MBA sent a check for $100,000 on behalf of its member companies. Additionally, MBA staff gave $8,541 in individual contributions through the association over the past two weeks.

“MBA thanks its employees for their generous contributions,” said MBA President and CEO Jonathan Kempner.
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He joins John Connelly, a former chairman of the board of the Federal Home Loan Bank of Pittsburgh; John McKenney, senior vice president and chief credit officer with Alliance Bankshares Corp. of Virginia; and Richard Swanson, former CEO of HomeStreet Bank in Seattle.

GMAC Mortgage, Horsham, Pa., announced the appointment of several executives to new posts within the company’s senior management structure. The appointments include:

• Ralph Hall as the chief operating officer for business operations.  Hall will oversee GMAC Bank, business lending, capital markets and information technology functions. 

• Jim Hillsman as chief operating officer for consumer operations.  He will be responsible for leading the company’s consumer lending business (including the GMAC Mortgage and ditech.com brands) and national loan administration capabilities.  Hillsman will also be responsible for managing GMAC Mortgage’s servicing assets.

• Dave Bricker as chief financial officer.  Bricker will oversee the company’s finance organization, accounting, reporting and analysis, treasury and tax functions. 

• Jim Whitlinger as senior vice president and chief accounting officer. He will be responsible for all accounting functions for GMAC Mortgage, leading a team of more than 80 associates. 

• Scott Griffith as vice president and managing director of servicing valuation and analytics, leading 17 professionals in this department. 

Radian Asset Assurance Inc., New York, announced the appointment of Jack Praschnik as senior vice president and head of its global structured products group. Since 2003, Praschnik had been senior vice president and head of global strategies at Radian. He will continue to manage this function.

Praschnik’s previous experience includes more than 14 years developing and leading risk management and strategic planning groups, creating risk management policy and analyzing economic risk. He spent several years at MBIA Insurance Corp. as managing director, portfolio risk management where he was responsible for measuring and managing the risk of MBIA's insured portfolio. He began his career as an assistant professor of economics at the University of Western Ontario. 

Pro-Teck Services LTD, Waltham, Mass., announced the following internal promotions:

• Luc Levensohn has been promoted to vice president of operations. He joined Pro-Teck five years ago and most recently held the position of vice president of information technology. He will have responsibility for all operations including vendor management, account management and quality control.

• Chris Carey has been promoted to vice president of information technology.   He previously served as Pro-Teck's IT manager, where he led development of Pro-Teck's collateral valuation platform, ProValue.  Chris will now have full responsibility for all IT development and systems and will join Pro-Teck's senior executive team.
 
Steve Williams has been named to succeed James Dalton as president of GMAC Commercial Mortgage Europe. Dalton announced plans to retire from the company, effective September 30. He will continue his role as director of GMACCM Europe’s affiliate, Dublin-based GMAC Commercial Mortgage Bank Europe Plc., a position he has held since 2001.

Williams, presently an executive vice president of for GMACCM Europe, joined GMACCM in 2000. Based in Europe since 2001, Williams has also worked in the company’s home office in the U.S. In addition to overseeing the company’s lending and investment activities, Williams has been responsible for GMACCM Europe’s distressed debt acquisitions, joint ventures and special servicing operations throughout Europe, including emerging markets.

Williams’ experience prior to joining GMACCM includes establishing a platform in Asia for investing in non-performing loans and servicing NPL investments. He also managed five offices of a distressed debt investment company in the U.S. and worked for the Resolution Trust Corp.

RiskBusiness, London, appointed Duncan Wilson as executive director responsible for Europe. He was formerly global head of operational risk management at BNP Paribas. RiskBusiness also appointed Hansruedi Schütter as executive director for Asia and the Middle East.

Secured Funding, Costa Mesa, Calif., appointed Phil Dandridge as chief financial officer. He is responsible for capital formation, budget and financial plans and managing the accounting division.

Dandridge, with more than 20 years of financial industry experience, spent the past seven years with Edison International, where he was the CFO of Edison Capital. Prior to Edison Capital he worked for more than 17 years with the McDonnell Douglas/Boeing organization in a number of positions. 

Mortgage Builder Software Inc., Southfield, Mich., announced the additions of Wendy Bennetts to the customer support team and Robert Balousek to Web development. 

Bennetts is responsible for training clients on the functionality of the Mortgage Builder system from implementation to daily operations.  She also works with programmers on enhancements and compliance changes, as well as customizing the software for specific client needs.  Prior to joining Mortgage Builder, Bennetts was an on-site representative for First American National Lender’s Advantage, where she acted as a liaison for specialized programs. 

