After 20 years of slow growth, more than 90 percent of all reverse mortgage loans are HECMs, originated through FHA. Since 2004, the number of reverse mortgage lenders increased 240 percent with more than 1,600 lenders endorsing at least one FHA loan, industry experts said here at the Mortgage Bankers Association's Government Housing and Loan Production Conference.

Based on U.S. Census Bureau statistics, 71 million Americans will hit age 65 or older by 2030 with more than $4 trillion in home equity held by seniors today. FHA anticipates 25 percent to 35 percent of Americans in the next few years to hit 65 and estimates 35 million people older than 65 by 2010.

FHA also forecasts 160,000 reverse mortgage loans next year, compared to 110,000 last year as average property values hit $241,000 with an average maximum claim at $217,900. The average borrower age for reverse mortgages this year is 73, down slightly from 76 in 1990.

"FHA predicts that our volume alone—in dollar value of HECM loans—will grow more than five times from 2006-2016," said Jeffrey Taylor, CMB, vice president of the senior product group at Wells Fargo Home Mortgage, Des Moines. "Most financial planners that I talk to today are putting the possibility—not the probability but the possibility—of using the reverse mortgage in the financial toolkit of their clients—for the first time ever."

Despite its maturity, the reverse mortgage industry continues to face ill-informed perceptions that lump the product into subprime or predatory lending discussions.

"I'm sure somewhere in America there is a meeting today talking about regulating our industry tomorrow as a result of a huge potential perception that this market will not mature," Taylor said.

The current year has been difficult for the reverse mortgage product, not because of a problem in the mortgage product but concerns in mortgage product suitabilities that moved from subprime mortgages to reverse mortgages, said Margaret Burns, director for office of single-family program development at HUD.

"I have grave concerns about overzealous legislators on this product," Burns said.

After vigorously working with lenders to develop a fair reverse mortgage product for the consumer, Burns said she was nearly driven to tears watching a "blatantly inaccurate" segment on NBC News that said reverse mortgage lenders wanted to take borrowers' homes away from them.

"Those are falsehoods from more than a decade ago," Burns said.

"Mortgage lenders can assist in the growth of this market but must do everything to prevent consumer abuse," Taylor added.
 
In earlier versions of reverse mortgages, some seniors would agree to give up a percentage of the increased appreciation in their home in exchange for taking out a larger reverse mortgage through a "shared appreciation" feature. Taylor said the feature caused a backlash and criticism of the reverse mortgage industry in the 1990s as some areas showed "phenomenal full price appreciation rates."

"When they went to pay off their mortgage and found that their house [appreciated significantly] and the lender was entitled to a percentage—maybe 30 or 40 percent of the increase—all of a sudden, everybody's memory went blank," Taylor said.

In three class action lawsuits as an industry defense witness, Taylor saw borrowers who would not remember agreeing to a "shared appreciation" program. When stories hit the press, it tarnished the name of "reverse mortgages" as taking advantage of the elderly.

"There are no products today that have shared appreciation…that's the reason," Taylor said. "In the early days—in the early 1990s—a Fannie Mae product had a shared appreciation feature as well, and that's been eliminated."

In today's reverse mortgage product, however, "it's what you see is what you get," Taylor said.

He noted the home value reflects the amount of advancement—either all up front, through a line of credit or in a combination—and while critics question fees, insurance provides consumer protection.

"At the end of the day, if the home is worth more than what you owe, you keep it. If the home is worth less than what you owe, you walk away," Taylor said. "That's why you pay for the [FHA] insurance. These other versions were not insured."

Some critics, however, perceive loan costs on reverse mortgages as still too high. A HUD mortgagee letter said that on the fixed-rate product, the note rate and expected rate must be one and the same, and it could be closed end credit with a monthly servicing fee up to $30.

Ken Austin, president of Reverse Mortgage Solutions Inc., Spring, Texas, said consumer abuse prevention should not preempt FHA insurance or cutting monthly service fee for less to provide more available money.

"That's the wrong way to approach this. You're just cutting our own throat to play that game," Austin said. "The 2 percent of the balance is the FHA insurance itself. That makes the loan available. How vigorously are you going to attack that amount? I just wouldn't do it."

"We must focus on requirements in place and what we can do as FHA to help the consumer," Burns said. For example, she said calling a child or grandchild into the equation is something that must be done by lenders.

