The upward revisions also changed the mix of the components of GDP, improving the outlook for second quarter growth. In addition, a separate report of a strong increase in April durable goods orders, excluding transportation equipment, also bodes well for future business investment. In the face of declining domestic demand, manufacturers have benefited from overseas demand, boosted by global economic growth and the declining dollar.

Domestic demand continued to be weak going into the second quarter. Personal consumption expenditures (PCE), which account for more than 70 percent of GDP, rose 0.2 percent in April but remained unchanged after adjusting for inflation. Over the past year, real spending has increased 1.6 percent, its slowest pace in about six years. Real spending growth has been anemic over the past five months. In particular, consumers have cut back on their spending on big-ticket items. Real spending on durable goods has increased only once in the last seven months. 

The tax rebate checks, which have been distributed since April 28 and will continue through July, should help lift spending growth in the coming months, at least temporarily. The extent of the boost to spending is uncertain, given rising energy prices as well as consumers’ concern about their personal finances and the outlook of the economy. Measures of consumer confidence continued to slide in May. For example, The Conference Board Consumer Confidence Index has reached its lowest reading since October 1992. Its expectations for the next six months component—believed to be more closely related to consumer spending than the current conditions component—slumped to the lowest reading on record. The University of Michigan Consumer Sentiment Index has shown sharper declines, reaching the lowest level since June 1980. 

While core inflation (excluding food and energy items) was benign in April, with the PCE deflator edging up only 0.1 percent, the rising trend in food and energy prices has led consumers to expect higher inflation. Consumer expectations of inflation over the next year from The Conference Board’s survey soared to 7.7 percent, the highest level on record back to 1987. According to the University of Michigan survey, one-year inflation expectations jumped to 5.2 percent, their highest level since 1982.

Finally, new home sales showed a sign of life in April, showing the first increase since October 2007. A quick turnaround for the housing market is not expected, however, as data in previous months were revised lower, and the months’ supply of nearly eleven months is still extraordinarily high.

Treasuries dropped and yields rose through Thursday in response to stronger-than-expected economic data and investors’ inflation concern. The yield on 10-year Treasury notes rose to 4.08 percent by Thursday, the highest level since late December. The 10-year yield fell on Friday on news of tame core PCE inflation, hovering around 4.04 percent by mid Friday afternoon. The Fed is widely expected to keep the fed funds rate at 2 percent at the next meeting on June 24-25.

Housing and Mortgage Indicators:
New homes sales were up 3.4 percent in April to a seasonally-adjusted annualized pace of 526,000. However, the increase followed the downward revision of the previous months’ figures. April’s sales pace was the same as the sales pace initially reported for March, and the drop in March new home sales were revised down to 11.0 percent from a previously reported of 5.3 percent. 

Sales of new homes during the first four months of this year were down 36.7 percent from the same period last year. Sales have declined about 62 percent since their peak in July 2005. Sales increased in three regions: 41.7 percent in the Northeast; 5.8 percent in the Midwest; and 8.3 percent in the West. Sales dropped 2.4 percent in the South.

The number of homes available for sale fell 2.4 percent to 456,000, the 12th consecutive monthly decline and the lowest level since June 2005. The steady decline in inventory reflected considerable cutbacks in single-family homebuilding. 

A drop in inventory and an increase in sales pace pushed the months’ supply down to 10.6 months in April from 11.1 months in March (previously reported as 9.8 months). Despite the decline, the months’ supply stood at the fourth highest reading since the inception of the series in 1963.

Another indicator of sluggish housing demand was the sharp increase in the length of time houses have spent on the market. The median number of months rose to 8.0 months in April, the highest level since record keeping began in August 1988. The median number of months on the market averaged 5.7 months in 2007.

The median price for new homes rose 1.5 percent in April from a year ago, the first year-over-year increase in the past five months. The increase followed a sharp drop of 14.1 percent in the previous month. The reason for the increase in home prices may be due to a change in the mix of sales: the only region where sales declined last month was in the South, where a typical home costs much less than in the Northeast and the West, both of which saw big increases in sales in April.

The S&P/Case-Shiller quarterly national composite index was down 14.1 percent in the first quarter from a year ago, following an 8.9 percent year-over-year decline in the fourth quarter of 2007. The drop was the biggest since the series began in 1987. It has now fallen about 16 percent from its peak in the second quarter of 2006. The S&P/Case-Shiller Home Price Indices track repeat sales of the same single-family house over time. They are therefore a better indicator of home price trend than average or median home prices, which can be distorted by the mix of sales of low- and high-priced homes. 

Economic Indicators:
The Conference Board Consumer Confidence Index fell 5.6 points to 57.2 in May, the fifth consecutive drop. Both the present conditions component and expectations component fell. The measure of expectations for the next six months slumped to 45.7, the lowest reading on record. Rising energy prices, volatile stock markets, falling house prices and credit market concerns likely weighed on confidence. 

