thoroughly investigate the mechanics of the deal–are there additional costs, such as origination and/or application fees?

• There are various types of mortgage packages. Figure out, with your lender, what type of mortgage is best for you.

• Get pre-qualified so you are aware of what you can afford as well as prepared to seriously consider real estate options.

• Visit as many homes as possible and decide on the house you are interested in based on your approved loan amount.

• Work, interactively with your trusted mortgage lender and be accessible to him/her in order to secure the loan.

The three major national credit bureaus -- Experian, TransUnion and Equifax—are making credit reports available online at www.annualcreditreport.com, by calling 1-877/322-8228, or by mail.

Credit reports give a history of how much money a consumer owes and how prompt they are at repaying debts. These reports can also determine whether someone is eligible for a mortgage, automobile loan, job or credit card. In addition to telling consumers their creditworthiness, credit reports can reveal identity theft or errors by financial institutions.
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The Index found Los Angeles values jumped by 2.6 percent from the first quarter to the second quarter and rose 21.9 percent from the second quarter a year ago. The average luxury home in Los Angeles is now $2.09 million, up by $376,000 from a year ago. Values have increased by 20 percent or more for four consecutive quarters on a year-over-year basis, according to the Index.

San Diego values increased by 2.2 percent from the first quarter to the second quarter, and were up by 16.5 percent from the second quarter a year ago, the Index said. The average luxury home in San Diego topped $2 million for the first time in the second quarter and is now $2.01 million, up by $285,000 from a year ago.

San Francisco Bay area values rose by 3.9 percent from the first quarter to the second quarter and gained 10.4 percent from a year ago. San Francisco luxury home values remain the highest in the state at $2.8 million, up by $263,000 from the second quarter of 2004.

"Luxury home prices in California set records again in the second quarter of 2005 due to double-digits gains," said Katherine August-deWilde , COO of First Republic Bank. "Despite these significant increases, we are starting to see some resistance to prices, and buyers are exercising more caution. [We] believe values will not appreciate as rapidly as they have over the past few years, particularly if interest rates continue to rise."
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The overall delinquency rate rose by .03 percent this year from .14 percent in the second quarter 2004. The reporting companies for the ACLI second quarter survey account for 85 percent of the life insurance industry's $266 billion mortgage portfolio for year-end 2004.

The total delinquency rate for all mortgages, including one-to-four family homes and agriculture loans, increased from 0.12 percent in the first quarter to 0.20 percent in the second quarter. However, the overall delinquency rate did not change from the second quarter of last year.

ACLI said the increase is primarily driven by changes in delinquency rates in the East, North Central and Mountain regions and is largely attributed to four loans on commercial properties that were previously in good standing.
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Robert Kaplan, senior managing director, and Mark Rutherford, senior analyst, both in the Miami office of HFF, secured a $45 million, two-year, adjustable rate senior loan through Fremont Investment & Loan, Tustin, Calif., and a $9.8 million, 18-month mezzanine loan through Ritchie Capital Management, Chicago. HFF exclusively represented the borrower, Beach Hill Development Coral Springs Holdings LLC, which purchased Eagle's Nest for $46 million in August 2005.

"Rising costs of land and construction paired with accelerated real estate appreciation has priced many people out of the single family housing market," Kaplan said. "This has created the strong condominium market and a continued high demand for high-quality condominium conversions like Eagle's Nest."

Eagle's Nest, west of downtown Fort Lauderdale and close to Florida's Turnpike, is currently 95 percent occupied and situated on 13.4 acres. The property consists of 11 three-story buildings with two and three bedroom units averaging 1,203 square feet each. All units feature terraces and full size washers and dryers, and select units have vaulted ceilings and water views. Residents have access to two swimming pools, two clubhouses, Jacuzzis, a fitness center and a basketball court. Parking is available for 550 cars.

Beach Hill Development Coral Springs Holdings LLC is a joint venture between Beach Hill Development and MP Realty Group. The principals of Beach Hill include Daniel Rotenberg and Gaby Naim. MP Realty Group, founded in 1994, owns and manages multifamily and retail properties mainly in the New York/New Jersey region.  The principal of MP Realty is Michael Puderbeutel.

The New York office of HFF secured $44.255 million in leasehold financing for 275 Main Street, a 263,565 square-foot retail facility and 1,300 space parking garage in White Plains, N.Y .

Jay Marshall, senior managing director at HFF, represented a partnership consisting of Ivy Equities of Montvale, New Jersey, and Barrow Street Capital in New York City, in placing the debt.

The transaction was structured with an A and B feature: Calyon, Chicago, provided the A note and UBS, Zurich, Switzerland, provided the B note.  The proceeds will be used to retire an existing loan and provide construction/renovation financing.

