(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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"Evidence of bubblettes clearly continues to build," said Richard DeKaser, chief economist at National City Corp., Cleveland, "though frothy conditions still account for a minority of the overall housing market."

“We would agree that there are some markets that are likely to see an adjustment,” said Doug Duncan, chief economist, Mortgage Bankers Association. “We are not concerned about nationwide bubble. We think that what’s going to happen is the market will gradually adjust. Average house price increases will slow."

Three metropolitan areas were added to the list of "extremely overvalued" markets, including five new listings; two areas have been dropped. New to the list are Fort Walton Beach, Fla.; Portland and Eugene, Ore.; Edison, N.J., and Bethesda, Md. Except for Fort Walton Beach, where prices advanced at a 6.9 percent annual pace during the quarter, each area among the five new listings posted increases between 21 and 29 percent, the analysis said.

Two metro areas that fell off the list are Boston and Essex, Mass . According to the report, while prices in these two areas continue to increase, income and population gains helped reduce the imbalance.

"We're not surprised by the emergence of extreme overvaluation in what are clearly hot spots for the housing market," said Philip Hopkins, managing director of U.S. Regional Services at Global Insight, Waltham, Mass. "And the Boston area adjustment illustrates the possibility for orderly corrections, rather than inevitable crashes. Outside the hottest housing markets, some signs of a slowdown in the rate of price growth were evident. The average level of overvaluation declined from 22.7 percent to 19.9 percent, with 171 of the 299 metropolitan areas analyzed showing a decrease in the extent of overvaluation between the first and second quarters."

To view the complete report visit (in .PDF format),
http://www.globalinsight.com/publicDownload/genericContent/housingstudy.pdf
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SharperLending LLC, Spokane, Wash., will expand its relationship with First Horizon Home Loan Corp., Irving, Texas. SharperLending provides the Mortgage Loan Report (MLR) and Property Plus Report for First Horizon’s home equity lending program.

The MLR is a credit-based report showing the borrower’s mortgage secured liens, reported judgments and public record information. The Property Plus Report provides the traditional Errors & Omissions report that includes: the current owner of the property, how property was conveyed to the current owner, open mortgages, liens and judgments, tax information and a complete legal description.

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New Century Mortgage Corp., Irvine, Calif., selected Guardian Mortgage Documents’ (GMD), Lakewood, Colo., Web-based Next Generation Input System (NGIS). Beginning in the first quarter of 2006, GMD will support all loan programs for New Century Mortgage correspondents.

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Dallas-based Sollen Technologies announced that Dallas-based Texas Capital Bank implemented two of its products: Lender OnLine and Best Ex. The Web-based applications allowing for loan searching, validation, loan level adjusted pricing and locking for a wholesale, retail, correspondent or call center application.

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The First American Corp., Santa Ana, Calif. and Dorado Corp., San Mateo, Calif., will jointly develop a common, Unified Point-of-Sale (POS) platform.

The platform will combine Dorado ChannelMaster enterprise lending software and Dorado SourceMaster intelligent ordering software with First American’s Web Services-based Vendor Management platform. The new platform gives lenders on-demand loan processing and fulfillment at the POS. The platform will be available by the end of the first quarter of 2006.
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Increased demand for commercial space was reported by New York, Richmond, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco Feds. Cleveland and Richmond said construction was increasing for commercial buildings. Atlanta reported a surge in demand for commercial space in areas where firms relocated after the hurricanes struck the Gulf Coast. Chicago indicated that demand for commercial space was rising in many parts of the district, although not in downtown Chicago.

Office vacancy rates were dropping in New York, St. Louis, Kansas City, and Dallas while San Francisco reported rising commercial rental rates. Chicago indicated that rents rose in areas other than downtown. Dallas reported that rents were holding firm but landlords were reducing incentives.
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Third quarter absorption almost doubled Colliers' projections of 20 million square feet (msf) per quarter, made at the outset of the year. July through September absorption totaled 36.2 msf compared to 33.9 msf during the second quarter this year and 26.2 msf during the quarter one year ago. 

“After adjusting for the effects of Hurricane Katrina, job creation remained remarkably strong in the third quarter. Because job creation has a direct effect on the health of the office market, it represents another major factor contributing to the strong office absorption experienced during the third quarter,” Colliers said.

Third quarter office vacancy rates measured 14.2 percent this year, versus 14.7 percent during the second quarter and 15.7 percent during the third quarter last year. The report said vacancies are now significantly below the cycle high of 16.4 percent registered at the end of 2003. “In line with this vacancy reduction, rents increased during the third quarter of 2005, with national averages showing healthy up ticks,” Colliers said.

"The United States office market is surprising almost everybody with robust growth and rapidly declining vacancies," remarked Ross Moore, vice president and director of research at Colliers USA.  "Unfortunately, however, this trend is almost certain to end, as the business sector appears poised for a slowdown, in the face of rising interest rates and escalating energy costs."

New construction totaled 8.8 msf during the third quarter, 4.2 million square feet lower than 12.6 msf during the second quarter.  Office construction completions totaled 31.8 msf at the end of the quarter versus the 31.7 msf completed by the end of the third quarter last year. Another 66.1 msf of office space is under construction, with completions expected in the next 18 months.  “Only a few office markets forecast a slowdown during the balance of 2005, with most predicting demand will stay at current levels or higher,” the report said.
 
