Most IOs had adjustable rates, 93 percent of dollar volume and 91 percent of loan count.  Therefore, adjustable rate loans (including IO ARMs) were 58 percent of origination dollar volume compared with 42 percent that were fixed rate loans.  However, there were more fixed rate loan originations than ARM originations, 52 percent versus 48 percent.

The Midyear 2005 Mortgage Originations Survey covers mortgage origination activity during the first and second quarters of 2005. This survey collects detailed information on first-lien and second-lien originations for single family properties. New information collected in this survey effort includes origination data on option ARMs, interest-only adjustable and fixed breakouts, occupancy status (including second home and investment property information) and agency eligibility. 

Please contact Mike Cevarr at mcevarr@mortgagebankers.org for more information on the Midyear 2005 Mortgage Originations Survey.
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Nearly 48 jurisdications have passed UETA and more than 30 states have passed UETA with three optional sections that provide authority to state and local governments to enalbe eFiling ; to set standards for the creation and retention of electronic records; the acceptance of electronic records and electronic signatures; and to ensure in operability among local and state agencies and with constituents in private arena, according to Carmelo Bramante, principal with CDB Consultancy , Washington, D.C..

ESIGN ensures that contracts entered into electronically will be legally effective and valid, and that consumers who enter into contracts electronically have the same protections they have when contracting in the "brick and mortar" world. ESIGN supersedes a state that does not implement UETA. UETA and ESIGN overlap and are companions to each other. ESIGN is a little unclear, Bramante said.

The basic goal of the URPERA is to create legislation authorizing land records officials to begin accepting records in electronic form, storing electronic records, and setting up systems for searching for and retrieving these land records. The intent is only to authorize such activities, not to mandate them.

“NCCUSL drafted the URPERA because, of some confusion and uncertainty around some states not including 17, 18, 19 in their passage of UETA. URPERA essentially operates like UETA it gives county recorders authority to accept electronic records and electronic signatures,” Bramante said. “It also clears up the issue of originality, which is covered under UETA. It also addresses on another issue, the issue of the stamp and seal requirement by notaries. UETA and ESIGN language never specifically addressed and legislative language that the notary when applying his or her signature did not need to affix a stamp or his or her notary seal or embossed seal. URPERA specifically addresses that the notary is not required to affix his or her stamp.”

There is debate within the industry, asking if a notary is supposed to validate that someone is who he or she say they are—their established purpose—versus providing a form of security to a transaction. Since states require notarization many questions are raised: What is a notary? What is the notary of tomorrow? What does notarization mean?

Under Section 5 of URPERA, that mandates that a statewide body develop data standards and other standards that are needed for electronic recording. “I think that is the most important part of URPERA because it takes what national standard setting bodies have done such as MISMO [Mortgage Industry Standards Maintenance Organization] and PRIA [Property Records Industry Association] and said to the statewide body look to MISMO for your basic data set and then add or expand any additional data that may be needed at the state and local level,” Bramante said.

“One school of thought is that the notary would carry a credential," said Gabe Minton, vice president of industry technology with the Mortgage Bankers Association . “Our recommendation, if you are a notary, if you’re going to have a credential—why not have a standardized credential?”

There several issues affecting eNotary. “Each state wants to include the notary because that’s what they have done in the paper world. However, they are not exactly sure how and the eRecording legislation as adopted by the states is what references notarizations at the state level and sets the precedence for that state,” Minton said

Since the states have control over the records, companies are going to have to deal with each state. “What we are hoping is that we don’t have 50 ways of doing recording in the future,” Minton said. “The URPERA is the uniform legislation that we are trying to get the state legislatures to adopt.”

For more information surrounding the issues of eRecording and eNotarization, visit PRIA’s web site at http://www.pria.us or NCCUSL’s web site at http://www.nccusl.org.
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Nearly 75 percent of lenders reported plans to maintain their existing loan structures in the $1 million to more than $10 million loan size categories, although one out of five lenders said they planned to tighten their loan structure in the under $1 million category. In the under $1 million loan category, 31 percent of respondents said they planned to increase the interest rate spread and fee structure.