The redeveloped 275 Main Street will be anchored by a 175,840 square foot Wal-Mart with the remaining 88,225 square feet able to be leased in various configurations accommodating up to three tenants. Marshall noted that Wal-Mart is enthusiastic for the location and the surrounding demographics. "The Wal-Mart will be a vertical design on the lower and first levels and will be one of only two such stores in the country," he said.

The retail property is across from the White Plains City Center, which includes 300 residential units, a 15-screen theater, a 2,370 space garage and major national retailers.
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At MBA's Management Track sessions, you hear from widely known speakers that have invaluable experience working and consulting for some of the world's most successful companies. Learn new techniques for achieving business goals, innovation and profitability, as well as building inspiration-driven goals and high performance into your organization.

Bring a new vision to your team and attend MBA's Management Track sessions.

The Disney Approach to Leadership Excellence
October 24, 2:00-3:15 p.m.
Take the fundamental leadership philosophies guiding the success of the Walt Disney World Resort and adapt them to your organization. Combining classroom sessions, application exercises, field experiences and interaction with Disney leaders, this session guides you in discovering the leadership principles that are at the core of Disney's organizational strength.

The Art and Science of High Performance
October 24, 3:30-4:30 p.m.
Andrew Bennett, founder of Bennett Performance Group, weaves together a compelling case about the need for inspiration in our work, and how it is closely linked to financial success. He discusses how inspiration builds enduring, positive energy into your organization's culture, connects the hearts and minds of customers, employees, suppliers and communities, and creates compelling reasons for staff members to work with their organizations. Walk away from this session with six tools for building inspiration-driven, high performance into your organization.

Four Generations in the Workplace: Searching for Common Ground
October 25, 11:00 a.m.-12:15 p.m.
For the first time in history, four distinct generations-Matures, Boomers, Xers and Millennials-are employed side by side in the workplace. In this session, retention and generations expert Cam Marston discusses common generational characteristics, specific leadership needs of each generation, the new definition of company loyalty and fresh guidelines for team building. And, he provides valuable advice about the common ground employees share-the intensity with which each generation holds fast to its value systems.

Organizational Change and Performance
October 25, 2:45-4:00 p.m.
Corporations often struggle in creating a common vision and in communicating that vision throughout their companies. In this session, executive coach, John Parker Stewart provides senior managers with guidance on organizational structure, personnel placement and identifying company needs. He specializes in melding together corporate cultures and uniting people with differing backgrounds and heritages.

Register Today
Join the largest gathering of residential real estate finance professionals at MBA's 92nd Annual Convention & Expo. The convention offers strategies so you can adapt and adjust your business to thrive in a constantly changing marketplace. While providing opportunities to network with your peers, the convention also offers the opportunity to gather valuable information on innovative business practices, learn about winning products and services, get updates on the latest technology, and to meet and exchange ideas with industry leaders.

For more information, visit the Convention Web site at http://events.mortgagebankers.org/92nd_Annual/default.html.
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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.

MBA appreciates the generous support of the following sponsors: Wells Fargo, MERS, Ameriquest, Lotstein Buckman and Fannie Mae.

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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"MBA's survey is the first of its kind to provide a comprehensive industry assessment of the degree to which processes and reporting is automated across the entire commercial real estate finance chain, at each stage of information-sharing and by function," said Catherine Rodewald, managing director of Prudential Mortgage Capital Co.,  Newark, N.J., and chair of COMBOG's Technology Initiatives Committee.

"This survey represents an important first step in evaluating the industry's ability to adopt commercial industry technology standards, including those released by MISMO," Rodewald said. "These standards are directed at reducing expenses, eliminating duplicative manual data input, increasing reporting accuracy and information transparency and boosting investor confidence in commercial real estate finance investments as an asset class."

Survey result highlights include:

• More than three-fourths of survey participants have started efforts to store electronic images of loan documents;

• Nearly two-thirds of the loan proposals sent from originators to lenders were submitted  in electronic format;

• More than half of loan underwriting packages received by lenders were received in electronic format;

• Servicer responses globally indicated a high usage of electronic communications and that larger servicers are generally more electronic than smaller servicers;

• Investor reporting and remittances are nearly entirely electronic; and

• Processing property inspections is largely electronic.

Overall, nearly 90 percent of survey participants assessed their firm's receptiveness towards planning new technology initiatives as "Strong" and 78 percent have launched electronic document imaging efforts.

Survey participants were unanimous in the sentiment that initiatives to exchange data electronically with their trading partners were not intrusive to business practices. "Since the beginning of MBA's emphasis on technology issues, we hoped industry professionals would begin to embrace e-commerce," said Bill Frazer, managing director and chief financial officer of L.J. Melody & Co., Houston, current vice-chair and former chair of COMBOG's Technology Initiatives Committee. "This survey clearly shows that the industry is heading in the right direction."

To view the MBA 2005 Commercial Technology Survey, click here.
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