The average contract interest rate for 30-year fixed-rate mortgages increased to 5.94 percent from 5.85 percent on week earlier, with points increasing to 1.21 from 1.19 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The 30-year rate is at its highest level since April 8. 

The average contract interest rate for 15-year fixed-rate mortgages increased to 5.55 percent from 5.44 percent one week earlier, with points decreasing to 1.15 from 1.23 (including the origination fee) for 80 percent LTV loans. The average contract interest rate for one-year adjustable-rate mortgages (ARMs) increased to 5.13 percent from 5.02 percent one week earlier, with points decreasing to 0.98 from 1.01 (including the origination fee) for 80 percent LTV loans. The one-year rate is at its highest since March 29, 2002.

The difference between the average contract interest rate for 30-year fixed rate mortgages and for one-year ARMs decreased to 81 basis points. This is the lowest spread since March 16, 2001.   

Application volume held relatively steady, while both the ARM share and refinance share of application both increased slightly. The seasonally adjusted Market Composite Index stood at 713.5, a decrease of 1.1 percent from 721.2 one week earlier. On an unadjusted basis, the Index decreased by 1.2 percent compared with the previous week and was down by 1.8 percent compared to the same week one year earlier. The four-week moving average for the seasonally-adjusted Market Index is down by 1.9 percent to 741.9 from 756.4. 

The seasonally-adjusted Purchase Index decreased by 1.9 percent to 473.8 from 483.1 the previous week. The four-week moving average for the Purchase Index is down by 1.3 percent to 492.7 from 499.0.

The seasonally Refinance Index increased by 0.1 percent to 2107.4 from 2106.6 one week earlier. The four-week moving average for the Refinance Index is down by 2.8 percent to 2191.6 from 2254.0. The refinance share of mortgage activity increased to 44.5 percent of total applications from 43.9 percent the previous week. The ARM share of activity increased to 29.8 percent of total applications from 28.8 percent the previous week. 

Other seasonally adjusted index activity includes the Conventional Index, which decreased by 1.8 percent to 1068.9 from 1088.8 the previous week, and the Government Index, which increased by 11.4 percent to 120.3 from 108.0 the previous week. 

The survey covers 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. 
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Three things lenders should NEVER tell their borrowers:

• Open new accounts
• Close old accounts
• Pay off collection accounts or public records

Doing any one of these three things temporarily kills a borrowers’ credit score. And when you are lending money, the last thing you want to do is lower a borrowers’ credit scores.

The credit scoring system is very tricky to understand. It was developed by Fair, Isaac & Co., which implemented a complicated mathematical algorithm. The system actually is a good gauge for lenders when lending money to borrowers.

But there are many discrepancies. It is estimated that more than 50 percent of credit reports have mistakes on them. A score could include people’s information; duplicate derogatory information; even old information whose statutes have run out but are still reported. Furthermore, credit scores are constantly changing; the volatile mathematical equation that computes a borrower’s credit information is independent of other consumers.

Many mistakes are made by creditors, and the bureaus have to report what the creditors tell them. The credit bureaus just store the information. Disputing accounts with the bureaus is not an efficient way of going about helping you help your credit. Dealing directly with the creditor is the best way to deal with your credit issues.

How are we to know this? Consumers have just recently been aware that they can view their own credit reports and obtain free copies. But do we understand how to read them and what all of the information means? 

Every person who has an account has a credit report. The scores range from 300 to 850. I say “range” because I have never seen a 300 or an 850. Most scores fall into the 500-to-750 range. Most lenders look at the middle score as an average. A score of 678 is the average credit score in North America.

When you are looking at a borrower’s credit report make sure you do things that will increase their score, and not the opposite.
 
(The views expressed in this article do not necessarily reflect the views or policies of the Mortgage Bankers Association. MBA NewsLink welcomes your articles; for more information, contact Mike Sorohan, editor, at msorohan@mortgagebankers.org)

Editor’s note: recent surveys, such as that by GMAC Mortgage Corp., Horsham, Pa., show that U.S. consumers still lack important knowledge about credit scores, which affects their ability to purchase a home. The Mortgage Bankers Association has taken steps to educate homebuyers of the mortgage process.

MBA’s Home Loan Learning Center (www.homeloanlearningcenter.com) provides people interested in becoming homeowners with the knowledge they need to more confidently approach the mortgage transaction process.

