The survey asks builders for their sentiment about current sales, traffic of potential buyers and projected sales over the next six months. Both the present sales index and the traffic of prospective buyers decreased two points to 18 and 15, respectively.  The future sales index remained at 26.

According to NAHB, confidence eroded further as a result of ongoing problems in the mortgage market and elevated level of inventories. In addition, builders reported that potential buyers are interested in sales incentives but are hesitant to act as they are concerned that home prices may decline further.

The index has been a good leading indicator on home building activity over the past housing cycles. The eighth consecutive decline in the index to the lowest reading since the series began in 1985 suggested that the bottom of the housing market may be as much as a year away.

In his remark to the New York Economic Club on Monday, Fed Chairman Ben Bernanke said housing will be a drag on overall economic growth through next year. His comments were consistent with Treasury Secretary Henry Paulson’s speech at Georgetown University on Tuesday that the housing downturn will negatively impact the economy, capital markets and homeowners for some time. He called the ongoing housing correction the most significant risk to the economy.

Another report showed that the nation’s output at factories, mines and utilities lost momentum toward the end of the third quarter. Industrial production edged up only 0.1 percent in September, following a flat reading in August. Manufacturing production increased 0.1 percent, held back by a 3.3 percent decline in auto production. Mining output was up 0.2 percent while utilities output was down 0.1 percent for the month. For the third quarter as a whole, industrial output increased 3.9 percent (annualized rate). This was the fastest quarterly increase in a year, thanks to the strong 0.6 percent increase in July. 

The industrial production report also showed that capacity utilization—which measures a portion of plants in use and thus a gauge for inflation pressures—remained at 82.1 in September. Capacity utilization was slightly below its recent peak of 82.4 in August 2006. 

Finally, a separate report showed foreigners drastically decreased their appetite for U.S. assets in August, reflecting the financial turmoil that started in late July. The Treasury Department reported that net foreign purchases of long-term U.S. securities declined to a negative $69.3 billion. The last time the figure turned negative was in August 1998, when Russia defaulted on its sovereign debt and hedge fund Long-Term Capital Management (LTCM) was about to go under.

Long-term yields decreased in response to reports showing soft industrial production and builder’s sentiment. The report of diminished foreign demand in dollar-denominated assets also caused concerns that the value of the dollar will face additional downward pressure. The yield on 10-year Treasuries hovered around 4.64 percent by mid-Tuesday afternoon, four basis points lower than rate on Monday.

(Orawin Velz is senior director of economics and research with the Mortgage Bankers Association. She can be reached at ovelz@mortgagebankers.org.)
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This week’s results include an adjustment to account for the Columbus Day holiday.

The Market Composite Index rose to 656.3, an increase of 0.7 percent on a seasonally adjusted basis from 652.0 one week earlier. On an unadjusted basis, the Index decreased by 9.3 percent compared with the previous week and was up by 0.7 percent compared with the same week one year earlier. The four-week moving average for the seasonally adjusted Market Index is down by 0.6 percent to 649.8 from 654.0.

The seasonally adjusted Refinance Index decreased by 1.1 percent to 1980.9 from 2003.2 the previous week. The four-week moving average is up by 0.2 percent to 1990.2 from 1985.5. The refinance share of mortgage activity decreased to 45.3 percent of total applications from 46.2 percent the previous week.

The seasonally adjusted Purchase Index increased by 2.1 percent to 429.1 from 420.2 one week earlier. On an unadjusted basis, the Purchase Index decreased by 7.9 percent to 370.2 from 401.9 the previous week. The four-week moving average is down by 1.3 percent to 419.9 from 425.6.

The seasonally adjusted Conventional Index increased by 0.3 percent to 937.5 from 934.8 the previous week; the seasonally adjusted Government Index increased by 3.9 percent to 187.5 from 180.5 the previous week.
 
