In the post-meeting statement, the committee acknowledged that economic activity, including consumer spending and employment, has softened further. It noted that financial markets are under “considerable stress.” Tight credit conditions and further decline in the housing market will continued to weigh on growth over the “next few quarters.”

The committee paid more attention to inflation than it did in previous statements. It noted that inflation expectations have risen. While the FOMC expects inflation to moderate, it argued that inflation outlook has become more uncertain. Despite the discussion on inflation, the committee acknowledged the downside risks to growth—keeping the door open for additional cuts in April.

The fed funds rate cut decision was not unanimous. Dallas Fed President Richard Fisher and Philadelphia President Charles Plosser voted for a smaller cut. This is the second consecutive meeting that Fisher dissented and the first time that there have been two dissenting votes during Fed Chairman Ben Bernanke’s time. The Fed also lowered the discount rate by 75 basis points to 2.50 percent.

In other news, home building activity stabilized as a surge in multifamily home building activity largely offset a large drop in single-family starts. Total housing starts edged down 0.6 percent in February to a seasonally adjusted annualized rate (SAAR) of 1.065 million. Single-family starts fell 6.7 percent. This is the 11th consecutive decline in single-family homebuilding, which has now reached the lowest level since January 1991. Multifamily starts were up 14.4 percent, following a 43.6 percent surge in January (an upward revision from an initial report of 22 percent gain). Both starts of 5-and-over units and 2-4 units rose 14.5 percent and 12.5 percent, respectively. 

Permits—a leading indicator of starts—fell 7.8 percent in February to 978,000 units (SAAR). This is the largest decline since January 1991 and the first time total starts fell below one million unit mark since November 1991. Single-family permits dropped 6.2 percent. This marks the 11th consecutive monthly decline in single-family permits, which reached the lowest level since January 1991. 

Regional performance varied significantly. Total housing starts dropped sharply in the Northeast (27.7 percent). They increased in the South (3.9 percent) and the West (5.1 percent) and flat in the Midwest. 

Through the first two months of this year, single-family starts were 38.9 percent lower than those in the first two months of 2007. By contrast, multifamily starts for the first two months of 2008 were 17.1 percent higher than those last year.

While both single-family and multifamily construction declined during the current housing downturn, multifamily homebuilding’s drop has been much more moderate. Since the peak in January 2006, single-family housing starts have declined 62 percent, compared with a 21 percent drop for multifamily starts.

Even with the sizable pullback in single-family homebuilding activity over the past two years, the housing market continues to show considerable imbalance as housing demand pulls back along with the decline in new construction. According to the National Association of Home Builders/Wells Fargo Housing Market Index released on Monday, home builders’ confidence during March continued to hover around record low levels reached in December 2007. 

Despite aggressive rate cuts by the Federal Reserve thus far, housing demand continues to be sluggish. Builders reported that many potential buyers are either reluctant to purchase or they are unable to qualify for a mortgage, given tighter lending standards. In addition, the spread between conforming mortgage rates and the benchmark 10-year Treasury yields has widened significantly. 

While the number of homes available for sale dropped steadily over the past 10 months, the months’ supply for new home rose to 9.9 months in January, the highest level since October 1981. Given the huge overhang of unsold inventory in many parts of the country and soft housing demand, a sharp pullback in housing starts is necessary to reduce the market’s excess supply. 

A separate report showed that both the overall and the underlying (core) wholesale prices picked up. The Producer Price Index (PPI) rose 0.3 percent in February, following a 1.0 percent increase in January. Excluding the volatile food and energy items, the core PPI rose 0.5 percent in February, the biggest increase since November 2006. From a year ago, the core PPI was up 2.5 percent, accelerating from 2.4 percent. 

The stock markets rallied before the FOMC meeting, helped by better expected earnings from Lehman Brothers Holdings Inc. and Goldman Sachs Group Inc., alleviating credit concerns. Treasury yields increased as funds moved from Treasuries to stocks. The yield on the 10-year Treasury note stayed around 3.46 percent by mid-Thursday afternoon, 15 basis points higher than the closing rate on Wednesday. 

(Orawin Velz is senior director of economic forecasting with the Mortgage Bankers Association. She can be reached at ovelz@mortgagebankers.org.)

FOMC Statement
The Federal Open Market Committee released the following statement yesterday:

The Federal Open Market Committee decided today to lower its target for the federal funds rate 75 basis points to 2-1/4 percent.

Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.

Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.

Today’s policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity.  However, downside risks to growth remain. The Committee will act in a timely manner as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh.  Voting against were Richard W. Fisher and Charles I. Plosser, who preferred less aggressive action at this meeting.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 2-1/2 percent.  In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York and San Francisco.
(Back To Top)

The Market Composite Index fell to 652.0, a decrease of 2.9 percent on a seasonally adjusted basis from 671.7 one week earlier. On an unadjusted basis, the Index decreased 2.8 percent compared with the previous week and was down 3.7 percent compared with the same week one year earlier. The four-week moving average fell by 6 percent to 668.4 from 711.1.

The Refinance Index decreased by 4.6 percent to 2335.0 from 2448.2 the previous week. The four-week moving average was down by 10.9 percent to 2452.8 from 2752.5. The refinance share of mortgage activity decreased to 49.7 percent of total applications from 50.6 percent the previous week.

