Couch is currently president and CEO of New South Federal Savings Bank in Birmingham, Ala., which operates 40 loan production offices in 13 states and a full-service deposit branch office in Birmingham. New South is the largest thrift and the seventh largest depository institution, based on asset size, headquartered in Alabama. Its operations principally involve residential mortgage, automobile, residential construction and manufactured housing lending.

“We at MBA are thrilled for Rob’s opportunity at Ginnie Mae,” said MBA President and CEO Jonathan Kempner. “Rob has a deep knowledge of the mortgage industry and knows first-hand the importance of the public-private partnership that has made FHA and Ginnie Mae programs so successful in meeting the needs of underserved families. He is a proven leader who served MBA with distinction and I am confident that he will provide excellent leadership and direction at Ginnie Mae.”

Couch has been an active member of MBA for nearly a dozen years and served as MBA chairman in 2003-2004. His volunteer service at MBA began in 2000, when he served as the first chairman of the Technology Steering Committee of the Board of Directors. He also served on MBA's Commercial Real Estate Finance/Multifamily Board of Governors (COMBOG) and the Residential Board of Governors (RESBOG). For six years, he has served on MBA's Strategic Planning Committee and was a member of the MBA Blue Ribbon Task Force that developed MBA's position on the proper role of Fannie Mae and Freddie Mac in the mortgage industry.

Couch has also served as President of the Mortgage Bankers Association of Alabama.

Ginnie Mae is a government entity under HUD that links global capital markets to the nation’s housing markets. Ginnie Mae guarantees investors the timely payment of principal and interest on mortgage-backed securities backed by federally insured or guaranteed loans, such as those issued by FHA, the VA, the Rural Housing Service and the Office of Public and Indian Housing.

Upon approval by the Senate, Couch would replace Ronald Rosenfeld, who left Ginnie Mae in 2005 to assume the chairmanship of the Federal Housing Finance Board. Michael Frenz, executive vice president at Ginnie Mae, is serving as acting president until Couch’s nomination is approved.
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According to Wells Fargo officials, each branch features a "gallery" with African-American, Asian or Latino artwork and colorful signs in languages including English, Spanish, Vietnamese, Japanese, Taglish, Cantonese or Korean.

"By reflecting the culture of the communities we serve, Wells Fargo Home Mortgage has created a setting that is warm and inviting for our customers," said Jackson Cosey, senior vice president of emerging markets with Wells Fargo Home Mortgage. "We believe that this approach will provide our customers with a friendly venue to learn about the home financing options available to them—something they may have otherwise not have explored."

Wells Fargo Home Mortgage opened these new branches in California, Colorado, Florida, Illinois, Indiana, Maryland, New Jersey, New York, Texas and Washington.

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Wolters Kluwer, Minneapolis, consolidated five of its financial services businesses under a new brand name—Wolters Kluwer Financial Services, effective January 3.

The consolidated affiliates include Bankers Systems; Atchley Systems; VMP Mortgage Solutions; GainsKeeper; and CCH Wall Street.

Brian Longe, president and COO of Wolters Kluwer Financial Services, said the consolidation reflects the integration of the company’s services, which were added largely through acquisition, under a single company brand.
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Defeasance is an option for borrowers who want to sell or refinance property with a CMBS loan. The property note is replaced by securities that reflect the principal and interest stream and the payoff associated with the underlying collateral.

“The number of loans with defeasance as an option has steadily increased over time,” said Stacey Berger, executive vice president in the Bethesda, Md. office at Midland Loan Services, Overland, Kan. “The vast majority of deals today are predominantly defeasance as opposed to yield maintenance or prepayment penalties.”

Berger said an environment with an inverted yield curve, as it is today, is more conducive to defeasance because of the interest rate scenario. While a steep yield curve would make the bonds more expensive, an inverted curve makes securities less costly.

“Those long-term securities, on a relative basis, are inexpensive and it makes [defeasance] more attractive,” Berger said.