"You all know it will be forced on us if you don't do it yourselves," Burns said. "Do it yourself. Take responsibility. It's the same thing as subprime. With this product, we have to take additional responsibility and guard ourselves."
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“The big news is the move to MISMO Version 3.0 that is based on XML Schema,” said Harry Gardner, vice president of industry technology at the Mortgage Bankers Association, speaking here Thursday at  MBA's Government Housing and Loan Production Conference. “It involves advanced technology that gives greater capability in data transactions, better structural consistency and new capabilities such as XML name spaces where users can identify their own name spaces.”

Gardner said version 3.0 also offers users data point-level encryption, where sensitive data such as social security numbers can be made private. MISMO hopes to launch the new version in January.

Business benefits of MISMO include a shared, common language that is maintained through a data dictionary, Gardner said. “MISMO achieves consistency and commonality. The commonality also allows for mapping of terms between process areas. Standardized data transactions provide faster, cheaper and better,” he said. “Other business benefits are that an interface can be developed in two weeks versus six months. Also, it is much easier to add or subtract interfaces with business partners. It helps overall business focus as well, allowing people to compete on products and services rather than interfaces.”

Gardner said developments in electronic signatures and digital signatures, such as capturing biometric data in holographic signatures and using alphanumeric codes in digital signatures will help achieve the complete eMortgage.

In discussing electronic documents, Gardner explained differences between document imaging and electronic documents, the latter being more interactive and electronic where the legal original document is electronic—created, signed and managed electronically.

“For lenders, eMortgages offers lenders better control of the process, shortened timeframes, reduced errors and easier quality control, JIT (Just-in-Time) document generation and no paper shipping, eDelivery immediately upon closing and eRecording with no delay,” Gardner said. “There are costs savings throughout the process.

For borrowers, Gardner said eMortgages provide a better, enhanced experience, the ability to preview documents, easy access, easier closing process and overall cost efficiency.

Gabe Minton, chief strategy officer at Mortgage Cadence, Denver, and vice chair of MBA’s Residential Technology Committee,  said the ResTech is currently focusing on data quality, integrity and purity initiatives. “The current data quality initiative is to agree on a manageable subset of critical data points that are typically used to make an execution decision in the secondary market, initially,” he said.

ResTech is evaluating data points through the loan life cycle to identify how many times they are “touched”—re-keyed, scanned or potentially changed. The evaluation involves measuring how many entities typically touch the data point and how important the data point is on a scale of 1-10.

“We are also measuring how the data point ages,” Minton said. A data risk level is assigned to the data—colors that match Homeland Security codes. The final deliverable of the data quality initiative will be an industry glossary that defines importance and illustrates “touches” on specific key data points. The glossary is slated to be released at MBA’s Annual Convention this October in San Francisco.

Bonnie McCloskey, program/policy specialist at FHA, said HUD and FHA are in the process of adopting MISMO standards in its B2G (business-to-government) transactions. “We are moving ahead with this so government agencies can standardize data fields for mortgage transactions,” she said.
 
The FHA Total Scorecard, developed by HUD, evaluates risk. “With the implementation of risk based premiums, we have been working with vendors to implement required changes,” McCloskey said. “The Total ScoreCard doesn’t meet MISMO standards but we are working with MISMO to map data fields for adoption by the industry.”
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Calyx Integrates Hazard Insurance Category into Point
Calyx Software, San Jose, Calif., a provider of loan marketing, originating and processing software, announced a hazard insurance category in the Calyx Network, connecting users of Calyx Point loan origination software with participating hazard insurance vendors. The hazard insurance category is accessed within Point’s services menu.

Through Calyx Point, a loan officer can generate a hazard insurance quote for the borrower, using tools in the services menu. Borrower data are automatically incorporated from the loan file into the insurance quote form. Once the hazard insurance quote is generated, the borrower can purchase coverage online or over the phone. Since no login is required to access the category, loan officers can streamline the process of generating a hazard insurance quote for their customer.

Mortgage Contracting Services Adopts Outsourcing
Mortgage Contracting Services, Tampa, Fla., a provider of property preservation and inspection services to the mortgage industry, has begun to outsource ancillary activities such as accounting and support functions. Currently, the company is outsourcing 8 percent of the work, citing cost benefits, greater efficiencies, improved turnaround times and additional capital that can be re-deployed on existing or new strategies.