Balousek is responsible for enhancing Mortgage Builder’s existing retail and wholesale Web site products that integrate into the Mortgage Builder system. He is also responsible for customizing these products to meet specific customer needs. 

Interthinx, Calabasas, Calif., appointed Ann Fulmer as vice president of industry relations. She works with national and state mortgage industry associations, and regulatory and law enforcement agencies to increase awareness of mortgage fraud, reduce financial losses and prevent damage to innocent neighborhoods.

Fulmer has an extensive history in investigating mortgage fraud, prompted when it invaded her neighborhood. In the mid-1990s, she noticed evidence of “property flipping” in her DeKalb County, Ga. neighborhood.  Despite numerous complaints to local authorities, she received no assistance. Her frustration with the authorities’ lack of assistance and her determination to protect her family and community led to the development of the Georgia Real Estate Fraud Prevention and Awareness Coalition Inc. (GREFPAC).  Fulmer is a co-founder and immediate past president of GREFPAC, a coalition of representatives from every segment of the real estate and lending industries, state regulators, local, state and federal law enforcement agencies and neighborhood victims.  GREPAC’s success identifying fraud rings and its assistance in criminal prosecutions has garnered national recognition and serves as a model for fighting mortgage fraud. 

goodmortgage.com, Charlotte, N.C., added seven members to its loan processing group and its loan specialist team. The new appointees include Antoine Smith, Calvin Barry, Claire Hudson, Barrington Streete, Brandon Meador, Renee’ Cloutier and Sondra Brooker.

Sperry Van Ness, Irvine, Calif., expanded in the Utah commercial real estate market by naming Tom Heal, CCIM, as senior advisor.  His office is located in Provo.

With more than 33 years of commercial real estate experience, Heal specializes in the sale of self-storage properties in Utah, Arizona, Nevada and Idaho. Prior to joining Sperry Van Ness, Heal owned Tom Heal Commercial Real Estate Inc., a full service commercial real estate company. Previously, he served as a real estate appraiser for 13 years, and has testified as an expert witness in various Utah courts.

Fidelity National Real Estate Solutions’ MLS Systems and Solutions group, a division of Fidelity National Financial Inc., Jacksonville, Fla., announced the appointment of Marty Reed as vice president of product development. Reed’s duties include providing development direction across product lines and bringing new products to the MLS market.

With more than 15 years of executive management experience in the MLS and real estate industry, Reed served as the CEO of the Cooperative Arkansas REALTORS Multiple Listing Service, managing several MLS system and lockbox conversions. Prior to joining Fidelity MLS, Reed was a senior consultant with Clareity Consulting and Communications and served as director of implementation for Clareity Security. 
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"I applaud the current applicants under the New Markets Tax Credit Program who plan on focusing their business plans in areas affected by Hurricane Katrina," Snow said. "Katrina is a disaster on every level imaginable, and tools like New Markets Tax Credits will assist in the recovery efforts of New Orleans, Louisiana; Mobile, Alabama and the rest of the region."

The Community Development Financial Institutions (CDFI) Fund will immediately implement two changes to the program, in response to the recent declarations of "major disasters" by the Federal Emergency Management Agency (FEMA):

• The CDFI Fund will provide NMTC Program allocation application deadline extensions, on a case-by-case basis, to organizations whose principal place of business is located in counties where FEMA issued a `major disaster declaration' as of July 15.

• The CDFI Fund will modify the NMTC Program allocation application so that additional consideration will be given to organizations that commit to target their investment activities to counties where FEMA issued a `major disaster declaration' as of July 15.

Up to $3.5 billion in tax credits is available under the current round of the NMTC Program, which attracts private-sector capital investment into the nation's urban and rural low-income areas. These tax credits help finance community development projects, stimulate economic growth and create jobs.

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In response to recent reports of difficulties in verifying the identity of people affected by Hurricane Katrina, principally through the loss of identity verifying documentation, Verid, Inc., Fort Lauderdale, Fla., is offering the use of its identity verification and authentication service free of charge to businesses needing to provide services to those individuals.
  
 “People have lost everything as a result of Katrina, including all forms of identification, such as social security cards, drivers’ licenses, bankcards and credit cards. The last thing these individuals need are delays and complications while banks, credit card issuers, government agencies other services providers attempt to verify their identity,” said Kevin Watson, CEO of Verid. “Businesses need and want to help customers as soon as possible. Our knowledge based authentication solution can verify consumers who have lost identifying documents that were traditionally relied upon. We are offering our service free of charge so that businesses can provide a quick response to customers in affected areas trying to get their lives back in order.”

Verid enables businesses to verify the identity of individuals that don’t have traditional forms of identifying documents. Verid’s knowledge based screening process uses a series of non-intrusive background questions that an individual must answer correctly to confirm their identity.