Consumers’ assessment of current labor market conditions deteriorated modestly. The share of consumers finding jobs plentiful fell to 16.3 percent, the lowest level since April 2004. The share finding jobs hard to get rose to 28.0 percent, the highest since November 2004. 

Plans to buy homes dropped to their lowest levels since October 1982; plans to buy autos also dropped sharply; but plans to buy appliances held steady. 

Durable goods orders declined 0.5 percent in April following a 0.3 percent drop in March. Transportation equipment orders fell 7.9 percent, led by a 20.0 percent drop in aircraft orders. Motor vehicle orders, which account for more than half of transportation orders, fell 3.3 percent.

Excluding the volatile orders for transportation equipment, orders were up 2.5 percent, the biggest increase since July 2007. Increases in new orders for electrical equipment, appliances and components and machinery were largely responsible for the increase in overall orders. Orders for electrical equipment jumped a record 27.8 percent, more than offsetting an 18.9 percent drop in March.

Shipments for nondefense capital goods excluding aircraft—a component used in the calculation of economic growth in the current quarter—rose 0.5 percent. Nondefense capital goods orders excluding aircraft—a proxy for future business investment in equipment and software—jumped 4.2 percent, the first increase this year. The strong increase bodes well for third quarter economic growth. 

The preliminary estimate of first quarter gross domestic product (GDP) showed that economic growth was slightly stronger than initially reported. Real (inflation-adjusted) GDP grew 0.9 percent in the first quarter of this year, an upward revision from 0.6 percent reported in the advance estimate. (Unless otherwise noted, data reported here are seasonally-adjusted annualized rates.) 

The overall upward revision to growth was the result of several factors. Downward revision to imports, upward revision to investment in nonresidential structures and upward revision to consumer spending on nondurable goods all increased GDP. These impacts outweighed downward revisions to inventory investment, exports, consumer spending on services and government spending, all of which reduced GDP.

The housing market was the biggest drag to growth, subtracting 1.2 percentage points from real GDP growth. Real residential investment declined 25.5 percent in the first quarter, improving from a previously estimated 26.7 percent drop, but still the biggest quarterly drop since the fourth quarter of 1981. Housing has been a drag on growth for nine consecutive quarters, the longest downturn since the series began in 1947.

The trade sector has been a positive influence on economic growth over the past year. It was the biggest boost to growth in the first quarter, adding 0.8 percentage points, significantly more than the 0.2 percentage points previously reported.

Inventories declined in the first quarter instead of the increase reported in the advance estimate. While the downward revision reduced GDP, it was nonetheless positive for the current quarter economic growth. An unintended increase in inventories bodes ill for future economic growth as businesses will likely pare down production to reduce unwanted stockpiles. The drop in inventories in the first quarter suggested that businesses will have to increase production if demand picks up in the current quarter.

The report also included a first look at corporate profits for the quarter. Earnings adjusted for the value of inventories and the depreciation of capital expenditures (or profits from current production) increased 0.3 percent to an annual rate of $1.57 trillion. Most of the gain came from overseas, where it was helped by global economic growth and the weak dollar. Domestic profits increased only modestly, with higher profits from nonfinancial businesses slightly outweighing losses in financial services.

Personal income rose 0.2 percent in April after a 0.4 percent increase in March. The end of bonus payment season weakened personal income growth, while tax rebates inflated disposable income growth.

Personal consumption expenditures (PCE) also increased 0.2 percent, decelerating from a 0.4 percent gain in March. Spending on services increased, spending on durable goods declined, and spending on nondurable goods was flat.

Real spending and real disposable income were unchanged in April. Overall inflation, as measured by the PCE deflator, rose 0.2 percent. Excluding food and energy items, core prices were up 0.1 percent in April and 2.1 percent from a year ago. 

The University of Michigan Consumer Sentiment Index fell to 59.8 in May from 62.6 in April. Current conditions fell 3.7 points, while expectations fell 2.2 points. 

This Week:

• Monday—April construction spending and the Institute for Supply Management (ISM) manufacturing survey for May;
• Tuesday—April factory orders;
• Wednesday—Nonfarm productivity & costs for the first quarter and the ISM nonmanufacturing survey for May;
• Friday—May employment report and April wholesale inventories.

(Orawin Velz is senior director of economic forecasting with the Mortgage Bankers Association. She can be reached at ovelz@mortgagebankers.org.)
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“These numbers clearly demonstrate that HOPE NOW is succeeding at helping homeowners avoid foreclosure and stay in their homes,” said HOPE NOW Executive Director Faith Schwartz. “Foreclosure benefits no one: the borrower, community, lender and investor all lose. HOPE NOW has every incentive to help troubled homeowners hold on to their homes and the alliance will continue to do everything possible to reach and help as many as possible.”

The April report from HOPE NOW estimates that on an industry-wide basis:

• Mortgage servicers provided loan workouts for 183,000 at-risk borrowers in April. This is an increase of 23,000 from the number of workouts in March and is the largest number of workouts completed in any month since HOPE NOW’s inception.