Seeing a lender is the first logical step in the home buying process for consumers, as it will help consumers understand what they can afford to buy, the rate they may receive and what loan products meet their lifestyle requirements. Valuable consumer tips for first time homebuyers can be found at the Web site, including:

• 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; and

• See a lender first. Shop around—compare various mortgage lenders and find one that will work well with you and your situation and more.
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"Since insurers recently excluded mold coverage on policies for homeowners and businesses, the fate of exposed parties--mortgage lenders, commercial mortgage-backed securities (CMBS) underwriters, and investors--has been an open question," Perry said.  "The recent hurricanes have brought the financially catastrophic aspect of the mold issue to the forefront, much the same way that 9/11 highlighted terrorism liabilities for financial institutions."

As insurers proceeded to exclude terrorism coverage, Perry said, they simultaneously built in mold exclusions, allowing them to avoid billions of dollars in claims on Katrina and Rita damages down the line. However, those in the lending community that rely on healthy real estate loans and the underlying collateral to do business did not respond quickly enough to avert the potentially massive consequences of mold damage caused by the Gulf Coast hurricanes.

Borrowers, particularly in coastal regions, have greater difficulty finding insurers to provide mold coverage. Most insurers eliminated mold coverage from their standard policies, while many insurance companies stopped doing business in states with damp, warm climates and high detection rates of mold.

“We found 48 states filed mold exclusions and there was very, very limited mold coverage available [$10,000 to $25,000 of coverage],” said Don Glitz, vice president of corporate risk manager at GMAC Commercial Holding, Horsham, Pa.

According to Perry, lenders who sell portfolios of loans in the secondary market now face the potential of being downgraded because of increased delinquencies and the moldy condition of the properties.

The Mortgage Bankers Association (MBA) released a 72-page white paper last month, Mold: Steps Toward Clarity, that details mold issues in commercial properties and examines methods to mitigate mold and dampness issues. The document was written by the MBA Commercial Real Estate/Multifamily Finance Board of Governors' Loan Origination Committee's Mold Working Group. Glitz chairs the group. 

(Michael Murray contributed to this story.)
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The survey collects compensation data on nearly 46,000 employees to provide salary trend information for 65 job titles in nearly 100 metro markets. 

Total cash compensation (base pay, bonuses and other cash incentives) for on-site employees increased by an average of 4.2 percent last year, according to the survey.

The ongoing job market recovery is enabling apartment firms to hold the line on merit increases, with projected increases for all positions combined in 2005 falling below the actual 4.0 percent average merit-based raise given in 2004. The apartment sector’s increased attention to human capital issues is paying dividends in the form of reduced employee turnover. Average overall turnover among non-exempt employees, such as leasing consultants and maintenance technicians, fell from 48.2 percent in the 2004 survey to 38 percent. Total turnover in the 2003 report, which did not separate exempt and non-exempt positions, averaged 50 percent, meaning one-half of a firm’s staff was leaving each year.

“Multifamily firms are enjoying marked success in the area of employee retention,” noted Betsy Feigin Befus, NMHC director of property operations. “Although turnover remains a significant challenge to maximizing on-site efficiency and minimizing costs, the property management industry’s investments in attracting and keeping top talent are clearly paying off.” 
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The company’s Minneapolis office arranged $34.5 million in permanent financing for River Park Plaza, a 330,000 square-foot class A office building in St. Paul. The building is nine stories and is currently 75 percent occupied by four tenants, with the major tenant occupying 55 percent of the net-rentable area (182,063 square feet).

Bruce Meland of the Minneapolis office secured the financing on behalf of the borrower, Revenue Building Limited Partnership, an entity related to the JLT Group Inc. Funding was provided by RBS Greenwich Capital.

CBRE Capital Markets’ South Florida Team arrenged $20.4 million in condo conversion financing for The In Apartments, a 230-unit multifamily complex in Fort Lauderdale, Fla.

Charles Foschini, senior director with CBRE \ Melody’s South Florida office, and Christian Lee, senior vice president of the company’s Institutional Group, arranged the financing through a local bank on behalf of The In Development LLC.

The In Apartments is located near the Fort Lauderdale central business district and is within a mile of Interstate 95.
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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.

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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Hear from a diverse group of leaders who understand the intricacies of the real estate finance industry.  These sessions focus on government housing programs, diversity, emerging markets, and key legislative and regulatory issues.
  