Mortgage Cadence Releases Orchestrator 5.1
Mortgage Cadence Inc., Denver, a provider of enterprise lending products and services for the financial services industry, released Orchestrator 5.1, which incorporates more security controls and fraud detection and updated core ELS functionality.

Orchestrator 5.1 was developed by two internal teams individually focused on the user experience and system security. These teams analyzed industry and technology trends, collected input from the customer base via the Mortgage Cadence Advisory Group and drove development for the new product.

Interthinx FraudGUARD Offers Automated Fraud Insurance
Interthinx, Agoura Hills, Calif., a provider of risk mitigation, fraud detection and regulatory compliance tools for the mortgage industry, established alliances with A-rated insurance carriers to offer insurance to lenders to fight mortgage fraud and misrepresentation. The technology is powered by FraudGUARD and made part of the automated underwriting engine.

The insurance carriers, which have validated FraudGUARD results, will imbed results as part of the underwriting engine. The fraud insurance process is automated by integrating Interthinx FraudGUARD scoring system. As part of the underwriting process, loans are eligible to be insured based on receipt of a “passing” FraudGUARD score.

QuestSoft’s Compliance EAGLE Integrates into Loan Energizer
QuestSoft, Laguna Hills, Calif., a provider of compliance software and geocoding services for lenders, integrated Compliance EAGLE, an automated compliance review system, into Loan Energizer, a loan origination system designed by Management Systems Development Inc., Encino, Calif., that provides underwriting and closing support.

Compliance EAGLE combines components of mortgage lending compliance into one system accessible through Loan Energizer. Compliance EAGLE offers compliance monitoring and reporting with Loan Energizer’s LOS to create a rule set that evaluates loan portfolios for possible compliance violations and automates reporting.
 
Network Funding Adopts Optimal Blue Technology
Network Funding, Houston, chose product eligibility and pricing engine technology from Optimal Blue, Plano, Texas, developer of a web-based platform that couples decisioning technology with content management for the mortgage industry.
 
Optimal Blue provides configurable technology along with notification and pending alerts.
When an investor makes changes, Optimal Blue notifies its customers, then removes the investor’s program from the system and puts it in a pending state, sending an e-mail to alert customers of impending changes. Once placed in the pending state, the progress of changes can be monitored by the lender in their web site, which can also be shared with originators in their search results. When updates are completed, new information is automatically made available in the system and an e-mail is sent to the lender notifying of the availability.
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"The loans were closed with a concurrent Early Rate Lock program to manage the different payoff requirements of the two existing loans," said Bryan Frazier, president of Sierra Capital Partners. "The program allowed the borrower to lock the interest rate for both loans nearly 30 days prior to close of escrow for Copper Creek II and 90 days prior to close of escrow for Copper Creek I to eliminate interest rate risk."

Copper Creek I, at 368 units, and Copper Creek II at 240 units, are two- and three-story garden-style complexes. Copper Creek II was built in 2002, while Copper Creek I was built in 2004.
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As a result of a collaborative effort with the Manufactured Housing Institute, Fannie Mae recently launched its MH Select Initiative to provide comparable site-built financing to manufactured homes classified as real estate that meet certain aesthetic and on-site completion criteria. The LIVE Online workshop is designed to help lenders understand the benefits of the program and take advantage of the burgeoning manufactured housing industry.

Panelists on this live and interactive online program include:

• Tom Beers, chief economist and vice president of housing finance with the Manufactured Housing Institute;
• Tamara King, senior business manager of manufactured housing with Fannie Mae; and
• Paula Reeves, president of CIS Financial Services.

Register for this program at http://www.campusmba.org/products/default.aspx?product_code=E2801716Z/REGIS.
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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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Apply strategies to your businesses and immediate solutions—the CampusMBA Secondary and Capital Market series workshops are designed to raise awareness of key business issues and address causes, implications and the means to tackle these issues using contemporary and innovative strategies.

Each working session provides cutting-edge perspective to problem solving. By attending, participants gain valuable insight into pertinent industry issues and the corresponding approaches to resolving them successfully.

To learn more about the programs, visit http://www.campusmba.org/AllLearningProducts/Secondary.htm.

Register now to ensure a space in this timely series. Take the entire series, or register only for those that best fit your business needs.