Fitch Ratings, New York, said it reviewed nearly five times as many defeasance requests this past year (193), accounting for approximately $7 billion in collateral, compared to only 41 requests and $1.8 billion on collateral in 2004. Fitch expects upgrades to far outpace downgrades once again in 2006, in part aided by the increasing presence of defeasance.

Fitch recorded 868 upgrades in 2005 among approximately 450 transactions under surveillance, compared with just 79 downgrades for an astounding 11:1 ratio, far surpassing the nearly 7:1 ratio in 2004.

Commercial property values are another reason for the high amount of defeasance as borrowers use this process to capture some of that value.

“As additional capital flows into the real estate market supporting higher values, defeasance will continue to be a factor,” said Mary MacNeill, managing director at Fitch Ratings.

While defeasance can cause upgrades, MacNeill noted that floating rate CMBS transactions are more susceptible to ratings downgrades because of refinance risk and adverse selection. Defeasance is not an option on floating rate loans and rising interest rates could affect maturing floating rate loans because they are structured with three-year maturities and only two one-year extension options. While stronger performing loans on traditional assets are typically the first to refinance, poor performing loans or transitional assets in a transaction are the ones left over.

“‘If transitional assets do not turn around and stabilize in a timely fashion, refinancing of floating-rate assets at maturity can be problematic.” MacNeill said.

Midland’s experience is consistent with Fitch’s concerns. “The floating rate loans, particularly the large, complex structured deals on transitional or repositioning properties are a concern in a higher interest rate environment,” Berger said. “With interest rates relatively low and property values relatively high, much of this has worked itself out. But there are still a number of properties that we are concerned about [with] their ability to refinance out at maturity.”
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The Bulletin represents suggested guidance that each state insurance commissioner may adopt on a voluntary basis.

In practice, NAIC Bulletins are widely adopted by state insurance commissioners. In fact, 43 of 50 state insurance commissioners and the District of Columbia adopted past NAIC guidance for TRIEA’s predecessor legislation, the Terrorism Risk Insurance Act of 2002 (TRIA).

Not adopting this NAIC guidance were California, Arizona, Colorado, New Mexico, Tennessee, Missouri, and Massachusetts.

The Bulletin primarily addresses losses under $5 million relating to the “make available” available provision of TRIEA and recommends terrorism insurance coverage for certain “non-certified” losses.

NAIC Addresses the 'Make Available' Coverage Gap
In order for a terrorist act to be “certified” by the federal government it must reach the $5 million threshold. If a terrorist act does not reach this threshold, it can not be “certified”. 

Without certification, it is not subject to the “make available” provision of TRIEA. The “make available” provision of TRIEA prohibits insurance carriers from excluding “certified” terrorist events. Therefore, terrorist acts under $5 million are not eligible for TRIEA coverage.

The Bulletin addresses this problem by recommending that state insurance commissioners not issue exclusions for terrorist acts if the exclusions are granted solely because the terrorist act failed to meet the $5 million “certification” level. This Bulletin recommends terrorism acts of under $5 million to be covered by terrorism insurance policies.

NAIC Recommends Coverage for Under $25 Million “Non-Certified” Losses
Only foreign source acts of terrorism can be “certified” by the federal government. Without “certification” a terrorist act is not eligible for TRIEA coverage. TRIEA does not cover domestic acts of terrorism. A domestic act of terrorism would be a “non-certified” act.

The Bulletin recommends that exclusions not be allowed for “non-certified” terrorist acts under $25 million. This NAIC guidance requires insurance companies to provide coverage for small (under $25 million) domestic acts of terrorism that are not covered by TRIEA or any other “non-certified” act of terrorism under $25 million with the exception of the exclusions presented below. Consequently, the Bulletin extends terrorism coverage for small scale terrorist attacks that may not be covered by TRIEA. 

NAIC Terrorism Insurance Exclusions
In order to make the Bulletin compliant with TRIEA, exclusions for terrorist events of over $100 billion are allowed and exclusions for all losses resulting from nuclear, biological, chemical, and radiological (NBCR) terrorist events are also allowed.  In the case of NBCR terrorist events, mandatory coverage of “non-certified” losses of under $25 million would not apply. Exclusions for “non-certified” losses over $25 million are allowed. For insurance policies covering liability, exclusions can be granted for terrorist events that kill or seriously injury 50 people or more.