The survey respondents included 95 lenders from commercial banks and commercial finance companies.

Half of lenders nationwide said their customers were forced to raise prices on goods or services based on the recent jump in fuel prices, and 60 percent of lenders believe the rise in fuel costs has the single largest potential to derail the economy, the survey said.
 
“Lenders are reporting to us that their customers across the nation are still feeling the effects of Hurricanes Katrina and Rita, mainly in the form of climbing fuel prices,” said Michael Jacoby, managing director of Phoenix Management Services. “Until prices for fuel and other products in the supply chain that are heavily dependent upon fuel stabilize, companies are unlikely to lower prices on their goods or services.”

Lenders are also concerned about the cost of rebuilding the Gulf Coast region. Nearly 70 percent said they were “somewhat” or “very” concerned about the potential impact on the economy of the federally-funded $200 billion rebuilding effort. Twenty percent of respondents said they were “mildly” concerned, while 13 percent said they were not concerned at all.

“Lenders clearly view the price tag for rebuilding the Gulf Coast as a cause for concern,” Jacoby said. “They know it is necessary, but they worry about the long-term cost to the economy for the federal government to write this check.”

The survey noted that 21 percent of lenders said their customers plan to make an acquisition in the next six to 12 months, 21 percent said their customers intend to make new capital investments and 16 percent said customers planned to raise more capital. Meanwhile, 14 percent said their customers planned to hire new employees, enter new markets, or introduce new products or services.

Lenders do not expect loan demand to be strong in the coming six months and they forecast the economy to perform at a “C” grade level during the next six months, the lowest short-term grade assigned in nine quarters by lenders. While 37 percent of lenders expect small business lending to strengthen, 35 percent anticipate an increase in middle market lending and 19 percent expect corporate loan demand to increase.

Nearly three-quarters of lenders, 72 percent, predicted loan losses would rise, up sharply from 36 percent last quarter, and 71 percent of lenders said bankruptcies would increase, up from 46 percent last quarter.

Lenders were also more pessimistic about the job market, with 50 percent predicting a rise in unemployment, compared to 18 percent last quarter. “Despite signs that point to a slowly strengthening economy, many lenders expect the economy to weaken,” Jacoby said. “Until they see tangible and sustained growth from their customers, they are unlikely to change their outlook.”
 
When asked which industries were most attractive to their lending institutions, lenders named light manufacturing (67 percent), service companies (63 percent), and industrial distribution (61 percent). All three have topped the list for more than two years. Start-ups/new ventures were deemed the least attractive industry to lend to, with 55 percent naming it unattractive.
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There are three distinct phases to the development of each commercial standard. The first phase is identification of the actual data transfer that will be built. The second phase is identification of the data points that will be sent and received, and these are compiled into a Logical Data Dictionary (LDD).  The LDD provides the name, data tag, definition, data type and valid range of options for each data point.  The third and final phase is the creation of the data transfer message using XML (Extensible Markup Language). 

The data transfer message, using XML, posts on the MISMO web site for any firm to incorporate into its systems after the standard receives approval and clears an intellectual property review process, 

Each MISMO workgroup determines and prioritizes the standards it works on. The Commercial Servicing Workgroup selected the broad area of servicing transfers for its first standard. This is an area that currently encounters a high degree of manual data re-entry, and the establishment of a common method for the exchange of data was seen as a strategic priority for this sector of the industry. 

Other commercial workgroups are building different standards for environmental data, the electronic transfer of loan documents and the development of electronic mortgage instruments for the commercial industry.

In February, the Commercial Mortgage Securities Association (CMSA) and MISMO announced an agreement to develop an XML version of the Investor Reporting Package (IRP) based on the MISMO commercial architecture.

