The decline in the overall index included large drops in pending home sales in two regions of the country: 10.6 percent in the West and 7.5 percent in Northeast. Pending sales increased by 2.8 percent in the Midwest and flattened in the South. Compared with a year ago, every region but the West posted declines. The West, which has experienced the largest home price drop over the past year, saw a robust 11.3 percent increase from last July. 

The index is based on signed contracts for existing single-family homes, condos and co-ops. It is a leading indicator of NAR’s existing home sales, which are based on closings, as the signed contract for the purchase of a home generally precedes its closing by one to two months. Following the 6.8 percent pickup in the pending home sales index in June, total existing home sales were up 3.1 percent in July to a seasonally-adjusted annualized rate of 5.0 million. 

The drop in July pending home sales suggested that existing home sales should resume their drop in the near term. Since November 2007, total existing home sales have been in a narrow range of 4.8 million units to 5.1 million units. NAR will release the existing home sales figure for August on September 24.

Other leading indicators of home sales pointed to subdued home sales in August. The Mortgage Bankers Association’s weekly survey of mortgage applications showed that purchase applications dropped modestly in July as mortgage rates trended up. The segment of the purchase market that has been doing consistently well is the government (largely FHA) market, which continued to see steady increases in purchase mortgage applications. 

The outlook for the new home markets, which have not been helped by distressed home sales, remains subdued: the National Association of Home Builders/Wells Fargo Housing Market Index, a measure of home builders’ confidence incorporating builders’ views on current single-family home sales, six-month expectations of home sales, and prospective buyer traffic, fell to a record low in July and remained at record lows in August.

Recent declining mortgage rates, triggered by Treasury’s actions to place Fannie Mae and Freddie Mac in conservatorship, will spur some housing demand. However, the impact on home sales data won’t be felt until the fall.

(Orawin Velz is associate vice president of economic forecasting with the Mortgage Bankers Association. She can be reached at ovelz@mortgagebankers.org.)
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A 2008 Primary Mortgage Servicer Study from J.D. Power and Associates, Westlake Village, Calif., fielded in July, said customer satisfaction with mortgage servicing declined for a second consecutive year.

“For most customers, their mortgage servicer is akin to a utility company—they just want things to work, and they expect a friction-free experience,” said Rocky Clancy, executive director of financial services at J.D. Power. “Any bumps in the road that cause customers to have to spend time asking questions or solving problems negatively impact satisfaction, particularly if they have to call more than once or talk to more than one person to get their issues resolved.”

The study measured customer satisfaction in four areas of loan servicing—billing, payments, contact with the lender and annual account administration. Satisfaction declined 14 index points to 784 on a 1,000-point scale, down from 798 in 2007 and 812 in 2006.

The study, however, found increasing customer adoption of electronic billing and payments as one key to customer satisfaction. More than 55 percent of customers reported payments made through an automatic deduction or a website, compared with 36 percent of customers making payments by mail. In 2006, 49 percent of customers made payments electronically, while 42 percent paid by mail.

“Satisfaction with payment processing is 50 points higher for people making payments electronically instead of through ‘snail’ mail,” Clancy said. “Automatic deductions, in particular, are associated with fewer problems because once things are on auto-pilot the chances of something going wrong are slim.”

Branch Banking and Trust (BB&T), Winston-Salem, N.C., ranked highest among primary mortgage servicers for a second consecutive year with a score of 839 and high levels of commitment from its customers.

The study said customers with high levels of commitment to their primary mortgage servicer are more than three times more likely to say they “definitely will” continue to do business with their current lender than those customers with moderate levels of commitment.

“Primary mortgages tend to be a highly commoditized product, so lenders can benefit considerably by increasing loyalty among their current customers,” Clancy said. “Highly committed customers tend to make more recommendations, intend to use the mortgage servicer again in the future, are less likely to switch and are more likely to use multiple products with the same firm—all of which help to benefit a lender’s bottom line.”

SunTrust Mortgage, Richmond, Va., and Wells Fargo Home Mortgage, Des Moines, followed BB&T with scores of 825 and 813, respectively.