The seasonally adjusted Purchase Index decreased by 1.0 percent to 365.0 from 368.8 one week earlier. The Conventional Purchase Index decreased 3.1 percent, while the Government Purchase Index (largely FHA) increased 7.7 percent and the Government Refinance Index increased by 11.4 percent. On an unadjusted basis, the Purchase Index decreased 1.0 percent to 406.8 from 410.8 the previous week. The four-week moving average is up 0.5 percent to 363.8 from 361.9.

The seasonally adjusted Conventional Index decreased 5.3 percent to 850.1 from 898.0 the previous week; the seasonally adjusted Government Index increased 9.2 percent to 321.7 from 294.5 the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.98 percent from 6.37 percent, with points decreasing to 0.89 from 1.05 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. Rates have fluctuated over the past five weeks, from a low of 5.72 percent the week of Feb. 8 to 6.37 percent last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.24 percent from 5.72 percent, with points decreasing to 0.97 from 1.06 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year adjustable-rate mortgages increased to 6.95 percent from 6.72 percent, with points increasing to 1.64 from 1.27 (including the origination fee) for 80 percent LTV loans. The ARM share of activity decreased to 7.9 percent from 15.5 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.
(Back To Top)

Alaska USA FCU Taps Metavante LOS
Metavante, Milwaukee, a provider of banking and payments technology, announced that Alaska USA Federal Credit Union is in production with Metavante’s Loan Origination System (LOS) point-of-sale product for its mortgage operations. Alaska USA FCU, headquartered in Anchorage, is one of the top 10 credit unions in the U.S. and the largest financial institution in Alaska with $2.8 billion in assets.

Alaska USA FCU is using the Web-based LOS to automate its mortgage loan origination process. The LOS provides real-time product eligibility, pricing and underwriting decisions at the point-of-sale. The integrated third-party platform also provides self-service capabilities—ordering credit, automated underwriting, flood insurance and appraisals.

eLynx Delivers Loan Modification Service
eLynx, Cincinnati, a portfolio company of American Capital Strategies Ltd., announced availability of a new on-demand loan modification service, which allows the loan modification process to be completed securely over the Internet in minutes.

The product combines electronic distribution and signatures with an on-demand archiving option. An integrated paper fulfillment option is available for borrowers who prefer paper at any time in the process.

Byte Software Releases ByteSync
Byte Software, Kirkland, Wash., a provider of mortgage software for banks, brokers and credit unions, released ByteSync, a value-added module that synchronizes data between its BytePro loan origination software and LoanToolbox.

Using ByteSync, mortgage professionals can export loan information from BytePro to LoanToolbox, either creating new LoanToolbox contacts or merging data into existing LoanToolbox contacts. The export function sends hundreds of fields to LoanToolbox, including borrower information, first and second loan data and parties' information. ByteSync identifies existing LoanToolbox contacts that are possible matches with the borrower in BytePro. If a match is identified ByteSync can update the existing contact instead of creating a duplicate contact.

Bills.com Launches 'Know Your Limits' Program
Bills.com, San Mateo, Calif., launched "Know Your Limits," a program to help homeowners determine if they are eligible for new, higher-limit loans passed in the economic stimulus package.

Mortgage lenders and brokers can reach homeowners eligible for the new loans through the FHASecure program, which matches lenders and brokers with applicants whose desired loan amount is below the FHA loan limit for their county of residence. A corresponding Stimulus Select program matches applicants who are eligible for jumbo-conforming loans. Both FHASecure and Stimulus Select are activated on a filter-by-filter basis and are optional.

Visionet Launches ESF.NET Rapid Development Toolset
Visionet Systems, Cranbury, N.J., introduced its Enterprise Systems Framework Platform, designed to save time, improve systems and enable rapid re-engineering using built-in database and servicing system connections, single logon capability, SOA based architecture and ready-to-use components.

The platform provides utilities to manage the presentation, business and database layers separately. ESF.NET extends its capabilities through tight integration with Microsoft BizTalk and SharePoint. 

IMS Adds Six New Servicers
Integrated Mortgage Solutions, Houston, a collateral protection resource for the mortgage servicing industry, announced addition of six clients, which include traditional mortgage servicers, auction companies, realtors and asset management companies.

Cogent Road Enhances Funding Suite v3.0
Cogent Road, San Diego, a provider of Internet-based applications for the mortgage industry, announced several enhancements to Funding Suite v.3.0, a redesigned database architecture underlying the credit report for brokers.

The enhancements to Funding Suite’s credit proofreading tools is a new Underwriting Conditions Scan, which allows every credit file is scanned to detect conditions and underwriting flags that may be indicated by Fannie Mae’s Desktop Underwriter. Included as a separate tab within the Intelligent Credit Report, all results are listed and enable mortgage originators to resolve conditions before the file is processed through Fannie Mae.

Ellie Mae Launches CenterWise
Ellie Mae, Pleasanton, Calif., a provider of software and services for the mortgage industry, launched CenterWise, an all-in-one electronic document management (EDM) and retail website package, available as a service through the Encompass Mortgage Management product.

CenterWise provides unlimited electronic document management, including all state-specific disclosures, delivery and archiving, along with a scalable and search engine-friendly WebCenter web site and secure online business center that enables communication among staff, borrowers and business partners.