MISMO’s approach to commercial data standards is based on the concepts of re-use and commonality.  All standards are built on a common Logical Data Model that consistently sets forth the relationships between the data points used to represent a commercial loan.  This approach allows the workgroups – and the users of the standards - to quickly locate data points and to efficiently incorporate changes and additions. It eliminates the risk of origination-focused standards differing from servicing-focused, investor-focused or vendor-focused standards. This consistent approach to data will accelerate adoption and implementation of what will be a broad set of standards.

MISMO is an industry-driven and industry-led subsidiary of MBA.  Participation is open to all, and all are encouraged to join in the effort to build and use the standards.  Ultimately, MISMO’s standards will reduce costs, streamline processes, improve accuracy, increase data transparency and boost investor confidence in mortgages as an asset class.

For more information on how you can become involved, please contact Dan Szparaga of MBA at dszparaga@mortgagebankers.org.
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The firm said it generated strong bids from nine major lenders, including two principal bids not conditioned upon successful securitization or syndication, which ultimately resulted in low cost financing for the borrower. The transaction was awarded to a balance sheet lender that offered a loan with high proceeds at a “very competitive spread,” and included prepayment flexibility and assumability.

“The refinancing retired the existing low leverage, high coupon, traditional loan encumbering the property,” said Arthur Adler, managing director and CEO for Jones Lang LaSalle Hotels.

The refinancing was subject to more stringent underwriting criteria than a comparable U.S. hotel because the property was in the Caribbean.  Leverage levels above 60 percent have not been historically available from the traditional Caribbean lending community, and many structural hurdles had to be resolved to access competitive financing, Jones Lang LaSalle said. 

The lender required political risk insurance to enhance its ability to efficiently securitize the loan in the future, as Nevis does not have a sovereign rating.  Also, being in a region prone to hurricanes, Jones Lang LaSalle needed to demonstrate that natural and engineered tropical storm and hurricane protection systems were constructed by the borrower to reduce natural risk have been effective. The borrower, Hotel Equity Fund V, an affiliate of Maritz Wolff & Co., wanted the refinancing to retire existing debt and provide a distribution to the owner.

“In a market where there are a limited group of hotel lenders accustomed to low leverage, balance sheet lending, we were able to exceed the client’s expectations on pricing and leverage, and structure the terms of the loan to best meet the client’s business plan,” said Rick Hollander, an executive vice president for Jones Lang LaSalle Real Estate Investment Banking.
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In this program participants will learn:

• A complete outline of the new changes, including what requirements have been removed and what requirements remain unchanged;

• FHA’s expectations on appraisers in completing FHA appraisals on the new URARs;

• Tips for reviewing the FHA appraisal under the new requirements and on the new forms; and

• How appraisers will apply these new changes in the reports they deliver and the impact of these changes on cost and timeliness.

It's never been easier to train your staff on the most current topics relevant to your business. Listen in to a 60-minute presentation by an industry expert, followed by a 30-minute interactive question and answer session. Just dial in from your conference room speakerphone to train your staff—whether there are two or 20 employees in attendance. The PowerPoint presentation that accompanies the audio program will be sent via email one week prior to the program date and can be reproduced for all attendees.

CampusMBA Audio Programs are a timely, convenient, and cost-effective way to train your entire staff on the latest topics. Why register for an Audio Program?

• Inexpensive: $225 MBA members / $325 Nonmember per site;

• Timely topics: regulatory and sales strategy issues brought directly to your speakerphone and conference room;

• Quality Program: program and presentation materials developed by industry experts;

• Simple: just use your speaker phone; and 

• Current: latest topics brought to you in a timely way.

The meeting number is E2602518D.

To register online, go to http://store.mortgagebankers.org/ProductDetail.aspx?product_code=E2602518D%2fREGIS. To download the Audio Program Registration Form, go to http://www.campusmba.org/pdf/audio_program_gen_ks.pdf. You can also register by calling (800) 348-8653 or by emailing CampusMBA at cbuzolich@mortgagebankers.org.
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Charles Morris, CMB, is president of Mortgage & Investment Opportunities Inc. in Madison, Miss. with a Master CMB designation. Morris, who specializes in commercial/multifamily real estate finance, earned the designation in 1979.