The average contract interest rate for 30-year fixed-rate mortgages remained unchanged at 6.40 percent, with points increasing to 1.04 from 1.00 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 6.09 percent from 6.03 percent, with points decreasing to 1.03 from 1.12 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year adjustable-rate mortgages increased to 6.17 percent from 6.15 percent, with points increasing to 0.94 from 0.92 (including the origination fee) for 80 percent LTV loans. The ARM share of activity decreased to 13.5 percent from 13.6 percent of total applications from 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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Under expedite, users gain access to eLynx's electronic document services, including electronic document management, secure delivery, integrated electronic faxing and print-on-demand components and electronic folders. Adaptable to the specifics of a variety of scenarios, expedite can be deployed swiftly to accelerate many different business processes.

www.elynx.com

Mortgage Cadence Debuts Orchestrator 5.0
A new software release from Mortgage Cadence Inc., Denver, a provider of enterprise lending services for the financial services industry, makes it possible for loan originators to create workflows based on real mortgage data without limitations imposed by traditional, paper-based lending systems.

Mortgage Cadence Orchestrator 5.0 has the ability to accept incoming data through any channel, routing it to the proper file and then direct the workflow based on what additional information is required to close the deal. Because the software is not tied directly to forms, which change often and can be specific to certain loan products, Orchestrator gives lenders the flexibility to launch new products—including reverse mortgage lending products—with fewer employees to handle volume.

www.mortgagecadence.com.

Associated Software Consultants Launches PowerSeller GPS
Associated Software Consultants Inc., Middleburg Heights, Ohio, announced launch of PowerSeller GPS, a technology service designed to help small- to mid-tier mortgage bankers and brokers grow secondary marketing operation profits by streamlining marketing activities, facilitating communication among stakeholders and delivering cost savings.

PowerSeller GPS provides originators with tools to manage existing pipeline and investor commitments. It allows originators to capture key data elements to verify that loans are properly priced and ensure that investors are funding loans correctly.

www.asconline.com.

3t Systems, Mortgage Cadence Help Insurer Launch Nationwide Operations
3t Systems Inc., Denver, an IT consultancy, and Mortgage Cadence Inc., Denver, a provider of enterprise lending services for the financial services industry, announced the launch of the Mortgage Cadence product suite, providing the foundation for a nationwide insurance company to establish a mortgage banking operation. The new bank will leverage and capitalize upon its brand and customer base to gain momentum within the mortgage marketplace.

The insurer operates nationally with tens of thousands of agents across the U.S. The new banking operation currently functions as a “virtual” Internet bank, leveraging a 16,000+ agent network. While the agent office serves as a point of consumer contact, business is conducted via the Internet, over the phone and through the mail. The banking operation offers a full range of consumer products including deposit and small business products, credit cards, mortgage, home equity and vehicle loans.

3t Systems and Mortgage Cadence’s products enabled the organization to bring its mortgage loan origination operation in house. 3t Systems implemented the Mortgage Cadence product suite in just under 12 months.

FIS Announces Portfolio Management Tool
Fidelity National Information Services Inc., Jacksonville, Fla., announced availability of a portfolio management tool that enables lenders, servicers and investors to identify and mitigate prepayment and default risk on an individual loan or portfolio basis.

The new offering integrates the proprietary default and prepayment algorithms from the FIS Applied Analytics division  with property valuation and pricing trend data from FIS Valuation Solutions and FIS Data Solutions divisions. 

Interthinx Releases Regulatory Compliance Modules
Interthinx, Augora Hills, Calif., a provider of risk mitigation and regulatory compliance tools for the financial services industry, introduced licensing and prepayment penalty modules into its automated regulatory compliance services.

Interthinx added the capability within PredProtect for customers to input company licenses and then selectively trigger state-level tests within its brand new License Administration functionality. This allows originators of all types to satisfy investor guidelines, which usually require application of state laws regardless of whether the laws actually apply to the company. These selections can be made online, without the need for complex programming or review.

A second module supplements the service’s existing anti-predatory lending and Truth-In-Lending Act tests. With this test, individual loan data is compared to applicable state prepayment penalty laws and detailed results are returned in a compliance worksheet. This allows the end-user to quickly identify violations without having to investigate.

www.interthinx.com.

S&P Alters Modeling Assumptions For Step-Down RMBS Provisions
Standard & Poor's Ratings Services, New York, continues to review the impact of the trigger provisions governing the release of credit support after the step-down date in U.S. residential mortgage-backed securities (RMBS) transactions. As a result, Standard & Poor's said it will, in most cases, look for higher minimum overcollateralization (O/C) levels throughout the life of rated RMBS deals.