Lydian Integrates to NYLX
Lydian Data Services, Mt. Arlington, N.J., and NYLX, Jacksonville, Fla., announced a partnership that connects Lydian Data Services and Lydian Technology Group clients with NYLX’s point of sale technology.

The partnership equips clients with a front-end service that offers real-time pricing and product selection, as well as customer-facing web portal capabilities. NYLX clients can connect to Lydian’s Mortgage Connectivity Hub to access various lending platforms, package loans for processing or delivery to a wholesale lender and leverage Lydian’s business process outsourcing (BPO) services. 

Rapid Reporting Offers Immediate, Real-Time Identity Verification
Rapid Reporting, Fort Worth, Texas, a provider of income and identity verification products to the mortgage industry, announced that DirectChek, the company’s identity verification service, will soon provide instant verification of Social Security numbers from the Social Security Administration. Immediate access to Social Security number verification data by the SSA had never before been available to the private sector.

To get instant identity verification, DirectChek users input the borrower’s name, Social Security number and date of birth into the DirectChek system; the system provides an immediate answer. The instant turn-around times is made possible by new technologies that SSA is implementing to the new permanent consent-based program.

Crescent Mortgage Deploys Avista LOS
Avista Solutions, Orlando, Fla., a provider of web-based mortgage loan origination software, announced that Atlanta-based Crescent Mortgage Co., a national residential wholesale lender, deployed the Avista Agile LOS Wholesale origination platform, Avista’s private labeled, secure and comprehensive web service for wholesale lenders, to fulfill its workflow process from origination through closing. 

Avista Agile LOS Wholesale origination platform enables lenders to give broker clients the ability to register and lock loans online and receive immediate confirmation from the lender. Brokers receive decisions from DU or LP in minutes, which include DU or LP findings, as well as lender-specific conditions. The lender’s secondary staff receives immediate notification of locks and registrations; brokers also have the ability to schedule a closing and submit their closing fee sheet online.

PriceMyLoan Joins Xerox's BlitzDocs Provider Network
PriceMyLoan, Atlanta, is now a Certified BPO Provider of Xerox Mortgage Services' BlitzDocs Collaboration Suite, a service for electronic document collaboration.

With BlitzDocs deployed, loans generated from PML are dropped into a collaborative e-folder and transformed into electronic documents for underwriting, auditing, transfer and archiving.

Xerox Enhances Collaboration Suite
Xerox Corp., Rochester, N.Y., introduced new features to its BlitzDocs Collaboration Suite. New to the BlitzDocs suite is Xerox Dataglyphs technology, a security feature that embeds computer-readable data to the paper.

Information regarding the mortgage loan is contained in the DataGlyphs, which act as a portable database, offering increased security and automatic classification capabilities throughout the loan process. DataGlyphs are flexible in shape and size, unlike most bar codes.
(Back To Top)

Mortgage Cadence, Denver, recently announced a shuffling at the top of its management structure, Detwiler, CEO for the past 10 years, leaves that position to serve as a strategic advisor and to develop new business streams. Hammond has been promoted to CEO; Minton, who helped create MISMO, the standards development subsidiary of the Mortgage Bankers Association before joining Mortgage Cadence last year, has been promoted to chief operating officer.

Detwiler will continue to serve on the Mortgage Cadence board and strategically advise the executive team. He said that as the Mortgage Cadence executive team coalesced, the opportunity for him to move on and position Mortgage Cadence to become a “billion dollar product and services company” presented itself.

“Over the course of the last year I believe we were able to put the final executive team members in place to make this possible,” Detwiler said. “I am extremely confident in the Mortgage Cadence executive team and in Hammond and Minton’s leadership and industry knowledge. Their promotion, in addition to the talented executive team of industry veterans, will ensure Mortgage Cadence’s success and position as a market innovator and technology leader.”

Hammond, most recently Mortgage Cadence’s chief marketing officer, will be responsible for overall management and continued growth of Mortgage Cadence. He told MBA Tech NewsLink that he was “humbled” by the appointment and the challenges ahead.

“It’s much more of a focus on the incredible foundation that Mike Detwiler established,” Hammond said. “We’re not necessarily going in different directions but maximizing our credit line. Last year we had seven clients go live on an enterprise lending platform. This quarter, two additional clients are going live. Despite slowdowns and fallout, we’ve continued the momentum by being strategic and focusing on how we cut costs and increase efficiencies.”

Hammond said Mortgage Cadence has been able to capitalizing on the current turmoil in the mortgage industry. “One of the things in being able to offer a complete platform—but what distinguishes us in the marketplace is the fact that we have our own rules engine that can enhance our core functionality,” he said. “We can age imaging, data automation—these are ways clients are seeing how to reduce costs and use fewer people. A lot of clients are looking at how to maximize cost cutting and offer better services.”

Hammond has more than 15 years experience in brand building, product launches and marketing/sales strategies. Before joining Mortgage Cadence, he worked as vice president of business strategy for Martopia, Chicago, an industry marketing and public relations firm. He earned his Certified Mortgage Technologist designation through CampusMBA, the education arm of MBA.

Minton will direct the corporate vision of technical innovation and will manage the ongoing investment in the Mortgage Cadence platform and product lines.  He will steer the short- and long-term product roadmap of the Mortgage Cadence product suite in addition to managing the day-to-day technical operations of the company. 