Washington, D.C. and parts of Manhattan account for four of the five largest office markets with the lowest vacancy rates. Washington had a 7.4 percent vacancy rate while Midtown South and Midtown Manhattan was 9.4 percent. Philadelphia was the fourth-largest city with a 10.7 percent rate and Downtown Manhattan rounded out the top five at a 12 percent vacancy rate.

The national average downtown vacancy rate was 13.8 percent for the third quarter and downtown asking rents increased by 3.2 percent, reaching an average of $35.84 per square foot (psf), while suburban rents increased two percent to $24.35 psf. “Such sustained quarterly [rent] increases were not expected to appear until 2006,” the report said.

Suburban office markets average 14.4 percent vacancy nationwide. Northern Virginia appears to have fully recovered from the dot-com fallout from five years ago as the top suburban office market with an 11.4 percent vacancy rate, followed by Northern New Jersey, Central New Jersey, Los Angeles and Ventura counties in California and the Atlanta suburban market.

The San Francisco and Boston downtown office markets ranked seventh and eighth in lowest vacancies, respectively, but their suburban office markets, also hit by the dot-bomb, did not make the top 10 vacancy rate list. Atlanta, Houston, Philadelphia and Chicago made both downtown and suburban office market lists for having lowest vacancy rates.
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Jason Rice of Quantum First Capital, a Green Park Financial preferred correspondent headquartered in Dallas, originated this loan for Liz Diamond, vice president in Green Park Financial's San Francisco office.

The tenancy will be age restricted to 55 and older with an income restriction on 80 percent of the units. The units will be rented to tenants earning 30 percent, 50 percent, and 60 percent of area median income. Amenities will include a community room, outdoor pool, fitness center, and walking paths.
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The Mortgage Bankers Association's Legal Issues in Mortgage Technology Conference, November 30-December 2 in San Diego, is devoted to current and emerging legal and regulatory issues affecting the technology of mortgage banking, including online mortgage lending and electronic mortgages. This conference features detailed information on how the most recent developments in the legislative, regulatory and compliance landscape will affect your company’s technology strategies and infrastructure.

Learn more about Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA), Electronic Signatures in Global/National Commerce (ESIGN) and Uniform Electronic Transactions Act (UETA), Intellectual Property Rights (IPR), eNotarization and eRecording, ePackaging, identity theft and data security, Home Mortgage Disclosure Act (HMDA) and Fair Lending, Fair Credit Reporting Act (FCRA) and privacy-related issues, RegAB and other relevant legislative and regulatory issues.

Who Should Attend:
• General counsel
• Regulatory compliance professionals
• Senior executives
• Business managers
• Information technology professionals
• Private attorneys who represent mortgage banking companies, depository institutions or secondary market organizations on issues of real estate finance
• Other personnel involved in legal and regulatory issues

Panelists feature staff from the Mortgage Bankers Association; Fannie Mae; Freddie Mac; major law firms such as Weiner, Brodsky, Sideman, Kider PC, Kirkpatrick & Lockhart, Nicholson, Graham LLP, Buckley Kolar LLP and Lotstein Buckman LLP; and major corporations including Countrywide.

The conference will take place at the Sheraton Suites San Diego, where registrants get a discount rate of $169/night (single). Hotel cut-off date is November 8; the hotel phone number is 1-888-627-8067.

To register, go to http://shop.mortgagebankers.org or call 1-800-793-6222. For more information, visit the conference Web site, http://events.mortgagebankers.org/legaltech2005/default.html.
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Rest assured, it’s on.

Despite the threat of Hurricane Wilma—as of this writing, a Category 5 hurricane heading slowly toward the northwest—MBA does not expect the impact to affect the Annual Convention, which officially begins on Sunday, October 23. Paul Green, MBA’s senior vice president of membership, said that current conditions do not suggest that the convention should be postponed or cancelled.

“We've been closely monitoring the track of Wilma,” Green said. “The facts being provided by the National Hurricane Center tracks the storm well south of Orlando with a higher probability of landfall between the Florida Keys and Miami, which is more than 200 miles south of where the convention will take  place.

At the current time, Orlando is not even listed on the National Hurricane Center Web page, www.nhc.noaa.gov/, with any percentage of probability of the storm being within 65 nautical miles, Green said. “The higher probability percentages show Key West and Marathon, which are far south of Orlando. Information also indicates it will be out in the Atlantic by late Saturday night or early Sunday morning.”

Green said MBA staff—some who are already in Orlando in preparation for the convention—have had discussions with the Walt Disney World Swan and Dolphin hotels, which will host the convention, as well as other area hotels that will house the conference’s nearly 6,000 attendees. “They have a variety of plans in order for what ever transpires,” he said.

Green said members should monitor the MBA Web site, www.mortgagebankers.org, for further updates.

“We'll continue to monitor the storm's track and if anything changes that would require us to re-evaluate convention activities, we will notify members,” Green said. “We look forward to seeing you in Orlando.”
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