Because a number of the rating changes affecting the 2005 subprime vintage resulted from the projected release of credit support following the step-down dates, S&P said it reviewed the impact that O/C floors have on the release of credit support. Based on recent observations of performance for the 2005 subprime vintage, S&P determined that an O/C floor, derived on a transaction-specific basis, may better protect the stability of the ratings on classes in future securitizations.

S&P said the minimum O/C floor will be calculated for each deal and will now be assessed based on the amount of support required to avoid losses to the rated securities given Standard & Poor's stressed default and loss curves. The O/C floor will be a percentage of the original pool balance and will not be less than 50 basis points (including any prefunded amounts), and the resulting amount should not exceed the outstanding pool balance.

ACB Members Vote to Merge with ABA
Members of America's Community Bankers voted overwhelmingly yesterday to merge the association with the American Bankers Association. With nearly half of the ACB membership voting, ACB officials said 94 percent voted in favor.

The merger, proposed earlier this year, will take effect on December 1.

Lenders One, Encomia Announce Marketing Partnership
Lenders One, St. Louis, a national alliance of independent mortgage bankers, and Houston-based Encomia, a provider of eMortgage technology, announced a marketing partnership aimed at providing Lenders One members with eDisclosures technology.

Through the partnership, Lenders One members can use Encomia’s eMortgage Solution to create ESIGN-capable 1003 and upfront disclosure documents and enable electronic signatures while originating, funding and selling loans to the secondary market. Encomia’s platform will simplify the lending process for members by allowing their borrowers to access, review and sign applications and disclosures over the Web.
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The letter to Committee Chairman Christopher Dodd, D-Conn., and ranking member Richard Shelby, R-Ala., urges them to support a “chairman’s mark” (a recommendation by committee chair of the measure to be considered in a markup, usually drafted as a bill) of the Terrorism Risk Insurance Program Reauthorization Act of 2007 (TRIPRA), which would extend provisions of the existing federal backstop for terrorism insurance by seven years.

“The seven-year extension in the Chairman’s Mark signals to the real estate finance industry and the nation as a whole that terrorism risk insurance will remain available and affordable over an extended period,” wrote MBA Chairman Kieran Quinn, CMB. “This certainly bolster’s the capital market’s confidence in the commercial and residential real estate finance industries and fosters market stability.”

Last month, the House passed H.R. 2761, the Terrorism Risk Insurance Revision and Extension Act, which included a 15-year extension. But President Bush said he would veto the House bill in its current language, as the Administration would like private industry to find a solution outside of a federal backstop.

Insurance analysts and actuaries, however, said they are unable to get their arms around the costs for more extreme forms of terrorism, including nuclear, biological, chemical and radiological (NBCR). The Senate bill would reduce that extension to seven years; some analysts expect a final version to be as low as five years, which might be more palatable to the Administration.

Recently uncovered domestic and international terrorist plots indicate that the distinction between foreign and domestic-source terrorism has blurred to the point where such distinctions are meaningless, Quinn wrote. “Accordingly, we strongly support the clarifying language contained in TRIPRA that eliminates this distinction and allows domestic-source terrorism to be included in TRIPRA.”

MBA remains concerned, Quinn said, about NBCR risks. “We stand ready to participate in an effort that would bring together the federal government, policy holders, the insurance industry and insurance regulators to perform a comprehensive evaluation of the challenges facing the development of the NBCR insurance market and provide recommendations for overcoming these challenges,” he said.

Additionally, the Coalition to Insure Against Terrorism, of which MBA is a member, sent its own letter to Dodd and Shelby, urging committee action on TRIA.

The CIAT letter emphasized that the current federal terrorism risk insurance program has been a “tremendous success. TRIA has helped keep the economy going in the face of continued terrorist threats by allowing businesses across America to secure this commercially necessary product, saving countless jobs in the process. Moreover, it serves as an important tool to minimize the severe economic disruption that almost certainly will occur from a future terrorist attack.”

The markup is scheduled for 10:00 a.m. ET in room 538 of the Dirksen Senate Office Building. The hearing can be viewed over the Internet at www.capitolhearings.org.
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Daryl Carter, chairman and CEO of Avanath Capital Partners, Irvine, Calif.; and David Roberts, CMB, president and CEO of Collateral Real Estate Capital LLC, Birmingham, Ala., were elected as COMBOG’s new vice chairs. The elections took place here at MBA’s 94th Annual Convention & Expo.