“Gabe brings a lot of expertise,” Hammond said. “And we have a strong executive team across the board so we can continue to not only tune in but exceed expectations.

Minton joined the Mortgage Cadence management team in 2007 as chief strategy officer. Before that, was vice president of industry technology at MBA and a pioneer in establishment of technology standards for the mortgage industry through MISMO, which he helped to create and actively managed from 2000-2007.

First Houston Taps Hultquist as Director of Capital Markets
First Houston Mortgage, Houston, named Steven Hultquist as director of capital markets. His responsibilities include product development, pipeline revenue management and pricing and execution strategies.

Hultquist has 23 years experience; prior to joining First Houston Mortgage, he served as executive vice president of a top-40 mortgage lender in the United States where he managed a prime capital markets team; coordinated competitive strategies with product development, reported trends and opportunities; developed pricing models based on takeout executions and managed pipeline fallout and loan sale fallout.

Mortgage Banking Recognizes FICS’ Gibbs
Mortgage Banking magazine, the monthly magazine of the Mortgage Bankers Association, recognized Dallas-based Financial Industry Computer Systems Inc.’s president and CEO Dawn Gibbs as an Information Technology All Star. The Technology All Stars recognize IT leaders who have made notable contributions during their careers to further the advancement of mortgage technology.

Since becoming president and CEO of FICS in 1995, Gibbs served as the principal architect of a number of projects, including writing five of the company’s original software systems into Windows, developing three web applications; developing Radstar, a document management system and developing Loan Accountant, a system for tracking the movement and distribution of fees collected and paid during the loan origination process.

Arbor Commercial Mortgage Appoints Porterfield; Promotes Donovan, Elefante
Arbor Commercial Mortgage, Uniondale, N.Y., appointed Jay Porterfield to director of its Dallas office. He will originate Fannie Mae and FHA transactions throughout the Southwest.

Prior to joining Arbor, Porterfield served as a senior vice president at Countrywide Commercial Real Estate. In this position, he managed the 50-person Plano, Texas regional office with a territory that included Texas, Louisiana, Oklahoma, Colorado and Nebraska. Before Countrywide, he was a director for LaSalle Bank Real Estate Capital Markets and held posts at General Electric Commercial Finance Real Estate and Archon Financial.

Arbor also announced the promotion of Joseph Donovan to senior vice president of production management. He previously held the title of vice president of production management. He will continue to oversee the day-to-day operations of the company’s Fannie Mae, FHA/Ginnie Mae and CMBS production unit. Additionally, he will be responsible for ensuring operational conformity with all aspects of investor compliance.

Donovan joined Arbor in 1993. Prior to Arbor, he worked for the Federal Deposit Insurance Corp. and Commonwealth Mortgage Co.

Arbor also announced promotion of Maria Elefante to vice president of treasury, responsible for negotiation, closing and subsequent compliance of various financing facilities entered into by both Arbor Commercial Mortgage and Arbor Realty Trust.

Elefante joined Arbor in August 2004 as director of treasury and was promoted to assistant vice president of treasury in February 2006.

Zenta Opens Operations in Carolinas
Zenta, New York, a business process outsourcing and knowledge process outsourcing company, established operations in Florence, S.C., and Charlotte, N.C., that will employ up to 300.

Craig Evans has been hired as vice president and will head the Florence operations. He is a 20-year veteran of the residential mortgage industry; most recently, he served as a senior executive with Bank of America’s correspondent lending operation. He also has previous experience at Washington Mutual, Fleet Mortgage and First National Bank of Chicago.

The Florence operations will employ up to 250; the Charlotte operations center will add 50 employees to the 80 existing staff. Zenta also has operations in New York; Los Angeles; London; Mumbai and Chennai, India; and Philadelphia totaling 4,000.

OpenClose Solutions Taps Eller as Director of Inside Sales
OpenClose Solutions, West Palm Beach, Fla., appointed Richard Eller as director of inside sales. He is responsible for qualifying new business leads for both OpenClose and Decision Assist products and will oversee outreach to the mortgage banking industry.

Eller brings more than 14 years of mortgage banking experience to OpenClose in sales experience and loan origination software. Most recently, he was an inside salesman with Greenbrae, Calif.-based Mindbox and previously worked for Del Mar Database and London Bridge.

Pro-Teck Services Promotes Gould; Expands West Coast Operations
Pro-Teck Services, Waltham, Mass., promoted Mary Gould to director of insurance services. She will oversee all of the company’s risk management and loss control service offerings; her primary focus will be on business development within the property and casualty homeowners market with both new and existing accounts.

Gould joined Pro-Teck Services in 2002 and has held various management positions in the company’s insurance division.
 
Pro-Teck also announced it expanded its California operations. The Pro-Teck operations in Irvine, Calif., expanded its current Quality and Customer Service departments while adding Quality Resolution, Capital Markets Review Reconciliation & Negotiation and Vendor Management departments to augment current operations in Boston.

Jeff Dickstein, a 20-year appraisal and collateral valuation veteran, is Pro-Teck’s chief appraiser and will continue to manage West coast operations.

Situs Hires Stern as VP; Opens Berlin Office
The Situs Cos., Houston, hired David Stern as vice president of real estate consulting and due diligence, responsible for business development, client relationship management and the company’s temporary and permanent staffing businesses.