The study also found that servicers could stand to earn considerable financial gains by making improvements in key areas.

“By improving the billing and payment processes, reducing the number of problems, improving retention and increasing the acquisition of new customers through recommendations, lenders may generate increased annual profitability of approximately $30 million for every 1 million loans serviced,” Clancy said.
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“SaaS is the hottest technology right now,” said John Kelvie, chief architect at Overture Technologies, Bethesda, Md. “Looking ahead, SaaS will provide a range of functionality and levels of granularity that businesses are looking for in terms of control. That will also change the players in the space. The advantages of SaaS are that its costs are lower, it provides better control and has become easier to use. When all these factors improve, security and reliability factors also improve.”

Ravi Varma, CEO of Lending Space, Fulton, Md., said SaaS is still in its infancy, showing significant potential not only in the mortgage banking industry, but all industries. “It’s making a major shift,” he said. “There will be a lot of new entrants in the mortgage industry and SaaS is going to take a large foothold of technology business going forward.”

Varma said there are multiple levels of SaaS which vary depending on the level of segregation in the core basis of the technology on the vendor side. “Level one involves hosting of each customer’s software and a segregated core basis,” he said. “The level provides much more customization but is not that efficient.”

Varma said levels two and three provide data customization but the code basis of the technology rests with the vendor, eliminating the need to maintain silos for each customer. “There is no longer a need to compromise quality of the LOS in difficult economic situations such as the one we are in now,” he said. “Lenders can pay as they go, also eliminating a need to maintain the technology and technology staff in house.”

“SaaS is a model where vendors provide a service,” said Todd Luhtanen, CTO of ISGN, Bensalem, Pa. “It shortens implementation for both vendors and customers. SaaS is bundled licensing models that create variable cost models which lenders can use. There are fewer upfront costs and more streamlined costs. The variables correspond to volume.”

Keven Smith, president and CEO of Mortgage Builder Software, Southfield, Mich., said SaaS, SOA and open source can be combined to work at the same time. “For example, the Mortgage Builder LOS can be delivered in a SaaS model—pay per transaction—and run on an open source operating system, Linux, while using SOA to interface out to third party companies like credit, flood, mortgage insurance and AVM providers.”

“SOA is how people build their application so other people can consume it,” Kelvie said. “If you build a mortgage application such as an LOS, you will make it such that someone else can call on a particular application externally and get an underwriting decision back.”

Kelvie cited Desktop Underwriter as an example of SOA. “Any LOS user will want to tie in to DU,” he said. “They can call DU and get a decision back from Fannie Mae within their own software, delivering a fast decision to the loan officer.”

Luhtanen said open source involves public sharing of source code among multiple parties. “As in house developers share code, they are obligated to add things to the public domain,” he said. “Users benefits from the communal aspect of sharing the code, still allowing organizations to use the code in their own way.”

“SaaS, SOA and open source are all technologies that, while separate from each other, can be combined to achieve better efficiencies,” Smith said. “Each can be applied to solve different problems. They are technologies that, if used properly, can make software systems more efficient and therefore save the end users time and money.”
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The Market Composite Index rose to 496.2, an increase of 9.5 percent on a seasonally adjusted basis from 453.1 one week earlier. However, on an unadjusted basis, the Index decreased 13.6 percent compared with the previous week and was down by 24.4 percent compared with the same Labor Day week one year earlier. The four-week moving average for the seasonally adjusted Market Index rose by 4.1 percent. This week's results include an adjustment to account for the Labor Day holiday.

The seasonally adjusted Refinance Index, also adjusted for the holiday, increased by 15.4 percent to 1222.9 from the previous week. Without the holiday adjustment, the Refinance Index dropped 7.7 percent from the previous week. The four-week moving average rose by 3.5 percent. The refinance share of mortgage activity increased to 36.3 percent of total applications from 34.0 percent the previous week.