NAIC’s Role in Promoting Terrorism Insurance
Through its federal lobbying efforts and Bulletin issuance, NAIC has undertaken a sustained activist role in ensuring that terrorism insurance remains available and affordable. These actions have brought greater stability to a vital part of the nation’s economy, the commercial real estate market. Consequently, a great debt of gratitude is owed by commercial real estate stakeholders for the vital actions undertaken by the NAIC.

Click here for a comparison chart of TRIEA and TRIA. 

For any questions on TRIEA or NAIC's interim guidance, call George Green, director in MBA's Commercial/Multifamily group, at (202) 557-2840 or e-mail at ggreen@mortgagebankers.org.
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Three separate lending entities made this $83 million transaction possible: Fannie Mae and APF are the permanent lenders; Citigroup, St. Louis, is the construction lender; and Enterprise Social Investment Corp. (ESIC) is the tax credit equity investor.

The $83.4 million loan transaction consists of $55 million in long-term fixed bonds plus another $28.4 million in short-term notes.  A Fannie Mae Credit Enhancement of New York Housing Development Corp. (HDC) bonds will be issued to refinance an existing HUD Section 202 loan; which was originally provided to convert and develop these properties for use as affordable housing by a not-for-profit sponsor; as well as ‘rehabbing’ all ten properties.

The multi-million dollar closing encompasses ten multifamily housing properties dedicated to providing more than 1000 modern, affordable and safe housing units for seniors. Nine of the projects are in Brooklyn residential neighborhoods and one is in Queens.
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CREF is MBA’s premier event for commercial and multifamily lenders. It provides networking opportunities and educational tools to ensure future success by showcasing new products and services, technology, business practices and ideas. CREF is the largest gathering of commercial real estate finance professionals and provides endless opportunities for building new relationships and connecting with industry experts.

The Opening General Session features two baseball greats: Cal Ripken Jr., the “Iron Man” who broke Lou Gehrig’s decades-old record for most consecutive games played, will be interviewed by another Hall of Famer and teammate, Jim Palmer, now a broadcaster. The session takes place on Monday, February 6.

But the action starts well before then. A special session on Sunday, February 5, “Get Up, Get Out, Get Going,” features guest speaker John Waldeck, manager of real estate underwriting with Pacific Life Insurance Co., who will discuss ways for you to get the most out of your convention.

The exhibit hall, always buzzing with activity, brings together convention attendees to network with peers and to learn about the latest products and services. This year, Rocky Bleier, former Pittsburgh Steelers football star, adds to the excitement and signs footballs in the Exhibit Hall on Sunday afternoon, before the annual MBA Super Bowl Party, sponsored by Bank of America, where the game will be shown on a huge-screen television with a tailgate party atmosphere.

Other highlights include the Second General Session, “Industry Dynamics in an Evolving Market,” featuring MBA Chief Economist Doug Duncan and Ray Torto, head of Torto Wheaton Research; and concurrent sessions on a variety of topics, including MISMO; conduit lending; CMBS servicing; niche multifamily markets; and loan workouts and defaults, among others.

Who Should Attend?
CREF is the event for all commercial and multifamily real estate finance professionals with a working knowledge of the industry, including:

• Mortgage bankers;
• Real estate investment officers of life insurance companies, commercial banks, savings banks, credit corporations and other lender;
• Pension fund advisors;
• Wall Street conduits;
• Structured finance companies;
• Fannie Mae and Freddie Mac Multifamily Seller/Servicer;
• FHA-approved multifamily mortgagees and Ginnie Mae issuers;
• Commercial and multifamily real estate loan originators, administrators, secondary market executives and professionals;
• Others with an interest in commercial and multifamily real estate finance.