COMBOG comprises 30 MBA member executives representing various sectors of the commercial/multifamily finance industry. COMBOG leads strategic development of commercial/multifamily policy, industry technology and best practices and standards aimed at helping MBA’s commercial/multifamily members operate their businesses more efficiently. 

COMBOG represents the diverse interests of MBA’s member companies through 12 standing committees led by industry leaders and expert staff. In addition to standing committees, various working groups and tasks forces dedicate efforts to major aspects of commercial/multifamily finance, including the regulatory and legislative arenas.

“The Mortgage Bankers Association’s commitment to promoting the Commercial Real Estate/Multifamily sector is critical to shaping the future of this dynamic and ever-expanding component of our industry,” said MBA Chairman Kieran Quinn, CMB. “Under the leadership of Steve Graves and with the support of Daryl Carter and Dave Roberts, COMBOG will continue to thrive.”

In addition to his service on the COMBOG, Graves has also served on MBA’s Board of Directors, Strategic Planning Committee and GSE Policy Task Force. Carter, who is engaged in his second term as vice chair, is founder, chairman and CEO of a new company, Avanath Capital Partners, and is chairman of MBA’s recently established Diversity Task Force. Serving in his first term as vice chair, Roberts is a long-standing supporter of MBA’s multifamily initiatives and has chaired both the DUS Advisory Council and the Multifamily Committee.

MBA’s new COMBOG members:

• Michael Berman, president of CWCapital, Needham, Mass.
• Brian Lancaster, head of structured products research with Wachovia Securities, Charlotte, N.C.
• Robert Maloney, investment leader with Nationwide Life Insurance Co., Columbus, Ohio
• Thomas Szydlowski, executive vice president of Wells Fargo Multifamily Capital, McLean, Va.
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Chad Thomas Hagwood, senior vice president and branch manager of the Capmark Finance Birmingham, Ala. office, originated $20.425 million in fixed-rate, permanent refinancing for acquisition of Timber Ridge Apartments in Mobile, Ala.  The loan, funded by J.P. Morgan, New York, has an 80 percent loan-to-value with a five-year term and interest-only payments for the first two years.

On nearly 31 acres, the property consists of 20 two- and three-story apartment buildings. Timber Ridge Apartments features 320 garden-style units, located near the Mobile central business district.  The borrower was a tenants-in-common structure, and the property was 96 percent occupied at average rents of $831 per month.

Hagwood also originated $12.5 million in fixed-rate, interim financing for acquisition and rehabilitation of Cross Creek and Chateau Oaks Apartments, two multifamily properties in Mobile, Ala. The 85 percent loan-to-value mortgage has interest-only payments and provides $6 million for renovations.

The borrower was again a tenants-in-common structure that included the owners of both properties—Todd Martin and Robert Randall. 

Cross Creek Apartments consists of five two- and three-story buildings, totaling 130 garden-style units.  The property on 6.4 acres includes a laundry facility and swimming pool. Chateau Oaks Apartments consists of two two-story buildings on 4.95 acres.  The property features 139 garden-style units, and a swimming pool. 

Hagwood also originated $2.8 million in a 6.33 percent fixed-rate, permanent refinancing for the Carriage Hills Court Apartments in Bessemer, Ala., funded by Countrywide Commercial Mortgage, Calabasas, Calif. The borrower was Logan Alabama Properties III LLC.

The 80 percent loan-to-value includes a 10-year term with interest-only payments for the first three years. On nearly 5.5 acres, Carriage Hills Court consists of one, two-story apartment building with 86 garden-style units. The unit mix consists of 20 one-bedroom units, 64 two-bedroom units and two three-bedroom units. The property is near the Birmingham-Hoover metropolitan site area and the University of Alabama.

Carriage Hills Court, a 94 percent occupied property, averages $595 per month in rent.