Managing Liquidity Risk in the Mortgage Supply Chain
Location: San Diego
Date: July 14
Early Registration Savings End: June 16

• Understand the contributing factors of the credit crisis within the financial services industry.
• Explore available sources of liquidity and the risks associated with the overall "flow of capital" through the industry.
• Learn how liquidity can be measured and the implications of good liquidity management practices.
• Understand how liquidity risks can be mitigated through the use of portfolio management techniques and analytics.

To learn more or to register, go to http://www.campusmba.org/products/default.aspx?product_code=E2801789/REGIS.

Measuring Risk in the Mortgage Supply Chain
Location: Washington, D.C.
Date: August 11
Early Registration Savings End: July 11

• Learn the different risks inherent in the mortgage value chain.
• Understand how to measure risks objectively to determine their impact on the value of an asset.

To learn more or to register, go to http://www.campusmba.org/products/default.aspx?product_code=E2801788/REGIS.

Hedging with Derivatives I and II
Location: Washington, D.C.
Date: August 12-13
Early Registration Savings End: July 12 (Pricing for this course is different)

• Examine risk vs. return relationship and how it relates to different participants in the industry.
• Identify and understand the different types of and structures of derivatives
• Determine hedging strategies utilizing  these derivatives to mitigate risks facing the mortgage industry.

To learn more or to register, go to http://www.campusmba.org/products/default.aspx?product_code=E2801787B/REGIS.

Loan Securitization Techniques and Strategies
Location: Washington, D.C.
Date: August 14
Early Registration Savings End: July 14

• Demystify the notions of the complex phenomenon called "securitization" by studying its fundamental components.
• Explore the need for different types of securitization pertinent to handling different collateral types (sub-prime vs prime etc).
• Learn credit derivatives and how securitization is used to cater to different risk-return profiles.

To learn more or to register, go to http://www.campusmba.org/products/default.aspx?product_code=E2801656A/REGIS.

Credit Enhancement Strategies
Location: Washington, D.C.
Date: August 15
Early Registration Savings End: July 15

• Understand the meaning of credit enhancement and the critical role it plays in generating liquidity for the mortgage industry.
• Determine different techniques to augment investment quality to mortgage backed securities.
• Pinpoint the role of rating agencies in setting levels of credit enhancement.

To learn more or to register, go to http://www.campusmba.org/products/default.aspx?product_code=E2801654A/REGIS.

Special pricing: Register for the entire Secondary and Capital Markets Workshop Series and save. For more information about special pricing, contact Dennis Lugo at 202/557-2919 or dlugo@mortgagebankers.org.
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Montgomery also discussed HUD's view of the RESPA rule, along with the possibility that losses at FHA might result in the federal government having to subsidize FHA mortgages for the first time since FHA was founded in 1935. While we continue to work behind the scenes with Congress on so many important issues, our friends at HUD are focused on finishing their time in office with a full set of achievements.

MBA Submits RESPA Comment Letter
On June 11, MBA filed formal comments in response to HUD’s proposed regulations under the Real Estate Settlement Procedures Act. MBA urged HUD to coordinate its RESPA reform efforts with the Federal Reserve Board's work to improve clarity about the terms and cost of credit under the Truth In Lending Act. MBA called on HUD and the Fed to work together to produce a combined TILA and Good Faith Estimate form and implement it at the same time to replace current RESPA and TILA disclosures provided to borrowers at the time of application. MBA and its members have developed a proposed combined form, as well as a comparable revised HUD-1, which MBA included with its comment letter.

In the event that HUD decides to move forward to finalize the rule without coordinating with the Fed, MBA proposes HUD do the following:

(1) Pare back its proposal and forms to address only closing cost issues (consistent with its statutory authority);

(2) Make the form given at the time of loan application and the HUD-1 more consistent so borrowers can easily compare their costs;

(3) More clearly disclose both lender fees and mortgage broker fees on the GFE and HUD-1;

(4) Revise the tolerances contained in the proposal with bright line safe harbors to reduce surprise charges at settlement;

(5) Eliminate the "closing script," which HUD says would add 45 minutes to each closing;

(6) Allow lenders and brokers to use "average cost pricing"; and

(7) Allow "volume discounts" without the restrictions proposed so borrowers can realize the maximum benefit of such arrangements. 