Prior to joining Situs, Stern was vice president of commercial real estate finance at Zenta, where he was directly responsible for business development and client relationship management.

Situ also announced it has expanded its geographic reach and range of service offerings in Europe with the recent opening of its Berlin office. In addition to the firm’s established array of due diligence and loan underwriting services, which Situs has heretofore offered through its London office, the firm will now deliver real estate-related financial services to institutional investors, hedge funds, private-equity groups and high-net-worth individuals looking to expand or modify their commercial real estate investments across Europe.

OTS Appoints Lee as Midwest Director
The Office of Thrift Supervision announced the appointment of Clarence “C.K.” Lee as regional director of the OTS Midwest Region. Currently managing director for complex and international organizations in Washington, Lee will assume his new position in Dallas on May 5. He will be responsible for the examination, supervision and regulation of thrift institutions and their holding companies in 13 states.

Lee joined OTS in 2004 as senior advisor for international operations and assumed his current position the following year. He began his career in 1994 as a legislative assistant to Rep. Charles Canady, R-Fla. He later served as a senior policy advisor to Sen. Connie Mack, R-Fla., working for five years on Senate Banking Committee matters that included the Gramm-Leach-Bliley Financial Services Modernization Act. In 2001, Lee joined the Federal Deposit Insurance Corp. as a special advisor to the chairman.

Informative Research Hires Svedberg, Prussel as SVPs
Dawn Svedberg, a former vice president at Countrywide Home Loans, has been named senior vice president of national sales at Informative Research, Garden Grove, Calif. Her duties include expanding its sales and market presence in the western half of the U.S.

Prior to joining Informative Research, Svedberg served in a variety of sales and account management roles with a title company and a provider of automated property valuation services. Most recently, she served as first vice president and area manager for Countrywide’s Correspondent Lending Division, where she led a team of primary account managers in the California region.

Informative Research also named Jon Prussel as senior vice president of national sales. His duties include expanding its sales and market presence in the eastern half of the U.S., from the Mississippi to the Eastern Seaboard.

Prior to joining Informative Research, Prussel served in a variety of sales and account management roles with mortgage lending corporations in California and Arizona. Most recently, he served as area sales manager for Bear, Stearns & Co.

Centerline Hires Credit Derivative Products Expert
Centerline Holding Co., New York, the parent company of Centerline Capital Group, announced that Jack Chen has been hired as chief operating officer of Centerline Financial, a credit derivatives company sponsored by Centerline Holding Co.

Chen joins Centerline Financial from Hillmark Capital where he served as COO. He joins Centerline’s Credit Risk Products Group, headed by Nicholas Mumford, who joined Centerline in 2006 from Ixis (now Natixis). Credit Risk Products includes Centerline Financial and a collateralized loan obligation (CLO) team. Prior to Hillmark, he was a senior credit officer of Moody’s Investors Service.

iCap Realty Advisors-Michigan Appoints Hannah
iCap Realty Advisors-Michigan, Detroit, appointed D. Scott Hannah as director.

Hannah brings more than 20 years of experience in commercial real estate lending as a banker and broker, including sourcing and placement of construction, permanent, bridge, mezzanine and equity capital from sources including conduits, life insurance companies and banks. His expertise encompasses a range of investment and owner-occupied commercial properties, including retail, office, industrial and multi-family. Prior to joining iCap Michigan, Hannah was an associate partner/commercial mortgage broker with Water Street Financial Group, Novi, Mich.

Compliance Systems Inc. Adds Gudobba to Lead CSi Mortgage Strategy Grand
Compliance Systems Inc., Grand Rapids, Mich., hired Roger Gudobba as its chief strategy officer with responsibilities for new business development and strategic planning.

Gudobba brings more than years of experience to the Business Unit, most recently as a senior principal with Wolters Kluwer Financial Services where he was instrumental in developing and maintaining business relationships. In addition, he was a key contributor to the success of VMP Mortgage Forms, now part of Wolters Kluwer Financial Services.

AFN Elects McKeever to Board of Directors
The American Legal & Financial Network, St. Louis, elected Michael McKeever to its Board of Directors, filling the seat formerly held by Michael Ackerman. His term is for two years.

McKeever is a partner with the law firm Goldbeck McCafferty & McKeever in Pennsylvania.
(Back To Top)

"This contribution of a SMART Doc validation method is another example of Fannie Mae's ongoing support for open standards and eMortgage adoption," said Harry Gardner, MBA's vice president of industry technology and head of MISMO. "We thank Fannie Mae for their support and are pleased to make this intellectual property available to the industry. It will undoubtedly help as we continue down the path toward industry-wide eMortgages."

The SMART Doc specification was originally licensed to MISMO in 2002 by Fannie Mae, then developed and released as an open industry standard for electronic documents. The new patent, which was granted to Fannie Mae this past November, defines processes for validating the VIEW and DATA sections of a SMART® document with automated systems. Additionally, the processes can enable "lights-out" post-closing and certification, two critical elements within the automated transaction process.

"Fannie Mae supports the need for industry-wide standards for eMortgages as they increase efficiency and transparency while driving down costs and improving accuracy," said Mark Oliphant, director of business strategy for automated business solutions at Fannie Mae. "This contribution will help the industry in the movement toward paperless processing and the realization of its full business value within real estate finance transactions."