“Capmark Finance structured the loan in a way that enabled the borrower to use the proceeds to retire the existing high-rate bank financing, return a portion of the equity to the partnership and pay all transaction costs,” Hagwood said.
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MBA's Future Leaders Program, in its 12th year, delivers a comprehensive leadership training experience for selected participants through three events offered throughout the year. Each new class will join a national network of more than 350 real estate finance professionals who have been acclaimed by the industry as its next generation of leaders.

"Through professional excellence and achievement, this accomplished group of individuals has demonstrated an ongoing commitment to the real estate finance industry," said MBA Chairman Kieran Quinn, CMB. “I look forward to working with this dedicated group of industry leaders in the coming year and into the future.”

Initiated in 1996 by then-MBA President Ron McCord, CMB, the Future Leaders Program delivers a highly regarded curriculum focusing on leadership and business analysis skills that help candidates advance their careers in real estate finance.

MBA honered the following graduates:

• Dana Abernathy, CMB, AMP, PMI Mortgage Insurance Co., Greenbrier, Tenn.
• Ruth Battle, Paramount Mortgage Co., St. Louis
• Greg Chaffin, SUSA Financial Inc. dba First Funding Inc., Dallas
• Mark Cheney, Southwest Securities FSB, Atlanta
• Rachel Diller, Centerline Capital Group, New York
• Fontana Fitzwilson, Williams & Williams Worldwide Real Estate Auction, Tulsa, Okla.
• Troy Garris, Weiner Brodsky Sidman Kider PC, Washington, D.C.
• Donna Hayes, AMP, Chase, Iselin, N.J.
• Kendra Himebauch, CoastalStates Bank, Hilton Head Island, S.C.
• Stacia Ivancich, Chase, Iselin, N.J.
• Barbara Jimenez, AMP, GMAC Mortgage Subservicing, Costa Mesa, Calif.
• Marilyn Sue Jones, AMP, Nationwide Life Insurance Co., Columbus, Ohio
• Bradley Joyner, Mississippi Home Corp., Jackson, Miss.
• Lisa Klika, Guild Mortgage Co., San Diego
• Robin Lamb, CMT, AMP, Wells Fargo Home Mortgage, Springfield, Ill.
• John Larsen, McKenna Long & Aldridge LLP, Los Angeles
• Ruth Lee, Titan Lenders Corp., Denver
• Steve Levine, Hamilton Group Funding, Cooper City, Fla.
• Holly Linaburg, Indymac Bank, Plano, Texas
• Paulina McGrath, Texas Mortgage Bankers Association Inc., Houston
• Kimberly Norwood, Prymak LLC, Greensboro, N.C.
• Michael Peretz, Patriot Lenders, St. Louis
• Mary Pettitt, Sun Trust Mortgage Inc., Richmond, Va.
• Brian Picker, 1st Mariner Bank, Ellicott City, Md.
• Louis Pizante, Mavent Inc., Irvine, Calif.
• Mark Raskin, CTX Mortgage Co. LLC, Addison, Texas
• Mark Reichter, Q10 Triad Capital Advisors Inc., Kansas City, Mo.
• Sally Reynosa, AMP, GMAC Mortgage Subservicing, Costa Mesa, Calif.
• Jason Shaffer, ARCS Commercial Mortgage Co. LP, Calabasas Hills, Calif.
• Michael Shevelson, PMI Mortgage Insurance Co, Walnut Creek, Calif.
• Christopher Sicuranza, Navigant Consulting Inc., Vienna, Va.

For more information about the Future Leaders Program, visit: http://www.mortgagebankers.org/ProfessionalDevelopment/FutureLeadersProgram.
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RESBOG is the governing body of MBA's residential/single-family members, responsible for identifying legislative and regulatory policies and positions on single-family residential lending and for recommending policies and initiatives to MBA's Board of Directors. RESBOG consists of 49 voting representatives from MBA member companies of all sizes and the eight chairs of MBA’s residential policy committees.

"I am honored to have Bob Griffith and Tim Dale as chairman and vice chairman of RESBOG," said MBA Chairman Kieran Quinn, CMB. “Their ongoing commitment and valuable contributions to MBA and the real estate finance industry make them model leaders.”

Griffith and Dale presently sit on MBA’s Board of Directors and have been active MBA members on various committees. Griffith is a 2007 vice chair of the RESBOG Advisory Committee and was a member of the GSE Policy Task Force. Dale was chair of the 2007 RESBOG Nominating Committee.

