It appears that high energy prices have not weighed on manufacturers at the national level as suggested by the earlier slowdown in manufacturing activities in the Philadelphia and New York Federal Reserve Banks’ manufacturing surveys. 

The report does add to inflation worries, however. The survey’s prices paid index, which measures how much manufacturers paid for raw materials, increased by 15.5 points to 78—the largest jump since September 1990. Combined with a 14-point increase in August, the recent surges in the prices paid component indicate that inflationary pressure from energy prices has increased considerably over the past couple of months. 

The jump in the prices of raw materials raises concerns that manufacturers are likely to pass through some of the recent price increases to consumer goods, causing an increase in core or underlying inflation.

Going forward, the increase in production associated with clean-up and reconstruction from Katrina should be positive for the manufacturing industry; however, higher input prices and possible shortages of industrial inputs present a risk to the industry. The chemical industry, in particular, may be facing some shortages in the coming weeks as the Gulf region struggles to restore output to pre-Katrina levels.

In a separate report, total construction spending increased by 0.4 percent in August from an upwardly-revised July level. This marked the first two consecutive months of increases since March. Both private and public construction spending increased strongly by 0.4 percent and 0.5 percent, respectively. Private residential construction outlays increased by 0.2 percent, while private nonresidential spending rose by 0.8 percent—the strongest increase since March. Construction spending should continue to firm in the coming months as a result of rebuilding from Katrina, which should somewhat offset some of the negative impact of rising interest rates on construction spending.  

The Federal Reserve will likely maintain its hawkish stance in response to increased risks of a pass-through of energy prices to core inflation as well as a rise in inflation expectations. According to the fed funds futures market, the probability of another 25 basis-point increase in the fed funds rate to 4.00 percent in November is currently greater than 90 percent.

The odds of an increase to 4.25 percent before the end of the year are nearly 60 percent. Long-term rates moved up last week and edged up further following the ISM report. The yield on 10-year Treasury notes rose by 5 basis points from Friday to 4.39 percent by mid Monday afternoon—the highest level since August 10th.

(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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Swanson is a licensed and certified appraiser with 24 years' experience in the valuation industry. She joined eAppraiseIT in 2001 as manager of the Innovative Valuation Group and was promoted to director of operations at the company's Poway headquarters. Prior to joining the company, Swanson served as chief appraiser and senior asset valuation specialist with Home Savings of America and GMAC/RFC, respectively.

McCann brings more than 12 years of field and appraisal management experience to her position. Since joining eAppraiseIT in 2000 as a quality assurance reviewer, she has held a number of increasingly responsible operations and sales positions within the company. She has managed the Review Department and Appraiser Panel Management and most recently served as director of valuation consulting.

No Red Tape Mortgage, Sherman Oaks, Calif., promoted Delaina Mitchell to first vice president of national production. Her new responsibilities include hiring, training and leading the national sales management teams in for both No Red Tape and its sister company, Zero Down Mortgage. 

Mitchell was most recently first vice president of East Coast production. She joined No Red Tape as national sales manager, where she formed the sales, training and broker development department. She has more than a decade of mortgage industry and production experience, previously holding account executive roles at Commonwealth United/National City, United Guaranty and Amerin Guaranty.

The First American Corp., Santa Ana, Calif., appointed Lionel Savage as vice president of market development and industry relations. He will continue manage First American’s corporate emerging markets strategy and strategic industry relationships in Washington, D.C.

Savage, joined First American in 2003. Prior to that, he held key positions at Fannie Mae, where he worked for 15 years. His background includes mortgage operations, small lender strategy, technology marketing and customer technology support.

First American also announced that George Livermore has been promoted to president of the company’s Property Information Group, assuming the role previously held by Dennis Gilmore, who was promoted to chief operating officer for the corporation in November 2004. Livermore will now oversee Data Trace, Data Tree and the Property Information Group staff. He also will maintain his duties as president of First American Real Estate Solutions, a position he has held since 1997.

Livermore began his career in the real estate information business in 1984 at Dynacomp, which was later acquired by TRW. He was named regional vice president of sales for TRW REDI Property Data in 1991, then vice president of national sales in 1994. His tenure with First American began when Experian, formerly TRW Information Systems & Services, merged its real estate information businesses with First American’s Real Estate Information Services division in 1997 and he was appointed president of the resulting entity, First American Real Estate Solutions. His role was expanded in 2000, when he was named president of the limited partnership company created by the combination of Transamerica’s Intellitech real estate information business and RES.

The Real Estate Solutions division of Fidelity National Financial Inc., Jacksonville, Fla., announced that Walt Clark has joined its leadership team as senior vice president of transaction management solutions. Clark will oversee the company’s TransactionPoint transaction management product and will also play a role in its strategic direction.