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Despite the widespread destruction caused by Hurricane Katrina throughout several Gulf Coast states, the impact on U.S. residential mortgage-backed securities rated by Standard & Poor's Ratings Services is expected to be minimal. A preliminary assessment of the exposed pools found them to have a limited concentration of affected mortgages. The pools also have built-in risk-insulating features, which provide further protection, S&P said.

S&P said it anticipates that effective mortgage loan-servicing policies will assist with issues such as delinquency advances, property inspections, forbearance plans, the filing and settling of insurance claims and the handling of any federal aid provided for properties in the affected transactions. It also expects these measures to “eliminate, or at least reduce, potential losses for a majority of the existing transactions.”

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The Federal Home Loan Banks’ Mortgage Partnership Finance Program has implemented special relief provisions designed to alleviate the hardship for victims of Hurricane Katrina. MPF servicers (institutions to which mortgage payments are made by borrowers) are authorized to suspend for three months loan payments from borrowers with FHLB-owned mortgage loans whose property is located in the disaster area.

Following the three-month period, MPF servicers have been asked to work out an appropriate plan for the continuation of the mortgage, on a case-by-case basis, that considers the borrower’s unique circumstances and repayment ability, including the extent of the borrowers’ loss of income, an assessment of the property damage, and the status of any property insurance claims.

For borrowers in the disaster area, MPF servicers also are encouraged and authorized to:

• Waive late fees for the months of September, October and November;

• Refrain from filing negative reports to the credit repositories for any payments suspended or reduced for the months of September, October and November;

• Expedite the release of insurance proceeds to help affected borrowers needing resources to repair their homes; and

• Suspend all collection and foreclosure proceedings on designated affected mortgages during the three-month period.

Affected borrowers should contact their lender or mortgage servicer with any questions. More information about the MPF Program can be found at www.fhlbmpf.com, which also contains links to the websites of the nine FHLBs that offer the program to their member lenders.
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“Although there is not a large concentration of properties in the gulf coast relative to other markets in CMBS, the ongoing crisis will make it difficult for borrowers to make their payments,” said Adam Fox, director at Fitch Ratings.

Fitch expects master servicers to advance on assets in the near term and determine the extent of damage and insurance coverage. “Delinquencies will rise and more loans will be transferred to the special servicer as details emerge,” he noted.

Loans transferred from master to special servicers will be on a case-by-case basis and depend on discussions between the two services. Fitch already received initial impact assessments from most CMBS master servicers as they continue to monitor damage assessments. “There are going to be some more aggressive special servicers in the field that are going to want properties immediately,” Fox said. “It depends.”

Communication continues to be a problem for those areas directly affected by the storm. Despite ongoing efforts to contact borrowers, some commercial mortgage servicers are still unable to contact borrowers within the New Orleans area.

The largest properties, such as hotels and shopping centers will get the most attention immediately, followed by office buildings. “Multifamily, from the list that I have seen, tend to be the smaller loans so I do not think we will see many multifamily transfers [to special servicing] in the beginning,” Fox said.

However, a gap in available flood coverage compared with property and casualty insurance can create discussions and debate on damage causes. The question will be whether damage was cause by wind or rain. The size of the loan and contact, or lack of contact, with the borrower will help determine if loans go into special servicing.

According to Bernard Brown, president of Insurance Advisors LLC, Stamford, Conn., damage caused by wind, including water damage, would normally be covered under a standard “all risk” property policy or under a separate windstorm policy. But if the damage was caused by rising waters unrelated to wind damage, the a flood insurance policy or a difference in conditions policy needs to be in place. "Flood policies written by the National Flood Insurance Program [NFIP] do not provide loss of income or business income protection," Brown said "We have been reminding lenders of this for years."

IPC U.S. REIT, a Toronto-based real estate investment trust (REIT) that invests in U.S. properties, reported at the end of last month that its 39-story Energy Center in the New Orleans’ Central Business District (CBD) sustained no material damage from Hurricane Katrina. The Energy Center, located at 1100 Poydras Street, did not suffer any structural damage, according to IPC U.S. REIT, and minor damage included some flooding, broken windows and loss of power, as the entire city of New Orleans lost its electrical supply. IPC US REIT said it has insurance to cover damage and business interruption, and it did not anticipate any material impact on the REIT.

The largest delinquency declines occurred in the office and multifamily sectors, which fell by 16.31 percent and 14.17 percent, respectively. The decline in multifamily delinquencies is largely the result of a bulk sale of distressed assets completed by ARCap REIT, Inc., Irving, Texas, in July 2005. There were $179 million multifamily assets liquidated from CMBS in July 2005. ARCap sold 19 assets from 16 CMBS transactions with an average loss of 19.64 percent. This sale represented 77 percent of the total multifamily liquidations for the month.