Newly elected RESBOG members include:

• Gary Acosta, Prado Mortgage Inc., San Diego
• Phillip Bracken, Wells Fargo Home Mortgage, Ellisville, Mo.
• James Deitch, American Home Bank NA, Mountville, Pa.
• John Koch, ION Capital Inc., Dublin, Ohio
• Sandy Samuels, Countrywide Financial Corp., Calabasas, Calif.
• Joseph Splendido, Colonial Mortgage Service Co., Horsham, Pa.
• R. Glenn Wertheim, Charter Mortgage Co., Albuquerque, N. Mex.
• G. Todd White, CMB, Arvest Mortgage Co., Lowell, Ark.
• Dena Yocom, CMB, imortgage.com Inc, San Diego

Returning RESBOG members include:

• Steven Abreu, GreenPoint Mortgage Funding Inc., Novato, Calif.
• Timothy Bartosh, CTX Mortgage Co. LLC, Dallas
• Adam Bass, ACC Capital Holdings, Orange, Calif.
• Paul Bibb Jr., National City Mortgage Co., Miamisburg, Ohio
• Barry Bier, GMAC Residential Holding Corp., Fort Washington, Pa.
• Edgar Bright III, CMB, AMP, Standard Mortgage Corp., New Orleans
• Todd Chamberlain, Regions Mortgage, Birmingham, Ala.
• William Cosgrove, CMB, Union National Mortgage Co., Strongsville, Ohio
• Dan Crockett, Franklin American Mortgage Co., Franklin, Tenn.
• Thomas Cronin, CMB, Clayton Fixed Income Services, Denver
• Timothy Dale, CMB, BB&T, Wilson, N.C.
• James Danis II, CMB, AMP, Residential Mortgage Corp., Fayetteville, N.C.
• Doris Davies, SCME Mortgage Bankers Inc., San Diego
• Marangal Domingo, CMB, Doral Financial Corp., San Juan, Puerto Rico
• Abraham Eisner, GFI Mortgage Bankers Inc., New York
• David Green, CMB, Comerica Bank Mortgage Division, Auburn Hills, Mich.
• Robert Griffith, Bank of America, Charlotte, N.C.
• James Jandrisevits, Countrywide Financial Corp., Parker, Colo.
• John Johnson, CMB, MortgageAmerica Inc, Birmingham, Ala.
• Richard Kile, Tri-Emerald Financial Group, Lake Forest, Calif.
• David Kittle, CMB, Principle Wholesale Lending Inc., Louisville, Ky.
• Samuel Lamparello, CMB, AMP, Security Atlantic Mortgage Co. Inc., Edison, N.J.
• Larry Litton Jr., Litton Loan Servicing, Houston
• Ken Logan, CMB, Wachovia Securities, Alpharetta, Ga.
• Marianne McCarty-Collins, Insight Bank, Columbus, Ohio
• Gilberto Monzon, Popular Mortgage Inc., San Juan, Puerto Rico
• Samuel Morelli, CMB, Eagle National Bank Mortgage Division, Chadds Ford, Pa.
• Steve Nadon, Option One Mortgage Corp., Irvine, Calif.
• Michael Padalino, Synovus Mortgage Corp., Birmingham, Ala.
• Cliff Piscitelli, Downey Savings & Loan Association F.A., Newport Beach, Calif.
• Kieran Quinn, CMB, Column Financial Inc., Atlanta
• Floyd Robinson, Bank of America, Charlotte, N.C.
• Deborah Rosen, Guidance Residential LLC, Irving, Texas
• David Schneider, AMP, WaMu, Seattle
• Debra Still, CMB, Pulte Mortgage LLC, Englewood, Colo.
• Robert Story Jr., CMB, Seattle Financial Group, Seattle
• Bruce Williams, HomeStreet Bank, Seattle
• Thomas Wind, Lehman Brothers Bank, Littleton, Colo.
• Richard Wohl, CMB, Indymac Bank, Pasadena, Calif.
• Tyler Wood, Bank of America, Macon, Ga.