Clark brings 15 years of progressive experience to the real estate, title and relocation industries. Before joining Fidelity, he was vice president of technology deployment with Stewart Realty Solutions. Prior to that position, he served as a consultant with First American Title, where he was responsible for the strategy development and execution of the company’s real estate transaction management systems.

Philadelphia Private Capital LLC, which recently joined U.S. Realty Capital LLC (USRC), will now serve as USRC’s Philadelphia office. Staffing the Philadelphia office will be Robert Jacoby, principal; Richard Robertson, Bruce Robertson and Charles Harmar as managing directors; and R. Brenner Green as director of structured finance.

Sperry Van Ness, Irvine, Calif., named Bill Hardy to regional manager.  He will oversee the daily operations and growth of Sperry Van Ness’ offices in Ontario and Palm Springs, Calif.  He replaces Bob Conley who along with Corey Waite will now manage Sperry Van Ness’ Pasadena, Calif. office.

Prior to joining Sperry Van Ness, Hardy served as portfolio leasing manager for Arden Realty Inc.  Previously, he worked as a commercial real estate broker for Grubb & Ellis. 

Grogan Associates, Charlotte, N.C., named Ken Monroe as vice president of sales and marketing. He is responsible for expanding the firm’s focus on the banking industry while increasing sales and marketing initiatives.

Monroe’s previous experience includes the American Management Association, Synet Service Corp. and a partnership in a regional accounting and financial services firm. 
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The Freedom ARM features a 360-month loan term and is tied to the Monthly Treasury Average (MTA). The product includes a discounted start rate, where the rate is fixed for the first month, then adjusts monthly thereafter. Up to four payment options are available to the borrower: minimum payment, interest only, 30-year fully amortizing and 15-year fully amortizing. The Freedom ARM includes a payment change cap that limits the amount the minimum payment can increase. The change cap allows only a 7.5 percent increase over the previous year’s minimum payment. In addition, to limit the effects of negative amortization, every fifth year—or if the unpaid balance of the loan increases to 115 percent of the amount originally borrowed (110 percent in New York)—the loan is “recast” or re-amortized to keep it on schedule for payoff within the original term.

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First American Real Estate Solutions (RES), Santa Ana, Calif., formed a strategic alliance with, and purchased a minority interest in ComplianceEase, a Burlingame, Calif.–based provider of regulatory compliance and risk management products.

As part of the strategic partnership, ComplianceEase's ComplianceAnalyzer, will be integrated into First American's mortgage technology platforms. ComplianceAnalyzer is compatible with most existing loan origination systems (LOS) and document preparation platforms.

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Former National Football League (NFL) player Hardy Nickerson announced establishment of a specialized company that provides real estate services to professional athletes, entertainers and corporate executives. Nickerson Realty Group (NRG), located near Charlotte, N.C., will offer relocation services, real estate investment consulting and traditional real estate agency services that address the needs of high-profile individuals, with an initial focus on athletes.

Nickerson spent 16 years in the NFL and was best known for his stints with the Pittsburgh Steelers and Tampa Bay Buccaneers .

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U.S. Recordings, St. Paul, Minn., will expand its electronic recording footprint into six new counties. InteleDoc Plus, U.S. Recordings’ multi-level eRecording platform was created in 2003 to submit and receive data electronically on a Level III basis with enabled counties. Expanding to meet industry needs, InteleDoc Plus now integrates into Level II, adding templates for lien releases and assignments for all jurisdictions.

In conjunction with U.S. Recordings’ alliance partner, Fidlar Software Systems, InteleDoc Plus was the first to electronically record in Rock Island County, Ill., Eau Claire County and Winnebago County, Wis. U.S. Recordings has also expanded into Champaign and Columbia Counties, Ill. Also, with its’ new integration partner, Aptitude Solutions, Casselberry, Fla., U.S. Recordings is generating electronic releases for Broward County, Fla., with InteleDoc Plus, and is currently testing with Ozaukee County, Wisc., in Level III, and Snohomish County, Wash., Salt Lake County, Utah and Monmouth County, N.J. in Level II.

InteleDoc Plus imports data directly from mortgage databases to create the InteleDoc Plus documents specific to each state. Lien releases or assignments can be digitally signed and notarized to file electronically through U.S. Recordings' gateway, or printed for wet signatures filed in counties that deal with paper.

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Atlanta-based Advectis Inc., announced the addition of Atlanta–based The StoneHill Group Inc. to its BlitzDocs Certified Quality Control (QC) Provider Program. The certification program ensures lenders and investors that QC and due diligence providers are fully trained and prepared to deliver services via the BlitzDocs Collaboration Suite.

To be certified as a BlitzDocs Certified QC Provider, a company must be proficient in performing quality control and due diligence services on image-based loan folders, complete a BlitzDocs certification training course and test, be a member of the Mortgage Bankers Association, and demonstrate a core competency in underwriting and delivery of due diligence services. 
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With nearly $500 billion of bonds outstanding, the market is now so large and so diverse that it will periodically be impacted by most U.S. natural disasters. Last year, the serial hurricanes of Charley, Frances, Ivan and Jeanne shone attention on windstorm coverage. This year, Moody’s said, attention is focused attention on flood insurance.