• The total number of loan workouts provided by mortgage servicers since July 2007 has risen to nearly 1.6 million.

• Nearly 106,000 of prime and subprime loan workouts conducted by mortgage servicers in April were repayment plans while 77,000 were loan modifications.

A summary table with April results can be found at
http://www.hopenow.com/upload/misc/files/AprSummaryTable.pdf.

HOPE NOW also announced that a separate survey of subprime adjustable-rate mortgages determined that:

• Nearly 603,000 subprime loans were scheduled to reset between January and April.

• Of those subprime loans, 30,545 (5.0 percent) have already been modified. Nearly 63 percent of these modifications are for five years or longer.

• Of subprime adjustable-rate loans scheduled to reset, 273,000 (45 percent) were paid in full when the homeowner refinanced the loan or sold the property.

• A limited amount—927 (0.3 percent)—of the loans scheduled to reset have started the foreclosure process.

HOPE NOW is an alliance of counselors, mortgage market participants and mortgage servicers to create a unified, coordinated plan to reach and help as many homeowners as possible. For more information on HOPE NOW and to see the full membership of the Alliance, please visit www.HOPENOW.com.

The Homeownership Preservation Foundation’s HOPE Hotline (888-995-HOPE), available 24 hours a day, seven days a week, receives on average more than 4,000 calls per day. This is far in excess of what the mortgage lending industry has ever had to field. There is no cost to borrowers for using HOPE NOW and the 1-888-995-HOPE Hotline.

In addition to the HOPE Hotline, HOPE NOW is coordinating a nationwide campaign to reach at-risk borrowers. So far, HOPE NOW has sent 1.2 million letters. Nearly 20 percent of homeowners receiving the HOPE NOW-coordinated letters have contacted their servicer, 10 times more than the routine 2-3 percent response rate that servicers receive when they send their own mailings.

In the past three months, HOPE NOW has connected 4,000 homeowners with their lender and/or a HUD-certified housing counselor at workshops in 11 different cities in California, Georgia, Illinois, Pennsylvania, Ohio, Massachusetts, Minnesota, Wisconsin and Indiana. HOPE NOW is continually looking for additional locations to host these workshops so that more troubled borrowers can be helped.
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“Best practices is a marketing term, said Jonathan Corr, chief strategy officer at Ellie Mae, Dublin, Calif. “Best practices according to whom? It’s a way to say a company has done something before and to take their word for it based on their experience and results. But is it evaluated from an outside perspective as to one practice versus another practice? No.”

"Best practices are policies, processes and procedures that result in above average performance for a particular function as compared to peers,” said Dan Cutaia, president of Fairway Independent Mortgage, Madison, Wis. “Best practices should be fungible. That is, they should plug into any company and provide improved results. They should not result in unintended consequences or result in poor performance in another area or function of the firm. For example, many technology solutions result in a reduction of operating costs in one area but increase IT costs in general without offering scale cost advantages on the operations side."

Dave Demster, president of the mortgage products division at ISGN, Bensalem, Pa., said best practices have to apply to a specific situation because it is a process. "It’s about determining what works best for a specific situation—almost the expert way to do it," he said. "It’s something you work at. It’s a process applied to a specific situation where you determine what works best and what you can do under certain circumstances.”

Brian Fitzpatrick, president of Lydian Technology Group and executive vice president of Lydian Data Services , Jacksonville, Fla., said the term best practices is overused in the way that many in the industry said they were “MISMO-compliant” when it was first launched.

“But best practices is not purely a marketing ploy,” Fitzpatrick said. “It’s delivering quality in a standard, repeatable way.” He said the next level of best practices is attaching a “good housekeeping seal” and incentivizing it. “That’s when you put teeth into the perspective—whether it's insured or guaranteed by a third party or whether some financial incentives are given by a third party. That’s when best practices really mean something because now you have parties coming to the table saying they will stand behind that and will actually give an incentive.”

“However, what people warrant against and guarantee are many times not best practices,” Demster said. “It’s their own practice and very often are not best practices.”

“There’s a level of transparency and accountability that is being forced upon many organizations because of what has happened in this industry,” Fitzpatrick said. “We take best practices very seriously. If somebody says best practices in their marketing materials, your next question should ask what that means to you. How does that benefit me? What does my company get out of it? How can I take that to my warehouse bank? How can I take that to my investor? Are they going to care about it? Best practices is a standard, repeatable process that brings value to a group of people. People have to agree on it and people have to be able to trade financial incentives in order for best practices to be meaningful.”

“Implementing practices to optimize benefits for both you and your client in such a way that it’s repeatable is not necessarily true for the industry,” Demster said. “I think that whether it even becomes a standard doesn’t also make it best practice."