CREF takes place at a familiar venue: the Walt Disney World Swan and Dolphin hotel complex. Convenient to all Disney World/Epcot attractions, the hotels feature a special rate for CREF participants—but you have to register first.

For more information, visit the CREF Web site, http://events.mortgagebankers.org/cref2006/default.html.
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A modest slowdown could not necessarily mean bad news for the industry. The economists said the slowdown only represents “a tapping of the brakes on a hot market.”

“It’s difficult to follow the strongest year ever,” said David Lereah , chief economist with NAR. “The boom is obviously winding down. It’s important to note that it is winding down but to healthy levels of activity. This is not 1990-1991 all over again. This is not a major contraction in the housing markets because the fundamentals are still good in housing. We still have relatively low mortgage rates even though supply is increasing it is still relatively lean and there is still healthy demand from very favorable demographics.”

"Red hot it’s not...but 2006 will be another busy year for the housing sector. As mortgage rates rise, housing activity will moderate with home sales and housing starts dipping from 2005. 2006 may not be a record-setting year, but the housing sector will still be a powerful engine that continues to fuel the nation’s economy," said Frank Nothaft , chief economist with Freddie Mac.

“In terms of the overall economy, I have a very good outlook for overall GDP growth,” said David Seiders , chief economist at NAHB. “I’ve got 3.6 percent year-over-year for 2006 that’s about what I think we’re going to get in 2005.

“Long rates up to some degree at this point, from where they were at midyear,” Seiders added. “I do expect to see some further increase in the long rates as we go forward. For example, I’ve got the 10-year treasury moving up to the 5.1 percent by the end of the year. Fixed rate mortgage to about 6.7 percent, it’s currently sitting on about 6.2 percent. The financial condition should be a little less favorable for housing in 2006 compared to 2005.”

“Housing starts, I have down 6.5 percent in 2006 from 2005,” Seiders said. “That’s basically retracing the increase we saw last year and getting back to about the 2004 level which was excellent. The big swing up and down is in the single-family component. We were expecting it to be up 7.2 percent in 2005 when we get all the numbers and I have it down 7.2 percent in 2006.”

Lereah expects existing home sales will be down between 4 and 5 percent for this year from an all time record 7.1 million in 2005. “New home sales will be down between 5 and 6 percent. Starts will be down between 7 and 8 percent,” he said.

“The housing forecast for me is based on, I think a little stronger economic growth than the others do for all of 2006, and I have 4.1 percent. I have 30-year mortgage rates really topping off at about 6.6 percent by year-end,” Lereah said.

“We are all projecting a moderate rise in mortgage rates because to use that is a blessing it means a soft landing for housing and just a temporary landing, Lereah said. “In 2007; I expect some positive activity, growth activity in the housing industry.”

David Berson, Fannie Mae’s chief economist, warned of a slowing in home price gains. “Housing activity is expected to slow in 2006, while home price gains slow sharply, in response to a pullback in investor activity and higher mortgage rates. This should be partially offset by continued strong job and income growth as well as positive demographics—suggesting that while down next year, the pace of housing activity will remain fairly strong. There is a growing risk, however, of home price drops in those areas where the investor declines are biggest,” Berson said.

“I think the biggest factor going into 2006 is that the U.S. economy is a juggernaut going into 2006. We have tremendous economic momentum entering 2006,” said Paul Merski , chief economist at ICBA. “I’m predicting a very solid 3.8 percent GDP growth for all of 2006.”

The Mortgage Bankers Association's annual State of the Real Estate Finance Industry Press Briefing will take place Wednesday, Jan. 25, at 12:30 p.m. EDT. The briefing will feature MBA Chairman Regina Lowrie, CMB; MBA President and CEO Jonathan Kempner ; Doug Duncan, MBA chief economist and senior vice president; and Kurt Pfotenhauer, MBA's senior vice president of government affairs.

MBA will release its revised three-year economic and mortgage finance forecasts, review legislative and regulatory accomplishments in 2005, and outline upcoming legislative and regulatory objectives for 2006 such as mortgage fraud, GSE reform and RESPA reform.
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