MBA’s Residential Committee Chairs serving on RESBOG:

• James Bean Jr., Wells Fargo Home Mortgage, San Francisco
Financial Management Committee Chair
• Gary Cipponeri, Chase, Iselin, N.J.
Secondary and Capital Markets Committee Chair
• Mary Coffin, Wells Fargo Home Mortgage, West Des Moines, Iowa
Residential Loan Administration Committee Chair
• Michael Lepore, CMB, Wells Fargo Home Mortgage, Des Moines, Iowa
Residential Loan Production Committee Chair
• Allan Lubitz, Option One Mortgage Corp., Irvine, Calif.
Residential Technology (ResTech) Committee Chair
• Stephen Morrison, CMB, Wells Fargo Home Mortgage, Des Moines, Iowa
Legal and Regulatory Compliance Committee Chair
• Chris Pellegrino, SunTrust Mortgage Inc., Richmond, Va.
Residential Education Committee Chair
• Robert Power, Countrywide Financial Corp., Plano, Texas
State Legislative and Regulatory Committee Chair
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Total originations should decline another 18 percent next year as both purchase and refinance originations drop, said MBA Chief Economist Doug Duncan. Total originations will drop an additional 6 percent in 2009 from 2008 as the 5 percent increase in purchase originations partially offset a projected 18 percent decline in refinance originations.

“We have not yet seen fully the impact of the credit shock to the U.S. and world economies, and the severity of that impact will depend on how long it takes for the markets to return to normal functioning and where credit spreads ultimately settle,” Duncan said.

In his presentation this morning at MBA’s 94th Annual Convention & Expo here, Duncan noted that among uncertainties facing the industry are the impact of sharply higher energy costs, the impact on inflation from higher import prices due to the falling dollar and the impact of uncertainty over tax policies coming out of Washington. “The underlying fundamentals of the economy, however, should be strong enough to get us past this period so that economic growth should return to normal levels by the second half of 2008,” he said.

In terms of housing, Duncan said the revised forecast calls for 2008 sales to be below 2007 levels until late 2008, “but given the over supply of homes in a number of markets, any significant increase in homebuilding is probably years off.”

“The drag on gross domestic product growth from the housing sector is being at least partially offset by strength from international trade,” Duncan said. “During the last four quarters, residential investment in constant dollars fell by $97 billion, while net exports rose by $53 billion. Strength from the external sector will surely continue, given robust growth abroad, a declining dollar and the impact of slower growth at home moderating the rise of imports.”

Should the Federal Open Market Committee reduce the federal funds rate by another 25 basis points at its October 30-31 meeting, “that may be the last move needed to keep the economy on a moderate growth track,” Duncan said. “Growth, however, seems likely to remain at or somewhat below the economy’s long-term growth potential, obviating the need to the Fed to reverse course and raise interest rates next year.”

Rates on fixed-rate mortgages, according to the MBA Weekly Applications Survey, currently stands at 6.40 percent. “We expect long-term rates to rise to 6.6 percent by the beginning of 2008,” Duncan said.

Highlights of the current MBA forecast:

• Housing starts and home sales should reach bottom in the second and the third quarter of next year, respectively; 

• Total existing home sales for 2007 will decline by about 12 percent from 2006 to 5.72 million units. Sales will decline further by about 10 percent in 2008 before picking up by 5 percent in 2009;

• New home sales will decline by 22 percent from 2006 to 819,000 units. MBA expects an additional decline of 10 percent in 2008. “For all of 2009, we expect new home sales to rise by about 6 percent,” Duncan said;

• Home prices for new and existing homes are expected to decline this year, with median prices falling about 2 percent. Prices should decline at a similar rate in 2008 before flattening out in 2009;

• Residential purchase mortgage originations will decline about 15 percent in 2007 to $1.18 trillion from $1.40 trillion in 2006. “Given projected declines in sales and prices for all of 2008, purchase origination should fall by 15 percent to 1.00 trillion in 2008,” Duncan said. “We expect purchase originations to rise about 5 percent in 2009, as home sales and home prices pick up;”