“The bottom line is that best practices is an optimized, standard repeatable process,” Fitzpatrick said. “When you have something that is optimized, it is agreed upon within the economic circle and it provides benefit—substantial financial benefits to all parties. From a best practices perspective, to look at a process is to determine and optimize it from a stand point of efficiency, optimize from a stand point of a risk perspective and optimize from a stand point of working to integrate partners. That you can do things faster, better, cheaper and with less risk that ultimately provides value to all parties—that’s best practices. Lydian’s approach is that we look at it from a best practices perspective for every single implementation and every single customer.”

"Best practices truly means having standardized processes to achieve a quality result,” said Lisa Binkley, executive vice president of risk strategy and policy development at Rapid Reporting, Fort Worth, Texas. “Specifically in the mortgage industry, best practices must be taken to a broader spectrum to include processes that satisfy their customers as well as the consumer, and are transparent in both wholesale and retail channels. At the end of the day, all lenders try to incorporate due diligence processes or best practices that allow them to evaluate loans better and faster than the competition while achieving quality. Many best practices are reverting to old school principles such as the "CCCC" standard that evaluates collateral, credit, capacity and character to determine if the consumer has the ability to repay the loan.”

"Best practices could be described as the right information at the right time in the clearest fashion for the right decision, said A.W. Pickel III, president of Leader One Financial Corp., Overland Park, Kan. “As mortgage lenders, we don't always need the fastest response or the flashiest response, but what we do need is the right information in a way we can understand so that we can do the right thing for the borrower." 

Fred Melgaard, executive vice president of DRI Management Systems, Newport Beach, Calif., said, "Best practices provide a template to do things right and do the right things so that one can maximize results while minimizing efforts and costs. The template is often constructed by looking across the industry to find the very best micro-processes and combining the very best into one overall process.”
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GE Real Estate will act as a fund investor with its initial stake and as an operational partner, contributing to the fund’s acquisition strategy—across the Euro zone countries, Scandinavia and Central and Eastern Europe—through origination teams on its seven European platforms.

Valued at nearly $428.7 million, the Capital France Hotel portfolio will consist of 12 assets in France—2,140 rooms—operated under multiple brands that include:

• Two hotels in Paris operated by Accor under the Mercure brand;
• One hotel in Cap d’Ail operated under the Marriott brand;
• Nine hotels in regional French cities operated by Rezidor under the Radisson and Park Inn brands, including the Radisson Nice, the Radisson Lyon and the Park Inn Nancy.

Capital France Hotel owns and manages nine three- and four-star hotels in its portfolio, all in urban locations. GE Real Estate brought the three Accor and Marriot brand-operated French assets into the fund in exchange for shares and cash from Capital France Hotel. Algonquin Asset Management France's experience is in owning and independently managing hotel properties in France.
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The conference, formerly MBA's Document Custody Conference, includes timely loss mitigation sessions. It’s tailored for both new and experienced document custodians, as well as anyone who may be involved in any aspect of the post-closing process, loan delivery, document control and/or servicing issues. The conference addresses a host of topics that are “setting the pace” for changes in the industry.

Who Should Attend
New and experienced document custodians, quality assurance professionals or anyone else with a business that touches on any aspect of the post-closing process, loan delivery and document control or servicing issues, such as time management and customer service.

Network with Attendees:
Conference sponsorship is the ideal vehicle to grab the attention of this important audience and position your company as a leader in the industry. All sponsorships include a tabletop exhibit opportunity, but space is limited. For more information contact Mark Brady at mbrady@mortgagebankers.org or call (202) 557-2790.

For more information about MBA’s Document Management and Custody Conference 2008, visit http://events.mortgagebankers.org/documentmanagementandcustody2008/default.html.
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Taking place Sept. 14-16 at the JW Marriott in downtown Washington, D.C., this is the conference to attend for those who want to stay abreast of compliance issues.

Topics to be addressed include: the Home Ownership Equity and Protection Act (HOEPA), the Real Estate Settlement Procedures Act (RESPA), anti-predatory lending requirements, regulatory reform of the housing GSEs, the Home Mortgage Disclosure Act (HMDA), the Fair Credit Reporting Act (FCRA), the Fair and Accurate Credit Transactions Act (FACTA), the Truth in Lending Act (TILA), an FHA update, litigation developments and much more.

This year's conference includes—at no extra charge—popular newcomer workshops that cover a variety of relevant topics. These structured mini-courses are designed for those who are new to the industry or those who just want to brush up on key regulatory requirements. These pre-conference workshops fill up fast, so sign up now.

For more information and to register for the conference, visit the conference web site at http://events.mortgagebankers.org/regcomp2008/default.html.
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Attend the MBA Government Housing and Loan Production Conference 2008 and gain insight into the dramatic changes made to government housing programs. This conference provides insight on how to make the most of the Federal Housing Administration's (FHA) programs such as FHASecure; the Veterans Affairs (VA) Loan Guarantee Service and the Department of Agriculture's (USDA) Rural Housing Service, as well as the chance to discover alternative sales approaches and evaluate new strategies, products and technology.