Monday, October 24, 2:00 p.m.-3:15 p.m.
What's Going on with the Government Housing Programs?
Hear from and ask questions of program leaders as they work to create more affordable housing opportunities for all Americans while protecting consumers from mortgage fraud and abuse.
 
Mortgage Fraud Against Lenders: The Growing Threat to Lenders and Homeowners
The real estate finance industry has proven to be a backbone of the U.S. economy and homeownership is one of the keys to wealth for American families. Yet the fraudulent acts of a few can threaten the stability of the system for all. Mortgage fraud against lenders can be financially devastating to lenders and to consumers-putting the American dream of homeownership at risk.  This roundtable discussion focuses on the status of mortgage fraud and where the industry and government need to go next in combating this threat.
 
3:30 p.m.-4:45 p.m.
Why Diversity Matters: Important Business Rules and Reasons
Educating managers and staff on working effectively in a diverse environment helps everyone prevent discrimination and promote inclusiveness. There is evidence that managing a diverse work force well can contribute to increased staff retention and productivity. Join us for this roundtable discussion as we examine the issues surrounding diversity and share ideas that work.
 
Tuesday, October 25, 2:45 p.m.-4:00 p.m.
Customer Retention in a Shrinking Marketplace
As the refinancing tide has ebbed lenders have begun the search for new ways to increase production volumes and retain customers. Some of today's successful lenders are focused on effectively reducing portfolio runoff while others are adding multiple channels to capture greater market share. If lenders wish to hold on to profits generated through a healthy portfolio, figuring out ways to retain those borrowers should be a core initiative.

Emerging Markets Lending: Best Practices and Challenges
As population demographics change, the understanding of emerging markets plays a more vital role in the mortgage industry. Join our panel to learn about developing and executing effective strategies. Better understand challenges and best practices for reaching this increasingly important segment of our population.

Legislative and Regulatory Update
This panel session addresses the latest developments facing the industry on Capitol Hill and in the Bush Administration such as oversight reform of the Government Sponsored Enterprises, revitalization of the Federal Housing Administration, greater consumer protections to combat predatory lending, simplifying the mortgage process through RESPA reform, and other pressing legislative and regulatory issues.
 
11:00 a.m.-12:15 p.m.
Differentiating your "On-Brand" Experience for Improved Margin and Market Share
The greatest profitability in any industry comes from differentiation of services from those of your competitors. A buyer advocacy marketing and fulfillment program can bring greater market share, better consumer branding and higher quality margins. Panelists discuss innovative solutions for balancing the need for safety and soundness of valuation systems and at the same time addressing the profit and expansion of the mortgage lending business.

Register Today to hear about the latest Business Strategies
Join the largest gathering of residential real estate finance professionals at MBA's 92nd Annual Convention & Expo 2005.  The convention offers you 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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Deloitte & Touche's "Sarbanes-Oxley Section 404: Lessons Learned ... and the Road Ahead," is the result of dialogue and ideas generated by CFOs from a series of Deloitte & Touche's roundtable on Section 404 compliance this year.

"Based on the roundtable discussions, and participants' survey responses, companies are moving from a 'get-it-done-now' mindset to a 'beyond compliance' mentality and approach, and viewing Sarbanes-Oxley as an opportunity to improve their business and gain competitive advantage," said Steve Wagner, managing partner of Deloitte & Touche's U.S. Center for Corporate Governance.

More than 60 percent of CFOs surveyed said they plan to implement business improvements as part of their Section 404 compliance effort. Planned operational improvements include enhancing internal control processes, upgrading technology, and people-related improvements.

Compliance-related roles and responsibilities varied among the surveyed companies. The Internal audit department often played a role, the report said. While others placed responsibilities for testing internal controls on the business-unit owners and some hired consultants.

During year one, all companies appointed leaders to oversee their SOX compliance efforts, and 93 percent assigned staff members with defined roles and responsibilities. However, one-quarter of the leaders and staff members were on temporary assignment and 83 percent of compliance related positions were outsourced, the report said.

According to the participants, education and training at the control-owner level were inadequate. For year two, respondents plan to implement programs that outline specific internal control-related responsibilities for employees and to provide instruction to strengthen policy and performance, the report said.

“All employees must understand that strong internal control over financial reporting requires ongoing attention and diligence,” Wagner said.

"Sarbanes-Oxley Section 404: Lessons Learned ... and the Road Ahead" publication is available at http://www.deloitte.com/us/CFOroundtable.
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