MBA also said it would support complementary statutory changes that would truly simplify and improve the mortgage process.

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

SEC Discusses Proposed Rules on Credit Rating Agencies
On June 11, the Securities and Exchange Commission voted to issue, in proposed format, a series of credit rating agency reforms (http://www.sec.gov/news/press/2008/2008-110.htm). According to the SEC, the proposed changes are intended to bring increased transparency to the ratings process and curb practices that contributed to recent turmoil in the credit markets.

The SEC's rulemaking initiative consists of three segments, with the first two segments issued June 11. A vote on whether to issue the third segment will be considered at a June 25 board meeting.

The first part of the Proposal significantly increases the scope and depth of disclosures ratings agencies would be required to make. For example, a ratings agency would be required to publicly disclose the information it uses to determine a rating on a structured product. The Proposal also would require rating agencies to disclose the way they rely on the due diligence of others to verify the assets underlying a structured product. The Proposal's first part also includes measures to decrease opportunities for ratings agency conflicts of interest. For example, ratings agencies would be prohibited from structuring the same products that they rate. MBA supports efforts to increase transparency and credibility of credit ratings.

The second part of the Proposal would require credit rating agencies to differentiate structured products ratings from bond ratings, either through the use of different symbols or by issuing a report disclosing the differences between the ratings of these two investment categories. MBA believes separate ratings for structured products versus bonds will add further confusion and disruption to secondary market transactions. MBA will advocate that this portion of the Proposal be withdrawn or modified. The SEC's vote on this portion of the Proposal was not unanimous, and SEC Board Members opposing the proposal referenced MBA's position. We are reviewing the Proposal and will submit formal comments during the comment period of 30 days after the Proposal's publication in the Federal Register.

The third part of the SEC's initiative, to be considered by the agency on June 25, will be to evaluate the extent to which ratings requirements embedded in SEC regulations influence investors' decisions to rely exclusively on credit ratings rather than making independent judgments of risks.

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

OFHEO Announces Final Rule for Loss Severity Calculations
On June 10, Office of Federal Housing Enterprise Oversight Director James Lockhart III announced a final rule for loss severity calculations under OFHEO's risk-based capital regulations (www.ofheo.gov/media/reg/LossSeverityRule061008.pdf).

According to OFHEO, the rule corrects inadequacies in the formulas used to calculate risk-based capital, or the core capital that takes certain losses into account. The new rule will adjust the loss severity equation so that it does not overestimate for foreclosed mortgages and will change the treatment of FHA insurance associated with single family mortgages with a loan-to-value (LTV) below 78 percent so that it is consistent with current law.

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

MBA Opposes Michigan Mortgage Legislation
On June 10, MBA representative John Jacobs testified before the Michigan House of Representatives Banking and Financial Services Committee in opposition to a legislative package that would severely restrict mortgage lending in the state.

Some of the bills' onerous provisions include assignee liability, prepayment penalty restrictions and lowered "high-cost loan" triggers. The bills, if enacted, would reduce availability of credit for future borrowers throughout Michigan, especially in communities hardest hit by the statewide economic downturn. In his testimony, Jacobs also expressed disappointment over the failure of consumer advocates to work with MBA and the lending community to achieve a compromise that would aid all borrowers by helping to stabilize the Michigan housing market.

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

Montgomery Urges Passage of FHA Reform; New Push to Ban Seller-Funded Downpayment Assistance
In a nationally televised speech at the National Press Club on June 9, FHA Commissioner Brian Montgomery warned that additional losses could threaten the program's solvency if reform is not enacted soon. FHA expects to lose $4.6 billion because of unexpectedly high default rates on home loans due to deteriorating economic conditions and losses primarily to the agency's seller-financed downpayment mortgage program, which has suffered from high delinquency and foreclosure rates in recent years.

Montgomery also announced that FHA will soon resubmit a proposal to restrict downpayment assistance. Last year, a federal court stopped HUD from enforcing a rule that would have prohibited seller-funded downpayment gifts on loans insured by FHA. The court said HUD had failed to provide a reasoned analysis for the rule. To that end, Montgomery said FHA would make its case again.