A self-proclaimed “Army brat,” Morris grew up in the Southeastern U.S. and moved to California and Germany. His wide-ranging career crosses various disciplines and titles, including mortgage banker, bank president, campaign manager for a congressional candidate, writer for a local newspaper and national publications and realtor. His current status, along with president of Mortgage & Investment Opportunities, is senior vice president of program operations for the Mississippi Home single-family and multifamily programs, as well as tax credit allocations, acquisition/development and construction lending programs.

A graduate of the University of Southern Mississippi, he completed Northwestern University’s School of Mortgage Banking and the University of Georgia’s School of Executive Development.
 
Morris pursued the CMB, a new designation at the time, as a means to improve his knowledge of the mortgage banking industry, its people and affiliates. He received his CMB on October 15, 1979.

As a result of pursuing and ultimately achieving the CMB designation, Morris said that he has been afforded many opportunities that have allowed him to contribute to the industry as a whole.  These opportunities include serving on the rollout Real Estate Settlement Procedures Act (RESPA) committee, formulating its training to MBA membership and making presentations in Atlanta and San Juan; and assisting Fannie Mae in development of a conventional loan purchase program, transitioning from a strictly FHA/VA investment portfolio.

In an attempt to expand the CMB program throughout the mortgage industry, Morris served as a past vice chair of MBA’s CMB Committee and participated on various CMB oral exam teams.

He remains active in various local community foundations and societies, including the Mississippi Mortgage Bankers Association and as past president of National Real Estate Forum.  

Morris encourages those interested in the CMB to go for it. “It's worth the effort. The respect you receive from your peers and the boost in personal self-esteem are great; but, what you are able to contribute to the mortgage banking industry after you achieve the designation will surprise you," he said. "Sufficiently learning the mortgage banking industry enough to earn the CMB designation opens the creative thinking processes so new ideas and programs can be developed.”

Join industry leaders such as Morris in earning the pinnacle of mortgage banking excellence – the Certified Mortgage Banker. Get your points evaluated, take your written and oral exams, and graduate with your peers at MBA’s 2006 CREF/Multifamily Convention & Expo  in Orlando.

Contact Jennifer Ridings at (202) 557-2763 or jridings@mortgagebankers.org, or Alicia Willey at (202) 557-2766 or awilley@mortgagebankers.org, today to get started on your CMB. To learn more, visit www.campusmba.org/cmb.
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H.R. 4314, the Terrorism Risk Insurance Revision Act of 2005, would raise the deductibles on all lines of insurance from their current level of 15 percent; increase the co-shares for smaller events while decreasing them for more significant events; increase the amount of insured losses that would trigger the federal backstop; and build up long-term capital to stabilize the marketplace by allowing insurers to treat a portion of their terrorism premiums as dedicated terrorism capital.

The Mortgage Bankers Association commended the House on its action. "At a time when the nation is at war and acts of terrorism within our borders remain a real threat, the renewal of TRIA is crucial to maintaining the smooth operation of the commercial real estate finance market. MBA strongly supports legislative action to extend TRIA," said Kurt Pfotenhauer, MBA's senior vice president of government affairs. "We look forward to continuing our work with Congress so that final TRIA legislation can be presented to the President for signature before the end of the year." 

TRIA is an essential part of the nation's economic preparedness against terrorism. As part of the multi-industry group--the Coalition to Insure Against Terrorism (CIAT)--MBA shares CIAT's goal of working toward a solution for this very pressing issue, MBA said.

The Senate passed its version of the extension, S. 467, the Terrorism Risk Insurance Extension Act of 2005, in November.

The House and Senate must now convene a conference committee to smooth out differences between the respective bills. Once that is done, the bill must gain final approval in both chambers before going to President George W. Bush for signature.

MBA encouraged Congress to “move forward, without delay, and bring a conference agreement back to each chamber for a final vote next week. The current TRIA authorization expires on December 31, so Congress must complete work on new TRIA legislation prior to adjourning for the year.”
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