The survey found that 37 percent of consumers said they would use their home-equity as a source of money if their income stopped. Of those with an emergency fund, two in three (69 percent) have cash on hand in case of an emergency; only 27 percent said they have $1,000 or more. Seventy-five percent said they would use their savings account as a source of money in case of an emergency, while 56 percent said they would use their credit cards, 50 percent said they would borrow money from a family member, and 39 percent say they would use their 401(k) retirement account.

"Although it may seem overwhelming to prepare both physically and financially for a major disaster, there are many small steps consumers can start taking now that can add up quickly in a very short period," said Ed Ojdana, group president of Experian Interactive. "It's great to see from our recent survey that most consumers have many of the basic physical needs, but it's troubling to see the number who are not financially prepared."

Only 15 percent of respondents said they are "very prepared" for such a disaster. Four in 10 consumers said they are "not at all prepared" (23 percent) or "not too prepared" (18 percent) for a natural disaster such as Hurricane Katrina . Most consumers store basic emergency items: 95 percent have flashlights, 90 percent have food, and 85 percent have batteries. About three in four have a portable radio (77 percent), a first-aid kit (73 percent) and bottled water (71 percent). Two in three (65 percent) said they have their credit card numbers, bank account numbers and other financial information in one place.

The Experian-Gallup Personal Credit Index is based on a monthly survey conducted Sept. 20 through 26, and included 1,001 adults. The sampling error is plus or minus 3 percentage points.
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We were most pleased to read the recent story in the Residential Spotlight on the Housing Plus Partnership For America dated October 11.  I would like to take this opportunity to clarify some errors for the reader’s edification.

The article describes the company as a non-profit enterprise. The company is not a non-profit, but intends to create a non-profit to funnel funds to on an ongoing basis in support of the low-income buyers assistance program component of Housing Plus.

The article also mentions an IPO.  The company has not undertaken, nor has it completed an IPO. In fact, the company will be seeking capital investment.

The article may leave readers confused as to when cash flows are paid out under the transaction construct we are seeking to promote. The transaction construct provides monthly distributions of cash flows to the investors and the homebuyer.

Today, we are moving forward with the software programming for the new trading platform and expect it to be ready for a beta test around Thanksgiving. This is our next major hurdle and once the test has been successfully completed, we will be able to start working with mortgage banking industry professionals at all levels to increase capital liquidity (and profitability) to the industry in general, and the housing finance consumers in all income brackets in particular.

Clinton Lovell
CEO, Housing Plus Partnership For America
West Palm Beach, Fla.
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Wholesale Lending Online (WLO), Burlingame, Calif., implemented Electronic Loan Review (ELR), a decision support tool to detect and prevent fraud by Interthinx, Calabasas, Calif.

ELR checks loans in real time at the point of application and at the pre- and post-funding stages, generating interactive reports. ELR increases e-mail capability workflow and updates loan origination software at no extra charge.

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Columbus, Ohio–based Armstrong Mortgage Company, will open a western U.S. loan production office located near Denver. The office will be overseen by Steve Underhill. Underhill, was most recently the manager of the Hospital Finance Group for the FHA lending unit of Prudential Financial.
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Built in 1984, The Vineyards is located one mile east of Luke Air Force Base. The property consists of 228,400 rentable square feet situated on 10.47 acres.

Financing for one phase of the sale was arranged by MMCC. The $5.3 million loan was provided by an undisclosed conduit lender with a five-year term and a 30-year amortization. Pricing was 125 basis points above the five-year Treasury. Greg Miskovsky in MMCC's Phoenix office arranged the financing.
 
Ric Holway and Alfred Hackbarth of Marcus & Millichap's Phoenix office represented the sellers in the transaction, which included Richard Meese, Charlie Dunlap, Lydia Torea, Bruce Henderson and Gary Magee of Chandler, Ariz. Reza Ghaffari of the firm's Ontario, Calif., office represented the buyer. The buyer was Sharo Khastoo of Pelican Property Management.

The garden-style community has 104 one-bedroom units and 196 two-bedroom units. It includes a basketball court, sand volleyball court, spa, playground, fitness center, laundry facilities, two swimming pools and nine barbecue areas.

Erik Rogers in MMCC's Ontario, Calif. office arranged $5.95 million of debt financing on a 130,000-square foot retail property located in Batesville, Miss. The financing for the Batesville Factory Stores was provided through an undisclosed credit union at a 75 percent loan-to-value ratio, with a 6.29 percent interest rate. The loan is fixed for five years without a pre-payment penalty, with a 30-year amortization. The property was purchased by an undisclosed California investment group.
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This year’s program incorporates both commercial/multifamily and residential sectors in the real estate finance industry. Sessions are designated by sector, while other sessions are appropriate for both. This conference provides up-to-date information on critical accounting, tax and other financial developments affecting large and small mortgage banking companies.

Go to http://events.mortgagebankers.org/accounting2005/agenda to view the program agenda.