The seasonally adjusted Purchase Index increased by 6.4 percent to 371.5 from one week earlier. The Conventional Purchase Index increased by 14.4 percent while the Government Purchase Index (largely FHA) decreased by 8.7 percent. The four-week moving average rose by 4.4 percent.
 
The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.06 percent from 6.39 percent, with points increasing to 1.02 from 1.00 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.73 percent from 5.96 percent, with points decreasing to 0.98 from 1.03 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year adjustable-rate mortgages decreased to 7.00 percent from 7.11 percent, with points decreasing to 0.30 from 0.35 (including the origination fee) for 80 percent LTV loans. The ARM share of activity decreased to 6.4 percent from 6.6 percent of total applications from the previous week.

The survey covers 50 percent of all U.S. retail residential mortgage originations and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.
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"Commercial/multifamily mortgages are not seeing the same kinds of deterioration in performance that single-family mortgages, construction and some other types of loans have seen," said MBA Vice President of Commercial/Multifamily Research Jamie Woodwell. "While delinquency rates for most commercial/multifamily investor groups are slightly higher over the last two quarters, it is important to remember that we are coming off record lows for the past year. The take away is that commercial/multifamily mortgage performance generally remains strong and well within expectations."

Between the first and second quarters, the 30+ day delinquency rate on loans held in commercial mortgage-backed securities rose 0.05 percentage points to 0.53 percent. The 60+ day delinquency rate on loans held in life company portfolios rose 0.02 percentage points to 0.03 percent. The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.02 percentage points to 0.11 percent. The 60+ day delinquency rate on multifamily loans held or insured by Freddie Mac fell 0.01 percentage points to 0.03 percent. The 90+day delinquency rate on loans held by Federal Deposit Insurance Corp.-insured banks and thrifts rose 0.17 percentage points to 1.18 percent.

The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities, life insurance companies, Fannie Mae and Freddie Mac. Together these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.

The analysis incorporates the same measures used by each individual investor group to track the performance of their loans.  Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.

To put these numbers in context, of 35,276 commercial/multifamily loans in life company portfolios, with a total unpaid principal balance of $252 billion, only 23 loans with an aggregate unpaid balance of less than $69 million were 60+ days delinquent at the end of the quarter. Of $1.2 trillion of commercial/multifamily mortgages at FDIC-insured banks and thrifts, only $15 billion was 90+ days delinquent.

A copy of the most recent report can be found at http://www.mortgagebankers.org/files/Research/CommercialNDR/2Q08CommercialNDR.pdf.

To view MBA's other research reports, visit www.mortgagebankers.org/research.
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The GSE Resource Center can be accessed by clicking http://www.mortgagebankers.org/IndustryResources/ResourceCenters/GSE.htm. You can also reach it via a redirect by simply entering www.mortgagebankers.org/gse.

This new Center is the complete GSE resource for the real estate finance industry. This online center will house a current and comprehensive collection of resources on activity and changes relating to Fannie Mae and Freddie Mac.

Key Documents currently in the Center:

• MBA Statement on Treasury’s Sept. 7 Announcement
• Statement by Treasury Secretary Henry Paulson Jr. on “Action to Protect Financial Markets and Taxpayers”
• Statement by Federal Housing Finance Agency Director James Lockhart III
• Treasury Fact Sheet on Senior Preferred Stock Purchase Agreement
• Treasury Fact Sheet on GSE Credit Facility
• Treasury Fact Sheet on GSE Mortgage-Backed Securities Purchase Program
• Bio Sketches of New CEOs of Fannie Mae and Freddie Mac
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In the history of housing finance, there has never been a more tumultuous business and economic cycle. In the primary market, disruptions include record foreclosure and delinquency rates, and nationwide price declines in both the commercial and residential finance sectors.

With Fannie Mae and Freddie Mac in conservatorship, a new dynamic exists in the secondary market. Secondary market disruptions include a significant market shift away from non-agency securitization toward agency MBS and government lending. Sweeping legislative reforms established new programs, regulatory agencies and funding channels in response to these conditions. Amidst all this uncertainty, there is one certainty: it won’t be “business as usual” in the industry for the foreseeable future.