Government officials and industry experts lead sessions exclusively designed for mortgage professionals with loan production and regulatory compliance responsibilities, including CEOs, heads of production, credit policy professionals, lenders of government loans and loan officers and brokers.

Who Should Attend:
Wholesale and retail originators, brokers and loan correspondents, residential underwriting professionals, credit policy professionals, quality assurance professionals, executives involved in the development of their organizations strategic plan, and anyone interested in learning more about the current government housing programs.

Web Site:
For more information about MBA’s Government Housing and Loan Production Conference 2008, visit http://events.mortgagebankers.org/ghlp2008/default.html.
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The Mortgage Bankers Association and the mortgage industry had a significant success on May 29 when Gov. Tim Pawlenty (R) of Minnesota followed MBA's advice and vetoed a foreclosure moratorium bill that would have set a very dangerous precedent. Pawlenty’s veto message will help strengthen and support MBA's advocacy efforts now underway in several other states where similar proposals are now being considered by state legislators. This is a reminder of how successful our industry can be at the state and federal level when we speak with a coordinated and clear voice to policymakers.

OCC Opposes GSE-OFHEO-NY AG Appraisal Deal
On May 27, in a letter addressed to Office of Federal Housing Enterprise Oversight Director James Lockhart, Comptroller of the Currency John Dugan expressed strong opposition to the Appraiser Code of Conduct agreement among OFHEO, the government-sponsored enterprises (GSEs), and New York State Attorney General Andrew Cuomo, echoing MBA's sentiment that was expressed in a comment letter sent to the GSEs and OFHEO on April 30.

OCC noted the agreement would: 1) undermine rather than enhance the reliability of appraisals; 2) raise costs for lenders and consequently for consumers; and 3) disrupt appraisal processes, which are generally functioning well. Moreover, OCC, sharing MBA's position, cited the agreement as fatally flawed because OFHEO failed to follow rulemaking protocol outlined in the Administrative Procedures Act. In addition, the agreement is inconsistent with well-established federal regulations and guidance.

It is also important to note the comment letter submitted to the GSEs and OFHEO from Office of Thrift Supervision Deputy Director Timothy Ward on April 30 opposing the Code. OTS believes "sufficient laws, regulations, and guidance exist to achieve the universal goal of appraisal independence," regardless of whether appraisals are conducted in-house or outsourced. The letter points out that the Code and Agreement were prepared without necessary regulator and industry counsel and that they fail to consider the implications for OTS-regulated lenders.

For more information, please contact Corey Carlisle at (202) 557-2860 (ccarlisle@mortgagebankers.org) or Michael Carrier at (202) 557-2870 (mcarrier@mortgagebankers.org).

Minnesota Governor Vetoes Foreclosure Moratorium Bill
On May 29, Minnesota Gov. Tim Pawlenty (R) vetoed Senate File 3396, the Subprime Borrower Relief Act of 2008. The bill would have established a one-year "foreclosure deferment" for certain negatively amortizing and subprime loans in default. In his veto message, Pawlenty stated that establishing a foreclosure moratorium is not an appropriate solution to help Minnesotans preserve their homes. He noted that, if enacted, the bill would raise the cost of credit for all Minnesotans and negatively impact individuals with challenging credit histories or lower incomes.

Pawlenty also stated that the bill posed constitutional concerns and he emphasized that no other state has enacted a foreclosure moratorium because "it is not sound policy." MBA led an industry-wide effort to oppose SF 3396 since its introduction in the Minnesota legislature. Pawlenty's veto of this dangerous precedent-setting legislation is an important victory that will aid MBA's ongoing advocacy efforts in New York, Massachusetts and other states where similar bills are being considered.

For more information, contact Chris Oswald at (202) 557-2866 (coswald@mortgagebankers.org).

MBA Releases Policy Paper on Costs of Foreclosure to Lenders
On May 28, MBA released its policy paper, Lenders' Cost of Foreclosure, during a MBA Congressional Education Series event. The paper can be viewed here: http://www.mortgagebankers.org/files/Advocacy/2008/LendersCostofForeclosure.pdf.

There have been several instances of media and congressional commentary indicating that the lending industry profits from foreclosures. The purpose of this paper was to set the record straight and explain the costs of foreclosures to lenders. Speakers included MBA Senior Vice President of Government Affairs Steve O'Connor, Senior Vice President of Legislative and Political Affairs Erick Gustafson and Vice President of Research and Economics Jay Brinkmann.

For more information, please contact Vicki Vidal at (202) 557-2861 (vvidal@mortgagebnkers.org).

MBA President Represents Lenders at President's Council Meeting
On May 29, MBA President and CEO Jonathan Kempner participated in a working committee meeting of the President's Advisory Council on Financial Literacy. The Council was created by Executive Order 13455 as part of the Administration's response to the mortgage market crisis.

Last week's meeting kicked off the work of the Council's Committee on the Underserved, which is focused on establishing appropriate parameters for responsible and sustainable subprime mortgage products and services. Input from the Committee will be used to craft a set of policy recommendations and industry best practices that will be forwarded to the President and are expected to be announced at a Federal Deposit Insurance Corp. conference in early July.