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

CBO Releases Housing Bill Budget Estimates
On June 9, the Congressional Budget Office released its estimate for GSE regulatory oversight reform and the FHA rescue plan that was approved by the Senate Banking Committee on May 20 (http://www.cbo.gov/ftpdocs/93xx/doc9366/Senate_Housing.pdf). CBO estimates that the bill will produce $8 billion in revenues and cost $7.2 billion in direct spending over the next 10 years, generating $800 million in returns—a plus for the legislation.

Much of this revenue would be generated by requiring Fannie Mae and Freddie Mac to pay 4.2 basis points on each dollar of new business purchases, which would then be put into an affordable housing trust fund. Allocation of the trust fund monies is one of several issues that will have to be negotiated by the House and Senate as discussions over the housing bill continue.

For more information, please contact Francis Creighton at (202) 557-2736 (fcreighton@mortgagebankers.org).

MBA Updates Housing Rescue Plan Side-by-Side
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; Federal Deposit Insurance Corp. Chair Sheila Bair; Office of Thrift Supervision Director John Reich; the 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).

FASB Releases Proposed Requirements for Disclosing Losses, Accounting for Hedging Activities
One June 5 and 6, the Financial Accounting Standards Board issued the following Exposure Drafts of proposed Statements of Financial Accounting Standards: (1) Accounting for Hedging Activities—an amendment of FASB Statement No. 133; and (2) Disclosure of Certain Loss Contingencies—an amendment of FASB Statements No. 5 and 141(R).

The first proposed Statement would require application of the amended hedging requirements for financial statements issued for fiscal years beginning after June 15, 2009, and interim periods within those fiscal years. The second proposed Statement would be effective for fiscal years ending after December 15, 2008, interim and annual periods in subsequent fiscal years.

The purpose of the draft on hedging activities is to obtain feedback on possible approaches for simplifying the current hedge accounting rules to eliminate the multiple methods of hedge accounting currently being used for the same transaction. It also would require an entity to designate all risks as the hedged risk (with certain exceptions) in the hedged item or transaction, thus better reflecting the economics of such items and transactions in the financial statements.

The purpose of the draft on disclosing loss contingencies is to obtain feedback on possible approaches for improving disclosures about certain loss contingencies. FASB reports that users of financial statements have expressed concerns that the current financial disclosure requirements do not provide them with sufficient information about the likelihood, timing, and amount of companies' future cash flow obligations.

Comments are due on the hedging draft by Aug. 15 and on the loss disclosure draft by Aug. 8. MBA will study both documents closely as it prepares comments.

For more information, please contact Alison Utermohlen at (202) 557-2864 (autermohlen@mortgagebankers.org).

Fed PlansFinalized HOEPA Rule in July
On June 11, Federal Reserve Board Gov. Randall Kroszner, in a speech before the Federal Reserve Bank of Cleveland's Community Development Policy Summit, announced that the Board is working toward issuing final regulations under the Home Ownership and Equity Protection Act in July.

Earlier this year, the Fed proposed to create new underwriting, documentation and other standards for a new category of higher-priced (subprime) loans and new standards including mortgage broker fee requirements for all loans. (Kroszner’s speech can be linked at http://www.federalreserve.gov/newsevents/speech/kroszner20080611a.htm. which also concerns the limits of disclosures).

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

FDIC Releases Summer Issue of Supervisory Insights Journal
On June 10, the Federal Deposit Insurance Corp. released its Summer 2008 issue of Supervisory Insights Journal. This issue features an article outlining suggested modifications to credit ratings agency processes and requirements in order to enhance transparency in the structured finance market. Another article describes the FDIC's perspective on risks specific to hybrid ARMs and suggested risk management techniques.

For more information, please contact Mike Carrier at (202) 557-2870 (mcarrier@mortgagebankers.org).
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A number of state and local officials are scheduled to testify. The hearing takes place at 9:30 a.m. ET at the Joseph E. Cole Center for Continuing Education at Cleveland State University, 3100 Chester Avenue.

The full House Financial Services Committee holds a hearing on Affordable Housing Preservation and Protection of Tenants on Thursday, June 19. The hearing will focus on efforts to preserve the nation’s existing stock of federally-assisted affordable, multi-family rental housing. The hearing begins at 10:00 a.m. ET in room 2128 of the Rayburn House Office Building.

The Senate Banking Committee holds a hearing on Risk Management and its Implications for Systemic Risk on Thursday, June 19 at 2:30 p.m. ET in room 538 of the Dirksen Senate Office Building.