Overall, the seasoned delinquency index decreased to 1.28 percent from 1.37 percent in July. The seasoned index omits transactions with less than one year of seasoning. Fitch used the minimum 60-day delinquency criteria to determine inclusion in the study.
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Capital Source funded an $18.165 million senior mortgage loan for the condominium conversion of the SoCo Urban Lofts , a 226,231 square-foot, 12-story, 203-unit apartment loft building located in downtown Dallas. Proceeds from the loan will be used to refinance a HUD loan on the project and to fund the condominium conversion.

Last year, 4,300 condos were sold in Dallas, up by 9 percent from 2003.

"The Dallas condominium market may not have historically enjoyed the same degree of success experienced in other cities, but that is changing. Downtown Dallas, not known for residential neighborhoods, is currently being transformed into a desirable location for young professionals to live,” said Don Moses , director in the San Francisco office of CapitalSource. “The property benefits from nearby restaurants, retail and a 20,000 square-foot grocery store which recently opened one block away.”

In the Chelsea and West Village neighborhoods of New York City, Capital Source provided a $21.795 million senior construction loan and a $4.2 million mezzanine loan for two luxury residential condominium developments. The Soma Condominiums, located at 116 West 22nd Street in Chelsea and Hudson Blue Condominiums, located at 423 West Street in the West Village will receive loan proceeds to repay existing debt and fund construction costs.

Chris Kelly, managing director and head of real estate at CapitalSource, said the transaction presented an opportunity for CapitalSource to finance two “high-quality, substantially pre-sold residential developments with reduced market risk and attractive pricing." CapitalSource financed a majority of the capital structure using its Advantage Program and Enhanced Mezzanine Program, Kelly said.
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Workshop registration currently stands at 85 individuals representing 32 states and two local associations. Take this opportunity to join your peers for this meaningful exchange of ideas. 

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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In a study from First American Real Estate Solutions (RES), Anaheim, Calif., "Real Estate Flipping: Gold Mine, Mistake or Fraud ," Christopher Cagan , director of research and analytics, draws a distinction between legitimate flipping and fraud. Legitimate flipping is defined as the purchase and quick resale of distressed or undervalued property for profit usually within 24 months of the original purchase, versus fraud, whereby the perpetrator uses false information in a real estate transaction to obtain unlawful profits.

The study also examined the prevalence of, and profits made from, flipping residential real estate properties from 1999 through June 2005 in three of the hot real estate markets: Las Vegas, Miami and Orange County, Calif.

The flip sales in the study were held for two years or less. The subset, which showed the most interesting flips, were held for three to six months, Cagan said. Las Vegas and Miami-Dade County, Fla., showed the most flipping activity during a three to six month period. In these counties, the study shoed flipping intensified during 2004 and 2005. In Orange Count Calif., the least prone to flipping in this period, showed the strongest year for flipping was in 2004, a year with faster prices rises than 2005, he said.

Cagan described this time span the sweet spot, resulting in the purest form of flipping. These types of flips occur in a hot market when properties can be quickly resold. As flippers ride the real estate rollercoaster, the study found that at the county levels flip sales did not dominate the overall markets as a percentage of total sales, Cagan said.

However, in smaller local areas flip sales can dominate the market. For example, the study showed during 2005, two Zip code in Las Vegas showed the total percentage of flips exceeded 40 percent, all in Miami or Las Vegas; none were in Orange County. Las Vegas zip codes 89119 shoed a total percentage of flips at 52.3 percent while Zip code 89147 was 45.7 percent. One Miami zip code, 33127, had a total of 46.9 percent.

"Among the strategies employed by purchasers who flipped properties within two years were investing in the hottest local markets; purchasing distressed, under-valued or foreclosed properties; and taking advantage of the psychology associated with a market experiencing higher than historical rates of appreciation to earn spectacular returns on their investments," Cagan said.

Real estate prices in some areas have seen 20 to 30 percent appreciations. The study shows that flippers obtained returns far in excess of those strong gains—above 100 percent per year in many cases.

In Cagan’s finding, flippers usually made a 15 percent or more gross profit. In the three to six month, flips did far better than 15 percent, Cagan said. Additionally, when the gains were converted to an annualized basis, the appreciation rates often exceeded 50 percent and even 100 percent. These profits were strong in Clark County, with Miami-Dade County in second and Orange County in third, Cagan said.

"While the market has done well overall, flippers have done even better," said Cagan. "During the past six years, flippers have exercised a level of strategic intelligence and savvy in their investments that proved to be even more profitable than the strong gains experienced by the general market."
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