For more information, please contact Josh Denney at (202) 557-2816 (jdenney@mortgagebankers.org).

MBA Chairman Participates at National Governor's Association Meeting
On May 29, MBA Chairman Kieran Quinn, CMB, participated on a panel at the National Governors Association's State Summit on Foreclosures and Housing Solutions, in Arlington, Va. Panelists discussed various policy options for combating future foreclosures, as well as the tensions between government regulation and financial innovation. 

In his presentation, Quinn stressed that state policymakers should avoid seeking quick and simple solutions that seem good at face-value, but do not address the real problems faced by borrowers, when designing legislative or regulatory solutions to address the mortgage crisis. Good policy solutions should contain frameworks that aim to stabilize the market, help distressed borrowers and ensure that problems in today's market do not occur in the future.

For more information, please contact Paul Richman at (202) 557-2899 (prichman@mortgagebankers.org).

MBA Submits Mortgagee Review Board Comment Letter
On May 29, MBA submitted a comment letter in response to HUD’s proposed rule aimed to modify procedures of the Mortgagee Review Board. If adopted, procedures of the Mortgagee Review Board governing administrative actions against mortgagees approved by the Federal Housing Administration would be altered. 

In the letter, MBA urges HUD to reconsider implementation of certain sections of the proposal, including exempting reprimand letters from due process requirements. MBA proposes the withdrawal of section 25.7(c) in order to treat reprimand actions in the same manner as any other adverse action. 

For more information, please contact Corey Carlisle at (202) 557-2860 (ccarlisle@mrotgagebankers.org).

Mayor Promotes MBA PSA on Foreclosure Prevention
On May 29, Schenectady, N.Y. Mayor Brian Stratton held a press conference where he released a set of television and radio public service announcements that were paid for and produced by MBA as part of a partnership announced this past November with the U.S. Conference of Mayors.

The PSAs urge struggling homeowners impacted by the foreclosure crisis to seek help at the first sign of trouble by calling the Homeownership Preservation Foundation hotline number. At the press conference, Stratton thanked MBA for its support, communications efforts, and for providing the tools needed to get the citizens of Schenectady's mortgage payments back on track.

For more information, please contact Paul Richman at (202) 557-2899 (prichman@mortgagebankers.org).

MBA Updates Housing Rescue Plan Side-by-Side
Today, MBA released an updated side-by-side comparison that includes the rescue plan approved by the Senate Banking Committee on May 20, as part of the Federal Housing Finance Regulatory Reform Act of 2008. The document compares and contrasts proposals introduced by Rep. Barney Frank, D-Mass.; Sen. Christopher Dodd, D-Conn.; FDIC Chair Sheila Bair; OTS Director John Reich; National Community Reinvestment Coalition; and others. MBA will update this document as developments warrant.

For more information, please contact Andrew Szalay at (202) 557-2941 (aszalay@mortgagebankers.org).

MBA Updates GSE Legislation Side-by-Side
As the full Senate prepares to take up GSE reform, MBA has updated its GSE side-by-side to reflect the recent action in the Senate Banking Committee. MBA is hopeful the GSE reform/FHA rescue bill will be considered on the Senate floor in June and that a final housing bill will include GSE regulatory reform—a long-standing priority among MBA's advocacy efforts. 

The side-by-side compares the GSE bill approved by the Senate Banking Committee, as part of the Federal Housing Finance Regulatory Reform Act of 2008, and H.R. 3221, which included GSE reform and passed the House on May 8. Part one includes all provisions without the affordable housing goals; part two focuses on the affordable housing provisions.

For more information, please contact Mike Carrier at (202) 557-2870 (mcarrier@mortgagebankers.org).

FHA Announces New Transmittal Form to Replace MCAWs
On May 22, HUD issued Mortgagee Letter 8-15, that will allow FHA to use the new form HUD-92900-LT, FHA Loan Underwriting and Transmittal Summary (LT) to replace both mortgage credit analysis worksheets, HUD-92900-PUR and HUD-92900-WS. 

Lenders must still calculate the mortgage amount in accordance with existing FHA statutory requirements and documenting that calculation in the loan origination file.  By signing and dating this form when underwriters are providing their final decision to approve the loan application for FHA mortgage insurance. The HUD-92900-LT does not replace, but will be used in conjunction with the HUD-92700-WS, and the 203(k) Maximum Mortgage Worksheet.

Lenders may begin using this new form on June 9, but must use it for all loan applications taken on or after Oct. 1.

For more information, please contact Corey Carlisle at (202) 557-2860 (ccarlisle@mortgagebankers.org).

FTC Hosts Conference on Consumer Information, Mortgage Market
On May 29, the Federal Trade Commission hosted a conference on An Economic Assessment of Information Regulation, Mortgage Choice and Mortgage Outcomes, where academics and government officials discussed various aspects of the mortgage market with an emphasis on improving consumer information and regulation.