MISMO has been publishing voluntary eMortgage and electronic data standards since 2000. The patent number is US 7,299,408.
(Back To Top)

The Path to Diversity program provides educational scholarships from CampusMBA—the education arm of the Mortgage Bankers Association—that offer employees from culturally diverse backgrounds the ability to advance their professional growth and career development. 

Several times each year, CampusMBA awards Path to Diversity scholarships to top candidates, based on essays and letters of recommendation, as decided by its Scholarship Award Task Force. Scholars receive a $2,000 voucher to use toward CampusMBA courses and products. The voucher can be used for residential or commercial programs delivered via distance learning or instructor-led training.

To learn more about the application process, go to http://www.mortgagebankers.org/pathtodiversity/index.html.

For specific information about qualification requirements, go to http://www.mortgagebankers.org/pathtodiversity/empschol/qualify.htm.

Support your staff in professional development by encouraging employees to apply for a Path to Diversity Scholarship today.
(Back To Top)

These three 90-minute workshops address the truths and myths of RESPA. Each workshop is led by RESPA expert and practicing attorney Robert Maddox, CMB, of Bradley Arant Rose & White LLP. Take advantage of his expert guidance and education to achieve the goal of full compliance.

Register now to ensure a space in this timely series, which takes place March 25, 26 and 27. Take all three workshops in the series and save, or register only for those that best fit your business needs.

RESPA LIVE Online Topics Include:

• Understanding the nuances of Affiliated Business Arrangements (AfBA) and delineates bona fide versus bogus service providers;
• Exploring HUD's determining factors for AfBA violations and HUD's assessment on payements; and
• Classifying return on ownership interest versus referrals of settlement service business.

Part 1, Affiliated Business Arrangements: Are We Doing the Right Thing?, takes place Tuesday, March 25 from 12:30-2:00 p.m. ET. To register, visit http://www.campusmba.org/products/default.aspx?product_code=E2801716T/REGIS.

Part 2, HUD’s Kick Back on Kickbacks, takes place Wednesday, March 26 from noon-1:30 p.m. ET. To register, visit http://www.campusmba.org/products/default.aspx?product_code=E2801716U/REGIS.

Part 3, Reform Recommendations: Where are the Rewrites Going?, takes place Thursday, March 27 from noon-1:30 p.m. ET. To register, visit http://www.campusmba.org/products/default.aspx?product_code=E2801716V/REGIS.

Registration for each workshop: Member, $49.99 per workshop, per person; nonmember: $74.99 per workshop, per person. Special Pricing: register for all three workshops and save: Member $125; Nonmember: $200.

To register, follow the links above or call 1-800-348-8653.

Learn the latest developments about RESPA from the convenience of your office. CampusMBA's LIVE Online Workshops allow participants to attend a one-time, interactive, instructor-led course from anywhere in the world. All that is needed is a computer with an Internet connection, web browser and telephone. All workshops are interactive and include open discussion and question/answer sessions with industry experts and leaders. Attendees of CampusMBA's LIVE Online Workshops earn 1/2 point toward the Certified Mortgage Banker (CMB) designation.

For more information about CampusMBA programs, visit www.campusmba.org.
(Back To Top)

“We found that companies were taking our DTD-based standards and converting them into schema,” said David Krause, the Mortgage Bankers Association’s director of XML architecture and compliance, speaking here at MBA’s National Technology in Mortgage Banking Conference & Expo. “We realized about two years ago that we needed to provide the industry with a schema-based solution.”

Version 3.0 achieved its first milestone in February, with the ability to publish demonstration examples of an entire reference model, from the deal structure on down; real estate transactions from Version 2.0, such as credit reporting, flood and title; reconciliation of reusable structures—“a new concept for MISMO, such as name and address,” Krause said—and a reconciled BORROWER and PROPERTY definitions.

Version 3.0 is element-based, with a common architecture and logical model. “It’s based on our version 2.x,” Krause said. “We’ve leveraged a lot of really good work in 3.0. We’re going back to one model to support all the pieces of the loan process. The way you look at data from a pre-closing to a post-closing model is very different. What we hoped to do is create the same format across any origination process—the same format among loan origination, secondary market and servicing—the same format across eMortgage documents.”

By moving to XML schema, Version 3.0 allows users more flexibility. “The sky’s the limit, and you can be assured that the data you view is accurate,” he said. “It gives you the opportunity to improve transactions—we can remove the data points that are no longer necessary, and resolve structural and relationship issues that seemed like a good idea at the time of Version 2.x development.”

For example, Krause, noted, Version 2.0 had 14 different definitions of PROPERTY. “Version 3.0 allows us to reconcile these definitions and make necessary corrections,” he said. “We now have one definition of PROPERTY that transcends all documentation.”

“Version 3.0 presents consistency in structures, easier implementation—better tool support—and the ability to communicate multi-lingual information,” Krause said. “By going to element-based architecture you can use various data languages that aren’t necessarily in the language of the rest of the document.”

Milestone 2 is scheduled to be completed by July, building on Milestone 1 accomplishments. Milestone 3 is scheduled for completion in October, with official publication of the reference model, applicable transactions and MEGs.