Accounting and tax experts who serve in the real estate finance industry, as well as seasoned financial analysts, deliver presentations that contain current information relevant to help you work more effectively and understand the latest industry developments. Topics covered include: regulatory trends; economic and mortgage market environment; SEC Regulation AB; and accounting for loan transfers and securitizations.

Who should attend:

• Chief Financial Officers
• Financial Officers
• Comptrollers
• Internal Auditors
• Independent Accountants
• Accounting Policy Managers

This year’s location is at the beautiful Boca Raton Resort & Spa (Web site: www.bocaresort.com). MBA discount room rates for the conference are $199 single/double with a $9 resort fee apply until the hotel cut-off date of Monday, October 17; early registration discount is valid through Monday, October 24.

Sponsorship opportunities are still available; call (202) 557-2790 or e-mail mbrady@mortgagebankers.org.

For additional information, visit http://events.mortgagebankers.org/accounting2005/default.html, or call (800) 793-6222, 9:00 a.m.-5:00 p.m. Monday-Friday EDT.
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Ramani Ayer, chairman and CEO of The Hartford Financial Services Group Inc., Hartford, Conn., said insurance companies would cover losses as high as the amount from the World Trade Center attacks and bear 80 percent of overall risk with extension of the Terrorism Risk Insurance Act (TRIA). However, federal involvement would insure against extreme catastrophic events, greater than the terrorist attacks from September 11, 2001.

Ayer noted the costs from 9/11 at $32 billion from property and workers compensation lines, but he said coverage in a wide area event is much more extensive. A model from Risk Management Solutions, Newark, Calif., shows that a five-kiloton nuclear bomb would cost  $586 billion in property and workers compensation lines; an anthrax attack would hit $330 billion; nuclear plant sabotage would cost $160 billion; a dirty bomb could cost $97 billion; and a sarin gas attack can reach $48 billion.

“Insurers might think of kinds of perils specific to location, but wide area events are difficult to protect themselves,” Ayer said. “That is something that affects the whole wide territory.”

Different simultaneous five-ton bombs could lead to more than $150 billion in losses from attacks in New York, Washington, Chicago, San Francisco and Los Angeles, according to statistics from RMS. “The public, including insurance companies, has very limited information about this risk,” Ayer said. “More time is needed to develop a permanent, long term private-public partnership program.”

“Three years was the best deal we could get [in 2002].” said Joel Wood , senior vice president of government affairs for the Council of Insurance Agents & Brokers (CIAB). “We don’t like government to have to backstop [the industry], we prefer a private marketplace.”

The Mortgage Bankers Association favors extension of TRIA’s provisions and a permanent solution to a federal terrorism insurance backstop. MBA has said that while terrorism insurance coverage assures stability and continuity for the commercial real estate industry, TRIA and terrorism insurance defends the U.S. against physical and economic consequences. MBA and CIAB are active participants in the Coalition to Insure Against Terrorism (CIAT) http://www.insureagainstterrorism.org/.

Bradley Wood, senior vice president of risk management at Marriott International Inc., Bethesda, Md., speaking on behalf of CIAT, said 9/11 impacted numerous economic sectors, including jobs of hotel workers and taxi drivers.

“The interdependencies are critical to protect business to business relationships,” Wood said. “[Hurricane] Katrina reinforced the notion that preparedness wins the day.”

Wood compared Hurricane Katrina to a terrorist attack. His research showed hurricanes have low predictability while the predictability of a terrorist attack is remote. The reinsurance market for Hurricane Katrina was available while it remains limited for terrorism.

“The reinsurance market for wind and flood appears stable as opposed to no [market] growth in terrorism,” Wood said. The cataclysmic potential of hurricane remains severe but it is catastrophic for terrorism and a regional effect on the economy for a hurricane is a national economic problem in a terrorist attack, according to Wood. “Katrina crystallizes the need for adequate insurance in unstable markets,” he said.

The negative aspect of Katrina is Congress appropriately focused on Katrina relief with less attention on TRIA, Wood said. “Terrorism risk is larger than private markets can absorb,” he added. The limited number of days left for Congress to address TRIA. Wood said the White House is “taking a backseat this go around,” unlike in 2002 when it made TRIA a priority.

“Terrorism is really war,” Ayer said. “The understanding is that wide areas are completely impossible to shift on the backs of insurance carriers….We have been talking to the government for sometime for the need to have wide area event coverage. We still believe, as industry members, [a wide area event] is not insurable. There is no appetite for industry reserves. The industry would be in support of [reserves] but it will take a long time to build.”

Chemical, biological and nuclear weapons are the most important factors of terrorism to the economy, based on catastrophic reach, but the only available insurance is for workers’ compensation. “It may require special rules for insurance companies ‘to play in the sandbox.’” Marriott’s Wood said. “One should insure the complete peril of terrorism.”

The Webinar was sponsored by Business Insurance.
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