Sales of new single-family homes in March reached a 16-year low, falling to a seasonally adjusted rate of just 526,000, according to the Bureau of the Census and HUD. The figure represented an 8.5 percent drop from the revised February rate of 575,000 and was 36.6 percent lower than a year ago, when the rate was 830,000. The last time sales were this low was October 1991.

The numbers for prices and inventory didn’t fare better: hampered by rising inventory, the median sales price of new single-family homes fell by 13.3 percent to $227,600 from $244,200, the highest single monthly drop since July 1970; the average sales price fell to $292,900 from $302,900.

Inventory of new houses for sale, despite cutbacks by home builders, rose to 468,000, representing a supply of 11.0 months at the current sales rate.

Sales fell in all regions of the country: by 19.4 percent in the Northeast; 12.9 percent in the West; 12.9 percent in the Midwest and 4.6 percent in the South.

The new home sales figures come on the heels of a 2 percent drop in existing home sales reported earlier this week by the National Association of Realtors.
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Several government agencies including the Federal Trade Commission and the  Federal Deposit Insurance Corp. jointly issued final rules and guidelines, section 114 of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act) and final rules implementing section 315 of the FACT Act. Section 114 requires companies to detect, prevent and mitigate identity theft in connection with the opening of certain accounts or certain existing accounts. Additionally, agencies are issuing guidelines to assist financial institutions and creditors to formulate and maintain a program that satisfies the requirements of the rules.

“Banks, mortgage lenders, brokers, pay day lenders—any financial institution or creditor is affected by this rule and each of these entities has to do a risk assessment of covered accounts,” said Sai Huda, CEO of ComplianceCoach, San Diego. “They have to determine the level of risk of identity theft and then identify corresponding red flags.”

The rules provide five categories of red flags that make up 26 types of red flags. But the agencies also encourage companies to identify more red flags based on external red flag sources such as identity theft schemes.

“If you see red flag, then you have to do something about it,” Huda said. “You have to look for it, detect it and respond to it. Beyond identifying, a detection response mapping has to take place. This is not just a technical requirement; it’s an affirmative obligation to prevent identity theft for companies and their consumers.”

As part of the procedure, companies are required to train employees and also monitor changes in business and new risks, regularly updating the program. New products, accounts, lines of business and schemes all have to be accounted for in the system. The rules also require companies to conduct a self audit that is presented to the board. Federal or state regulators would also conduct an audit for compliance.

“The rules apply to covered accounts—accounts that are offered to personal, family or household purposes,” Huda said. “A mortgage loan is a good example. The general covered loan is a mortgage but there is a sleeper in the rule. Companies need to know if they have any other accounts that also have foreseeable chance of identity theft."

For example, Huda said commercial mortgage loans might not qualify for companies that have non-consumer accounts. "But what if there were identity theft on commercial mortgage borrower acocunts? As you see, there are risks and you need to bring them all into your coverage," he said. "Eventually, the effort is all about risk management and leads to an overall coverage. It’s a broad rule that’s affirmative."

ComplianceCoach offers a web-based tool, CompliancePal, targeted toward lenders to help them achieve compliance. The service provides a questionnaire for lenders to complete and the software produces an assessment. It includes the 26 red flags already included in the rules, but Huda said it will add 17 new red flags to the list this month. CompliancePal also provides training for employees in areas of risk management and identity theft.

“If a lender has a weak program, either external or internal identity theft could take place and result in negative publicity, loss of customers and high legal costs," Huda said. "What we’re telling the industry is that complying with the rule is not a cost of doing business. It’s goodwill and revenue enhancement.”

The rules could be seen as yet another demand and some may treat it like another requirement; Huda saw the measure as highly beneficial. “It’s goodwill-building. When identity theft takes place, no one wins and most importantly, the consumer is damaged and angry and will certainly blame the lender or broker—the person who has the information.”