“It’s an aggressive timeline, but we’ve been very pleased with the results,” Krause said.

Ron Duff, senior vice president of information technology with Fiserv Lending Solutions, Lake Mary, Fla., and chairman of MISMO’s Governance Committee, said his hope that Version 3 will attract new users who, to this point have held off implementing MISMO standards. “We should be able to significantly increase the number of MISMO-compliant users in the next year,” he said.

Fiserv has become MISMO-certified in a number of applications, such as mortgage insurance, automated underwriting and credit. “It’s important for our clients to know that we are certified,” he said. “If I’m certified and I’m looking at a program, I have a degree of confidence that the data I’m looking at is correct.”

The single interface through MISMO creates opportunities for Fiserv to support multiple service providers without having to maintain point-to-point custom interfaces. “It’s also important to us that we have a flexible system that grows with us as our business changes. It’s improved our quality and our flexibility.”

MISMO served as the foundation for Fiserv’s own eMortgage initiative, Duff said. “We built our entire solution based on the dataset that MISMO created,” he said. “That’s true of all of our other partners as well. If you have everyone working with the same standard from the start, it makes implementation much easier.”

“MISMO helps set the direction for the industry,” Duff said. “The end game is still adoption. Without adoption, the standards are basically meaningless. eMortgage is huge—we see a huge leap in the number of transactions over the next couple of years. It’s a win-win for lenders and vendors. It saves us money, and that’s the bottom line.”

Robert Lux, CMT, chief technology officer with the information technology group at GMAC ResCap, Horsham, Pa., said the desire to streamline multiple systems drove his company to MISMO adoption.

“Basically, any lender deals with multiple platforms and systems. One of the challenges is getting cooperation in completing a transaction,” Lux said. “There are a lot of different interactions among different platforms. Back in 1998 we were creating spider webs of interfaces. Building the interface wasn’t the problem—the resulting spaghetti mess was.”

In 1995—pre-MISMO—GMAC created a service-oriented architecture (SOA) “switch” that coordinates and manages various platforms. “It acts much the same way as a switchboard operator,” he said. “It synchronizes transactions and creates best-delivery ‘queuing’ that rewards our best customers and makes systems migrations easier and seamless to users.”

Today, the Switch uses XML exclusively and uses MISMO wherever possible. “MISMO is the common language for our trading partners,” Lux said. “We’re now processing tens of millions of individual transactions.”

Another area where GMAC ResCap has benefited from MISMO is through the company’s Strategic Data Initiative. It established an enterprise data governance organization; an enterprise data stewardship organization; and an IT data services organization across all of the company’s lines of businesses.

ResCap purchased a generic industry data model and revised all data entries, elements and enumerated types using MISMO standards. “We had 7,000 different data elements,” Lux said. “We consolidated these data elements—eliminating duplicates and conforming names—into about 3,500 elements, using MISMO to assist with conforming names.”

From a document management standpoint, ResCap is moving from two different document management platforms into a single platform. “Currently we have more than 190 different document types classified. MISMO is key to our reduction efforts,” Lux said. “Our goal is to have mortgage loan file documents identified and reclassified.”
(Back To Top)

Duncan, speaking here at the Mortgage Bankers Association’s National Technology in Mortgage Banking Conference & Expo, said current economic conditions have exposed flaws throughout the real estate finance industry and in the economy in general.

“While we thought incentives were well-aligned; in reality they were not,” Duncan said. “There’s a contingent liability impact there. The securitization structure is still unrefined. The flow and purity of data in the food chain is critical, and that’s something we didn’t learn until the current crisis and how servicers restructure loans with the investor. As long as everything was going well, we didn’t see the problems. The mess in the market today exposed those flaws, and now everyone recognizes the importance of securitization as a key element to solving problems.”

The Fed, Duncan said, is doing everything it can to maintain liquidity in the marketplace. “If bank balance sheets are impaired, economic growth is tamped down,” he said. “The Fed’s concern is about liquidity and the ability to keep economic growth going. The central bank and other institutions worldwide have come up with some innovative ways to create stimulus, because the rest of the world is starting to slow with the U.S.”

Part of the issue centers on the definition of liquidity. “One view of liquidity is illustrated in the question, ‘is there capital available for investment?’ The global credit markets are flush with liquidity today—they’re just not interested in having it flow to U.S. real estate,” Duncan said. “If the definition is the availability to trade in the marketplace will little risk, then the answer is no.”

For example, Bear Stearns, which became subject of liquidity issues in the past two weeks, “went illiquid very quickly,” Duncan said. He added that the issues there tied not only into liquidity but also into leverage—or lack thereof—and accounting.

“I would argue that what is going on in the credit market is not a function of subprime, but rather a function of leverage,” Duncan said. “Leverage has positive benefits on the upside; it has serious ramifications on the downside. In August, the two Bear Stearns hedge funds were closed; and Cerebrus failed to find financing for Chrysler. They were both leveraged buyouts, and it caused serious re-evaluation. The principle was leverage, but the trigger was subprime. And this is something that has not been addressed by anyone except for the Federal Reserve, which recognized that there are vast amount of capital around the globe but not in the U.S. credit markets.”