One study that was discussed was commissioned by HUD. One of the study's findings is that, based on 2001 FHA loan data, consumers pay significantly more to mortgage brokers than they do when they obtain loans directly from lenders because of yield spread premiums. The report found that for loans with an average initial principal balance of $105,000, for brokered loans, the average fees were $4,000, compared with $3,150 for loans made directly by the lender. To view the study, go to http://www.huduser.org/Publications/pdf/FHA_closing_cost.pdf.

For more information, please contact Ken Markison at (202) 557-2930 (kmarkison@mortgagebankers.org).

FDIC, NeighborWorks Begin Seminars on Foreclosure Prevention
On May 28, FDIC and NeighborWorks America kicked off a series of one-day foreclosure prevention seminars to be hosted in five high-foreclosure areas—Las Vegas, Los Angeles, Detroit, Tampa and Columbus. These seminars will be targeted to private- and public- organizations that assist borrowers who are at risk of losing their homes.  For the full agendas, go to http://www.fdic.gov/news/conferences/foreclosure.html.

For more information, please contact Vicki Vidal at (202) 557-2861 (vvidal@mortgagebakers.org).
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"While MBA continues to work with state and local policymakers to explore all reasonable avenues for alleviating the foreclosure problem nationwide, we applaud Gov. Pawlenty for his leadership in promoting solutions to aid troubled borrowers and correctly deciding to veto this bill, said MBA Chairman Kieran Quinn, CMB.

The bill would have established a one-year foreclosure deferment for certain negatively amortizing and subprime loans in default. MBA had vigorously opposed the bill's deferment plan, which would have effectively frozen the foreclosure process for one full year on all qualifying loans made between Jan. 1, 2001 and Aug. 1, 2007.

In his veto message, Pawlenty said the bill, if enacted, the bill would raise the cost of credit for all Minnesotans and negatively impact individuals with challenging credit histories or lower incomes. "No other state in the nation has enacted a bill like this,” he said. “There is a reason for that—it is not sound policy."

MBA led an industry-wide effort to oppose SF 3396. "Even though it was crafted with the best of intentions, The Minnesota Subprime Borrower Relief Act of 2008 would have succeeded in prolonging the problem for the families it intended to help,” Quinn said. “Moreover, [Pawlenty] understands the constitutional questions surrounding foreclosure moratoriums and rightly recognized such initiatives as an unsound public policy choice.”

Quinn said delaying a foreclosure subjects a borrower to accrued interest, taxes, insurance premiums, foreclosure costs and many other fees. “This puts borrowers into a deeper financial hole when the deferment period ends, making foreclosure an ultimate inevitability, rather than a threatening possibility,” he said. “MBA supports solutions that do not harm the delicate state economy and are beneficial to all Minnesota homeowners. Unfortunately, a foreclosure moratorium or deferment is not one of those solutions.”
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The committee will also consider nominees to serve in the Treasury Department; HUD, the Commerce Department; the President’s Council of Economic Advisors, the Securities and Exchange Commission and the National Credit Union Administration.

The hearing begins at 2:30 p.m. ET in room 538 of the Dirksen Senate Office Building.

On Thursday, June 5, the committee holds a hearing on The State of the Banking Industry: Part II. The first hearing in March featured witnesses from the major federal banking agencies. The hearing begins at 10:00 a.m. ET in 538 Dirksen.

All House and Senate hearings can be accessed live over the Internet at www.house.gov; www.senate.gov; and www.capitolhearings.org.

The Mortgage Bankers Association will release its 1st Quarter Commercial/Multifamily Originations Survey on Tuesday, June 3. MBA NewsLink and MBA Commercial/Multifamily Newslink will provide coverage.

The presidential primaries wrap up on Tuesday with elections in Montana and South Dakota; the final Republican primary takes place in New Mexico.

Upcoming Reports/Events:

June 2: ISM Index, Institute for Supply Management 
June 2: Construction, Bureau of the Census 
June 3: Manufacturer Shipments, Inventories and Orders, Bureau of the Census 
June 4: MBA Weekly Application Survey
June 4: ADP National Employment Report 
June 4: Productivity and Costs, Bureau of Labor Statistics
June 4: ISM Services, Institute for Supply Management 
June 5: Gross Domestic Product by State, Bureau of Economic Analysis 
June 6: Joint Economic Committee Monthly Statement 
June 6: Employment, Bureau of Labor Statistics 
June 6: Wholesale Trade, Bureau of the Census
June 6: Consumer Credit, Federal Reserve 
June 8-11: MBA Presidents Conference, Charleston, S.C.
June 9-12: CampusMBA School of Mortgage Banking Course II, Philadelphia
June 9: Housing Forecast/Pending Home Sales Index, National Association of Realtors 
June 10: CampusMBA Loss Mitigation Boot Camp, Westlake (Dallas), Texas
June 10: Trade Balance, Bureau of Economic Analysis 
June 11: MBA Weekly Application Survey
June 11: Beige Book, Federal Reserve 
June 11: Treasury Department Monthly Statement
June 12-13: MBA Government Housing Conference, Washington, D.C.
June 12: MBA Offices close at noon (move to new headquarters) 
June 12: Advance Retail Sales, Bureau of the Census 
June 12: Imports/Exports, Bureau of Labor Statistics 
June 12: Business Inventories, Bureau of the Census
June 13: MBA Offices closed (move to new headquarters) 
June 13: Consumer Price Index, Bureau of Labor Statistics 
June 13: Real Earnings, Bureau of Labor Statistics 
June 13: Cleveland Fed Median CPI 
June 16: Empire State Manufacturing Survey
June 16: CampusMBA Measuring Risk in the Mortgage Supply Chain, Costa Mesa, Calif.
June 16: CampusMBA FHA Fundamentals Workshop, San Diego
June 17-18: CampusMBA Hedging with Derivatives I & II, Costa Mesa, Calif.
June 17: Trade Balance, 2007 Annual Revision, Bureau of Economic Analysis
June 17: Producer Price Index, Bureau of Labor Statistics 
June 17: U.S. International Transactions, Bureau of Economic Analysis 
June 17: New Residential Construction, Bureau of the Census/HUD 
June 17: Industrial Production/Capacity Utilization, Federal Reserve 
June 18: MBA Weekly Application Survey
June 18: N.J. Employment/Unemployment 
June 19: CampusMBA Loan Securitization, Costa Mesa, Calif.
June 19: State Quarterly Personal Income, Bureau of Economic Analysis 
June 19: Composite Indexes, The Conference Board 
June 19: Philadelphia Fed Survey 
June 20: CampusMBA Credit Enhancements in Secondary Markets, Costa Mesa, Calif.
June 20: Regional/State Employment/Unemployment, Bureau of Labor Statistics  
June 23: Chicago Fed National Activity Index 
June 24-25: Federal Open Market Committee
June 24: S&P/Case-Shiller Home Price Indices 
June 24: OFHEO Monthly House Price Index 
June 24: Richmond Fed Survey 
June 24: Consumer Confidence, The Conference Board 
June 25: MBA Weekly Application Survey
June 25: Revised Building Permits, Bureau of the Census  
June 25: Advance Durable Goods, Bureau of the Census 
June 25: State/Local Building Permits, Bureau of the Census 
June 25: New Residential Sales, Bureau of the Census/HUD 
June 26: Gross Domestic Product, Bureau of Labor Statistics 
June 26: Corporate Profits, Bureau of Economic Analysis 
June 26: Existing Home Sales, National Association of Realtors 
June 26: Help Wanted Index, The Conference Board 
June 26: Kansas City Fed Manufacturing Survey 
June 26: Chicago Fed Midwest Manufacturing Index 
June 27: Personal Income, Bureau of Economic Analysis 
June 30: Chicago Purchasing Managers Index 
June 30: Dallas Fed Manufacturing Survey
July 8-10: CampusMBA Multifamily Property Inspection Workshop, San Francisco
July 14-15: CampusMBA Introduction to Commercial Real Estate Finance, San Diego
July 16-17: CampusMBA Commercial Loan Origination 301, San Diego
July 16: CampusMBA FHA Fundamentals Workshop, San Diego
July 17: CampusMBA FHA Underwriting & Operations Workshop, San Diego
Aug. 5: Federal Open Market Committee
Aug. 11-15: CampusMBA School of Mortgage Banking Course III, Washington, D.C.
Aug. 19-20: CampusMBA School of Executive Education, Future of Structured Transactions, Washington, D.C.
Sept. 11-12: CampusMBA Human Resources Symposium, Washington, D.C.
Sept. 14-16: MBA Regulatory Compliance Conference, Washington, D.C.
Sept. 15-18: CampusMBA School of Mortgage Banking I, Washington, D.C.
Sept. 15-18: CampusMBA School of Mortgage Banking II, Washington, D.C.
Sept. 16: Federal Open Market Committee
Sept. 21-23: MBA Document Custody Conference, Charlotte, N.C.
Oct. 17-18: MBA State & Local Workshop, San Francisco
Oct. 19-22: MBA 95th Annual Convention & Expo, San Francisco
Oct. 28-29: Federal Open Market Committee
Nov. 5-7: RESPRO Fall Seminar, New Orleans
Dec. 16: Federal Open Market Committee

2009
Jan. 27-28, 2009: Federal Open Market Committee 
Feb. 8-11: MBA CREF/Multifamily Housing Convention & Expo, San Diego
Feb. 17-20: MBA National Mortgage Servicing Conference & Expo, Tampa, Fla.
Mar. 15-28: MBA National Technology In Mortgage Banking Conference & Expo, Las Vegas

Information about MBA Events can be found at the MBA Web site, www.mortgagebankers.org; and at the CampusMBA Web site, www.campusmba.org.
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