• Refinance originations will also decline about 15 percent to $1.13 trillion in 2007 from $1.33 trillion in 2006. “A significant amount of loans have faced or will face their resets this year and next year,” Duncan said. “Tightening lending standards will significantly curtail activity in the subprime segment of the market. We believe, however, that recent and future Federal Reserve actions will help restore liquidity to financial markets, which will help support refi activity in the prime market in the coming quarters. Nevertheless, as mortgage rates edge up modestly with the stronger economy and increased demand for funds in 2008 and 2009, refi activity will decline by about 22 percent in 2008 from 2007 and about 18 percent in 2009 from 2008; and

• Total mortgage production will be down nearly 15 percent to $2.31 trillion this year from $2.73 trillion in 2006. Total originations should decline another 18 percent next year as both purchase and refi originations drop. MBA projects that total originations will drop an additional 6 percent in 2009 from 2008 as the 5 percent increase in purchase originations partially offset a projected 18 percent decline in refi originations.
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“The internet and accelerated retail experiences have bred ‘super shoppers’, expecting their specific needs to be met in ways that fall far outside of traditional practices,” said Linda Simmons, senior vice president of business development at Overture Technologies, Chevy Chase, Md., speaking here yesterday at the Mortgage Bankers Association’s 94th Annual Conference & Expo. “Lenders that meet these needs prosper, while those that don’t may rapidly lose market share.”

“More than 70 percent of individuals used the Internet last year for making purchases and more then 100 million individuals used theIinternet for product research,” noted Sandra Bell, chief marketing officer at The First American Corp., Santa Ana, Calif.

Internet use has nearly tripled in the past six years, said Rick Allen, director of strategic initiatives at Mortgagebot, Mequon, Wis. “Online banking has grown 150 percent between 2000 and 2006—an example of consumers’ changing needs in the financial sector alone, expecting instant, simple gratification,” he said.

Allen noted that on average, 70 percent of consumers research mortgages online but only 20 percent apply online. However, in the second quarter of this year, online originations among the top 20 originators experienced a 73 percent increase from the second quarter in 2006. Overall production for the lenders however, only increased 1 percent.

“Online mortgage origination will follow the path of what has happened in the online banking sector,” Allen said. “However, we need to be careful to account for the different needs of the many types of consumers. Consumers’ demand for speed often means doing business on their terms and opening all origination channels and capabilities.”

Consumers have different experiences with the evolution of the Internet, which now plays a large role in helping consumers conduct their business—mostly driven by efficiency, Bell said. “Traditional” business areas such as banking, mailing services and even travel have adopted different strategies to meet consumers’ expectations.

“Consumers are looking for an end-to-end experience,” Bell said. “Quality, speed and low cost do not always translate into managing all of the consumer’s expectations. Also, augmenting an existing consumer relationship, such as offering online capabilities to banking customers, is easier than creating new relationships in traditional arenas.”

Tim Sandos, president and CEO of National Association of Hispanic Real Estate Professionals, encouraged development of language and acculturated materials for Latino homeowners, one of the fastest-growing populations in the U.S.

“The industry today needs to win its trust back,” Sandos said. “There is a lack of trust on both the consumer and investor side. Provide an end-to-end experience, working with originations, servicing and risk management, that meet the needs and expectations of the targeted consumer.”

Marketing strategies traditionally include direct mail, telemarketing and broadcasting avenues. The industry could now also adopt new marketing channels include podcasts and other mobile technology marketing practices

“We have to be great in the new marketing. There are fewer leads now because of the current industry,” said Dennis Hastings, president of iDirect Marketing Inc., Irvine, Calif. “We have to be more targeted and realize that there are now higher requirements for borrowers to obtain a loan. One size doesn’t fit all anymore—even in marketing. Become an expert to educate your consumers, but before then, yourself. Perform real-time campaign analytics and apply what you learn.”

“The consumer, regardless of the channel of origination, is very demanding—speed, communication, price and trust are very important,” said Jay Plum, executive vice president of national home equity and specialty lending at Charter One Bank, an operating entity of Providence, R.I.-based Citizens Financial Group. “Proactive, clear and constant communications and established expectations are some key factors in developing a means to speak with the consumer.”
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The Closing General Session features an economic outlook from MBA Chief Economist Doug Duncan. Joining Duncan will be former Fed Governor (and former MBA economist) Lyle Gramley, as well as Alan Mendelowitz, governor with the Federal Home Loan Banks.

MBA also honors graduates of its Future Leaders program with a ceremony this morning.
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