On accounting, Duncan said requirements in accounting rules, such as mark-to-market, don’t apply if buyers go away. “Economists believe there are intrinsic values to assets in the marketplace that change under various conditions over time,” he said. “It’s hard for us to believe that Bear Stearns is worth only $2 a share, given all the assets it has. So in some cases where there were securities created for a very small number of firms, in time of financial fear that number goes to zero.”

For the short term, the outlook is bleak, Duncan said. “Housing continues to experience the most severe downturn since World War II, and we haven’t seen the end of it yet. Housing has been a major drag on economic growth and economic activity.” Despite the fact that 90 percent of those Americans who have a mortgage are paying them on time, the recent MBA National Delinquency Survey lists record delinquencies and foreclosures. “When you look at the bigger picture, it’s stable,” he said. “But those delinquencies have triggered a meltdown in the credit markets because of the lack of leverage.”

Duncan said a housing upturn is not likely until the end of 2008 at the earliest. “The severity of the recession will be determined by federal policy decision-making and the housing situation,” Duncan said. “Unemployment is rising, which complicates the recovery of the housing market. We have huge supplies of housing inventory still on the market. California and Florida represent 18 percent of national GDP and they have an excess supply of housing, borne of the speculative bubble; whereas the bubbles in Michigan and Ohio have been due to collapsing economies. Whichever way you look at it, the months’ supply remains huge. A normal supply would be around six months; we’re around 10 months.”

Part of the recently passed economic stimulus package saw an increase in jumbo loan limits, but Duncan said he would not get hopes real high about how much business is going to improve in that space. “Credit underwriting remains tight,” he said. “Banks have significantly tightened underwriting criteria in all classes of loans. Standards are the tightest they’ve ever been. Part of the concern of the central bank is managing the assets already held by the institution and tightening of underwriting that is stifling economic activity.”

Going forward, Duncan said a key issue is capital management. “Capital is always critical,” he said. “Going forward, if you’re going to be a successful CEO you’re going to need to understand capital management. Understanding the risks to your capital is always going to be critical going forward in this market.”

One factor of capital management previously underlooked is equity put into the mortgage by the borrower. “The fact that we reduced their capital investment to zero has the industry rethinking that,” Duncan said.

Duncan also called for greater transparency. “The ability to see into investments, into mortgage contracts, is important,” he said. “There is inadequate transparency in our industry; everyone will benefit from greater transparency because we will be able to see the costs. On the consumer side, there is also a transparency issue. Simplification of mortgage documents so that they can clearly understand the terms of the loans also benefits the lender. Transparency in both directions will be increasingly important.”

“The future for housing is bright, but for the next couple of years, it’s going to be rough,” Duncan said.
(Back To Top)

“Third-party origination strategies can have greater financial, operational and compliance risks,” said Chris Burckhardt, senior vice president and chief information officer at Pulte Mortgage LLC, Englewood, Colo. “As broker and correspondent lending channels continue to be strategic, lenders must find efficient ways to mitigate that risk and build profitable loan portfolios.”

Jay Levine, executive vice president and chief technology officer at Wolters Kluwer Financial Services, Minneapolis, said data and its different applications determine its value. “Securing clean and complete data from third-party originator, managing data in one place, validating data throughout the loan cycle and ensuring third-party origination risk acts in the borrower’s best interest and can improve third-party origination processes using technology,” he said.

“Every risk control effort should have the same strategy,” said Stanley Street, president of Street Resource Group, Atlanta. “Recognition of risk, assessment of potential risks, first execution—taking action on the assessment using technology, oversight, review and follow-up are components of the strategy. Technology implementation goals should also be the same at any level—goals have to be stronger, more robust in depth and accuracy.”

Street said goals should consider risk management roles and strategic corporate goals. “Goals should aim to maintain or increase market share but also protect and promote consumer’s profitability,” he said. “Credentialing, predictive analytics, which is more important among warehouse lenders and originators, and performance monitoring, making sure originators are performing properly with policies, are technology tools to help mitigate third-party origination risk.”

Street added that electronic data standardization and risk-point decision workflow processing enhance the process. “Risk point-decision workflow processing for warehouse lenders is taking points in the loan origination process,” he said. “When lenders make the decision to approve a loan, that is the ultimate risk. So they grab data and identify risk points in the process.”

Teresa Yow, vice president and business IT partner at Synovus Mortgage Corp., Columbus, Ga., said because a majority of borrowers prefer communicating via email, which raises identity theft concerns, lenders must have a secure method of sending sensitive consumer data.

“Integrating risk management in loan origination systems and workflow requirements yields a process that would have to be easy for both consumer and loan officer,” Yow said. “It requires bringing together departments that are players in the plan—they include production, origination, processing, technology, secondary marketing and compliance areas.”

Synovus has a secure document delivery system for origination disclosures, Yow said. Additionally, to avoid fraud, the company implemented a system to watermark documents with disclosure dates. Its email correspondence is auto-generated, validating delivery of documents for compliance.

Yow advocated working toward standardization with investors and integrating risk management into business workflow for security considerations. “Clarifying investor requirements upfront, clarifying documentation required for the loan file, enhancing the web site for customer usability, user training acceptance and borrower acceptance are important considerations,” she said.

“Having a secure web site meeting customer authentication requirements is important,” Yow added. “Ensure compliance requirements are met. Tracking of loan delivery and decreased postage and mailing costs are also benefits of mitigating risk.”
(Back To Top)