The rules could also contribute to eliminating fraud in the industry—weeding out bad actors who take advantage of unsuspecting borrowers. “Identity theft happens knowingly or unknowingly," Huda said. "What the rules bring are higher standards and lenders will look at brokers for compliance and borrowers will look at both lenders and borrowers for compliance.”
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MBA's 95th Annual Convention & Expo 2008 offers strategic options to business challenges and provides a venue where you can obtain usable solutions in an evolving industry. Nowhere else will you find the exceptional range of original content and fresh information for residential mortgage bankers just when it is needed most.

The in-depth program tracks offer insight on leadership, growth strategies and trends to better position your business. In addition, take advantage of an influential mix of contemporary speakers and educational sessions that delve beyond the basics to help position your company for new opportunities in a dynamic environment.

The coming years will bring vast changes to the real estate finance industry. Make MBA's 95th Annual Convention & Expo 2008 the start of future growth. Be sure that your company is prepared with Winning Strategies for the New Age.

Who Should Attend
Because this conference is the largest annual gathering of residential real estate finance professionals and is the centerpiece event for networking and professional development, more than 60 percent of the attendees are from upper management of the industry's leading corporations.

Senior-level attendees include:

• Presidents and CEOs
• Chief Financial Officers and Chief Operating Officers
• Vice Presidents
• Managers and Directors

Attendees also include:

• National and regional lenders
• Full-service mortgage companies
• Mortgage brokers
• Mortgage conduits
• Service providers
• Affordable housing groups
• State and local association executives

Expand Your Reach
To apply for sponsorship of MBA's 95th Annual Convention & Expo 2008, download the sponsorship brochure at http://www.mortgagebankers.org/files/conferences/pdf/M2901402_sponsorbrochure.pdf or contact Phillip Giorgianni at pgiorgianni@mortgagebankers.org or (202) 557-2733 to request details on customized Sponsorship packages, production deadlines or logo/signage specifications.

Explore MBA's exhibitor opportunities by contacting Kim Newell at knewell@mortgagebankers.org or (202) 557-2791 or Patty Miller at pmiller@mortgagebankers.org or(202) 557-2792.

For more information, visit the Conference Web site at http://events.mortgagebankers.org/95th_annual/default.html.
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Did you now that 97 percent of borrowers use a competitor to finance their next home? Learn how you can successfully work with realtors and other referral sources to change this number to your advantage. Learn effective strategies to reach and keep borrowers in today's challenging market at this 90-minute LIVE Online Workshop from CampusMBA.

This interactive online program will help you acquire and keep borrowers, develop strategies to refill borrower pipelines and build and nurture borrower relationships in this new lending environment.

Key concepts covered at this workshop:

• How to reach borrowers first, before realtors;
• How to incubate buyers through an often-lengthy buy cycle; and 
• How to prevent realtors from referring pre-quals to other mortgage originators/brokers.

For more information about this program, visit http://www.campusmba.org/products/default.aspx?product_code=E2801716W/REGIS&wt.mc_id=LOWMethodsE1.

The workshop is led Steve Kropper, president of Bank on Real Estate (BoRE) Inc., which develops advanced technology to retain and acquire customers for residential lenders and real estate brokers. He is also director of New Homes Realty, an advisor to CircleLending and a consultant to TotalMove. He is a member of the MBA's Loan Production Committee. A regular speaker, instructor and writer, Kropper consistently appears at real estate and residential finance events throughout the U.S., is a contributor to the MBA's Mortgage Banking magazine and teaches in CampusMBA's School of Mortgage Banking.

Program Cost: MBA Member: $79.99 per person; Nonmember: $99.99 per person. To register online, visit http://www.campusmba.org/products/default.aspx?product_code=E2801716W/REGIS&wt.mc_id=LOWMethodsE1) or call (800) 348-8653.

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 leaders. To learn more about LIVE Online Workshops, visit http://www.campusmba.org/Tools/ProductLists.aspx.

Designation Credit:
Participants in CampusMBA LIVE Online Workshops earn ½ point toward the Certified Mortgage Bankers (CMB) designation per workshop.
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The research, sponsored by CareerBuilder.com and the Wharton School at the University of Pennsylvania, found that offshoring opportunities also go well beyond customer services functions and include highly skilled positions, such as management, technology and sales/marketing.