Scheduled to testify:

• Donald Kohn, vice chairman of the Board of Governors of the Federal Reserve System;
• Erik Sirri, director of the division of trading and markets with the Securities and Exchange Commission; 
• Scott Polakoff, deputy director of the Office of Thrift Supervision; 
• Richard Bookstaber, senior research associate with Bridgewater Associates; 
• Richard Herring, professor of international banking and co-director of the Wharton Financial Institutions Center with The Wharton School at the University of Pennsylvania; and 
• Kevin Blakely, president and CEO of the Risk Management Association. 

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

The American Enterprise Institute, a Washington-based think tank, holds a seminar on Is the Federal Reserve on the Right Track? today (Monday, June 16) at AEI headquarters. Speakers include Richard Berner, chief economist at Morgan Stanley; AEI Visiting Scholar from Carnegie Mellon University and Fed historian Allan Meltzer; former Fed researcher Michael Prell; and AEI Resident Scholar Vincent Reinhart, a former director of the Fed’s division of monetary affairs.

MBA Vice President of Research and Economics Jay Brinkmann participates on a panel Tuesday, June 17 at another AEI seminar, Has the Effect of Foreclosures Been Overstated? The seminar presents findings of a new study by AEI Visiting Scholar Charles Calomiris of the Columbia University School of Business and William Mills of Wichita State University.

The seminar takes place from 1:30-3:30 p.m. at AEI headquarters. Participating with Brinkmann on the panel will be Mark Zandi of Moody’s Economy.com; the panel will be moderated by AEI Fellow Peter Wallison. MBA NewsLink will provide coverage.

Looking ahead, the Joint Center for Housing Studies at Harvard University presents the State of the Nation’s Housing 2008, its annual report on housing markets and economic, demographic and social trends that drive market performance, on June 23 in New York.

Participating in the presentation will be Joint Center Director Nicolas Retsinas; Executive Director Eric Belsky; and Research Analyst Rachel Drew, along with FHA Commissioner Brian Montgomery; David Lowman, CEO of home lending at JP Morgan Chase & Co.; and Saul Ramirez, executive director of the National Association of Housing and Redevelopment Officials.

MBA NewsLink will provide coverage.

Also looking ahead, the Federal Deposit Insurance Corp. will hold a Forum on Mortgage Lending for Low- and Moderate-Income Households on July 8. The forum will explore a “framework for low- and moderate-income mortgage lending in the future, including identifying market and regulatory incentives for encouraging LMI mortgage lending.” Scheduled participants include Treasury Secretary Henry Paulson Jr.; Federal Reserve Chairman Ben Bernanke and JP Morgan Chase & Co. Chairman and CEO James Dimon; the forum will take place in Arlington, Va.

And looking even further ahead, House Financial Services Committee Chairman Barney Frank, D-Mass., announced a series of hearings this summer and fall on policy implications of the transformation of domestic and international financial markets. Topics to be explored include growth in the share of assets held outside the commercial banking system; arrangements that link firms that are regulated differently; and the increasing amount of leverage.

The committee will also explore potential systemic risks, the adequacy of current oversight and tools and the extent to which existing structures are adequate to respond to future problems. Frank said he expects participation from Treasury, Federal Reserve, Securities and Exchange Commission and other federal regulators, as well as academics and market participants.

Upcoming Reports/Events:

June 16: MBA Offices re-open at 1331 L St. NW, Washington, D.C. 20005
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 16: American Enterprise Institute Federal Reserve Seminar, Washington, D.C.
June 17: American Enterprise Institute Foreclosure Seminar, Washington, D.C.
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: Sate of the Nation’s Housing 2008, Joint Center for Housing, New York
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 8: FDIC Forum on Low- and Moderate-Income Housing, Arlington, Va.
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: 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. 15-18: MBA National Technology In Mortgage Banking Conference & Expo, Las Vegas
Mar. 17: Federal Open Market Committee
Apr. 28-29: Federal Open Market Committee
June 23-25: Federal Open Market Committee
Aug. 11: Federal Open Market Committee
Sept. 22: Federal Open Market Committee
Nov. 3-4: Federal Open Market Committee
Dec. 15: Federal Open Market Committee
Jan. 26-27, 2010: Federal Open Market Committee

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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