A large portion of the damage attributed to Hurricane Katrina was caused by flooding. The flooding came both from the storm surge that typically accompanies hurricanes, and more unusually, from the breaching of levees protecting New Orleans from the waters of Lake Pontchartrain. The focus of much debate, and some planned legal actions by plaintiffs' lawyers, is how much of the damage can be characterized as damage covered by windstorm insurance rather than by either nonexistent or fairly limited, flood insurance, Moody’s said.

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L.J. Melody & Co., Houston, formally changed its name to CBRE / Melody, a reflection of its relationship with its parent company, CB Richard Ellis.

Brian Stoffers, executive managing director and COO of CBRE / Melody, said the name change would also give the company more recognition throughout Europe, Asia and other parts of the world where the CBRE brand is recognized.
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Proceeds from this transaction were used to repay a $135 million construction loan provided by KeyBank N.A. The construction financing useda combination of tax-exempt and taxable low-floater bonds for this 80/20 project.

The Singer and Bassuk Organization (SBO), a mortgage brokerage and real estate advisory firm in New York, said it negotiated with various Fannie Mae Delegated Underwriting and Servicing (DUS) lenders and Freddie Mac seller servicers before selecting Wachovia Multifamily Capital, Inc. as the DUS lender to represent the borrower with Fannie Mae. Dan Cunningham and Bill Rosenbauer of Wachovia Multifamily Capital worked with Fannie Mae on the deal.

Richard Bassuk , president of SBO, said the loan’s complex structure was required in light of the substantial increase in value of the project since construction, and The Moinian Group wanted to monetize the appreciation in project value to obtain $20 million of proceeds in excess of the initial construction financing.

“The permanent credit enhancement structure for the Marc was highly sophisticated and involved three separate tranches of financing. Analyzing the permanent financing alternatives, we advised the borrower to retain $89.5 million of tax-exempt bonds, to redeem the project’s outstanding taxable bonds and to provide in their place a structured Fannie Mae variable rate financing in the amount of $55.5 million,” Bassuk said.

In addition, a third layer of financing was added in the form of mezzanine financing from Wachovia Bank, having a five-year maturity with amortization beginning 12 months following closing.  This enabled the borrower to receive $20 million of loan proceeds in excess of the proceeds of the construction loan, Bassuk said.

The permanent financing included auction rate tax-exempt bonds issued by the New York State Housing Finance Agency (HFA) under its 80/20 program. The bonds were credit enhanced by Wachovia Multifamily Capital under Fannie Mae’s permanent credit enhancement financing program.

“The use of auction rate low-floater bonds, rather than the more traditional variable rate low-floater bonds, enabled the borrower to achieve greater proceeds at a lower interest rate. This is only the fifth time auction rate bonds have been successfully utilized to provide permanent financing for a large multi-family project,” Bassuk said.

“This financing package enables us to develop the Marc on more advantageous terms and to make it the building we had always envisioned as a New Yorker’s dream,” said Joseph Moinian, CEO of The Moinian Group.
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Borrowers found changes in fees, interest rates or spelling errors at the closing table, which delayed mortgage settlements. From minutes to hours or days, depending on the time of settlement, the errors could cause a borrower to lose a rate lock, pay more money than first expected or possibly be temporarily without a home.

“Some people in the room had horror stories,” Huff said. “It came through loud and clear that they wanted us to fix that. “

At the time, eLynx was developing a product to facilitate HUD-1 transfers; but hearing from clients at once brought the case home. “To hear the collective say it, and for it to come out as one of the top three items that they wanted us to fix, those were marching orders,” Huff said.

The result is HUD-1 Check, a product that passes a HUD-1 Settlement Sheet electronically between lenders and settlement agents through the e-Lynx Web Posting Service (WPS). Lender and settlement agents enter online.

As closing agents complete the final HUD-1 for signatures, they send it to the lender. The lender can view the status, review the HUD-1 electronically, automatically verify figures and “approve” or “reject” it based on the criteria. Comments can be added if necessary.

If rejected, the lender electronically sends the document back to the settlement agent for correction. The agent then resubmits it for approval. All of this action can be done in minutes using the Web-based approach through eLynxPRO. A lender or closing agent prints to a software printer making the HUD-1 available on the Web.

“Once it is on the Web, it can be viewed and reviewed by both parties taking part in the closing,” Huff said. “It is customizable and users can create their own rules.”

Huff said one industry analyst estimated that more than 60 percent of all HUD-1 Settlement forms contained errors. “That can have a tumbleweed effect,” Huff said. “It can cost a lot of money in overhead just managing all that misinformation.”
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