"Among employers who offshore, half said they believe offshoring is necessary to compete in a global economy and 15 percent project more than 20 percent of their jobs will eventually be sent overseas," said Matt Ferguson, CEO of CareerBuilder.com. "This does not mean the U.S. will see a reduction in employment levels, however. One in four employers who offshore said it has enabled them to create a greater number of better jobs here in the U.S."

The survey, Jobs Beyond Borders, found 13 percent of employers said their companies outsourced work to third-party vendors outside the country in 2007. The same amount said they would do so in 2008. Seven percent of employers offshored job functions to foreign affiliates in 2007; 9 percent plan to do so in 2008. Plans to offshore to third-party vendors in 2008 are more prevalent in the Northeast and West at 15 percent compared to 12 percent in the South and 10 percent in the Midwest.

Among employers who offshore, 44 percent estimate less than 5 percent of their jobs will ultimately be sent overseas while 39 percent project more than 10 percent of their jobs will eventually be offshored.

"We're seeing a systematic pattern in the types of positions that are vulnerable to offshoring," said Lorin Hitt, associate professor of operations and information management at the Wharton School. "[It] indicates that services that can be delivered electronically and don't require much face-to-face interaction are now at higher risk of being displaced."

Respondents also said more firms are offshoring high-wage, high-skill jobs that were once thought to be immune to global competition. Twenty-eight percent of these employers reported more high-skill services positions are being sent overseas to third parties or foreign affiliates in need of management, technology and sales and marketing know-how. The majority of employers who offshore (69 percent) believe high-skill services positions are at equal or more risk of being offshored than low-skill jobs.

Among industries, technology services, telecommunications, insurance, manufacturing, engineering, banking & finance, oil, travel, utilities and communications all reported higher rates for offshoring.

Where offshoring does impact U.S. jobs, the study said of all respondents, older workers were more susceptible to being displaced than younger workers. Of workers who reported being displaced by offshoring, one in five (21 percent) said they were reassigned within the company. Seventy-one percent were let go. Of those who were reassigned, 76 percent reported it was a lateral move while 7 percent reported they benefited from either a promotion, higher compensation or both. Of those who left the company, 81 percent went to another employer that was not aggressively offshoring.

But the report emphasized that while U.S. workers have lost jobs as a result of offshoring, companies are making the argument that offshoring is ultimately benefiting the American workforce. Twenty-eight percent of employers who offshored jobs said offshoring has already enabled them to create new, better jobs of different types in the U.S.

"The adverse impact of offshoring has been somewhat tempered by a shift of displaced workers to firms that are not yet offshoring," said Prasanna Tambe, a doctoral student at the Wharton School. "Although offshoring has already had a significant impact on some U.S. workers, offshoring-related displacement currently accounts for a relatively small proportion of annual U.S. employment turnover, which can be close to 40 percent per year."

The main benefit to offshoring remains cost savings, 64 percent of respondents said. Nearly half (49 percent) said that moving information technology operations offshore saved more than $20,000 per head on average; 15 percent of employers said they are saving more than $50,000 per head. Twenty-seven percent of respondents cited availability of skills and 19 percent pointed to plans for expansion in a particular market as their main reasons for offshoring.

South Asia remains the most popular offshoring location, with 44 percent of employers who offshore stating they sent jobs to India. Others key locations include China (24 percent), Mexico (12 percent), Canada (9 percent), Germany (8 percent), the Philippines (7 percent) and the U.K. (7 percent).

Of those respondents who said they did not offshore, the main reason cited (21 percent) was the importance to keep jobs in the U.S. Fourteen percent reported their customers would not respond favorably and 10 percent said they work with sensitive data. Other concerns included difficulty to build trust across borders, the cost associated with monitoring workers and shipping/materials and the availability of a skilled labor pool abroad.

The survey was conducted online within the U.S. by Harris Interactive on behalf of CareerBuilder.com among 3,016 hiring managers and human resource professionals and 6,704 U.S. employees in late 2007 with a sampling error of +/- 1.8 percentage points and +/- 1.2 percentage points, respectively.
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