Attend MBA's National Secondary Market Conference & Expo 2009, the nation's largest annual gathering for secondary market executives, and learn what this new world of challenges and opportunities is likely to hold for mortgage bankers, investors, risk managers and portfolio lenders.

This conference enables you to network with peers who are experiencing the same business challenges you face daily; and offers one venue to convene with industry leaders and experts to develop solutions that will help shape the secondary market of the future. Attend informative sessions on topics, such as managing credit and liquidity volatility, the shift in credit and underwriting standards, and new product development. Gain insight into GSE portfolio caps and the implications of FHA reform. Also receive the latest on changes and trends affecting the industry.

New: On July 30, the Housing & Economic Recovery Act of 2008 was signed into law. Enactment of this critical piece of legislation means new challenges for the real estate finance industry. Conference attendees will learn about the contents of this law, how its provisions will be implemented and what changes your business needs to make to comply with the new regulations.

Who Should Attend:
MBA's National Secondary Market Conference & Expo 2009 is designed for industry leaders and decision makers from residential and capital markets, including CEOs and senior level executives, mortgage investors, investment bankers, rating agency professionals, risk managers and mortgage lenders.

To download the registration form, visit http://www.mortgagebankers.org/files/conferences/pdf/M2902048_registrationform.pdf. To register online, visit http://store.mortgagebankers.org/ProductDetail.aspx?product_code=M2902048/REGIS.

About the Venue:
The Hilton Chicago Hotel is a landmark downtown property overlooking Grant Park and Lake Michigan, Millennium Park and Museum Campus. It is the closest luxury hotel to the city's convention center while being only minutes from the loop business center, shopping and theatre. We look forward to seeing you in Chicago.

For more information, visit the conference web site, http://events.mortgagebankers.org/secondary2009/default.html.
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This new dedicated online product center serves as a resource for all MBA education and events relating to reverse mortgage lending.

The upcoming Reverse Mortgage Central public schedule includes a series of LIVE Online Workshops and an interactive classroom-based course. In addition, MBA will hold a Fall Reverse Mortgage Lending Conference to follow up on the popularity of its spring conference.

For Your Staff: CampusMBA offers the option for custom company-specific reverse mortgage training through its enterprise training division.

Reverse Mortgage LIVE Online Series
Learn the basics of responsible reverse mortgage lending, in just three 90-minute LIVE Online workshops, without incurring travel costs or leaving your office. CampusMBA's Reverse Mortgage LIVE Online Series, part of Reverse Mortgage Central, is perfect for brokers, originators and lenders who are interested in expanding their reverse mortgage lending businesses. Each workshop is led by instructor San Chrome.

To learn more, visit http://events.mortgagebankers.org/rmlf2008/default.html?wt.mc_id=FallRevMortfromNLFHACentral.

Register now to ensure a space in this timely series, which takes place over three weeks this fall: September 22, September 29 and October 6. Take all three workshops in the series, or register only for those that best fit your business needs.

Part 1, September 22, 1:30-3:00 p.m. EDT

Key topics:
• How borrowers qualify for a reverse mortgage
• Reverse mortgage terminology
• Loan calculations
• Disbursement options
• The loan repayment process
• How to recognize when a reverse mortgage will benefit a borrower

To register, visit http://www.campusmba.org/products/default.aspx?product_code=E2801716AG/REGIS.

Part 2, September 29, 1:30-3:00 p.m. EDT

Key topics:
• Reverse mortgage products
• Borrower requirements
• Counseling requirements and process
• Common misconceptions about reverse mortgage
• How a reverse mortgage can impact government benefits

To register, visit http://www.campusmba.org/products/default.aspx?product_code=E2801716AH/REGIS.

Part 3, October 6, 1:30-3:00 p.m. EDT

Key topics:
• Reverse mortgage loan origination process
• Key time lines for processing
• Good Faith Estimate for reverse mortgages
• Compensation for a reverse mortgage
• Reverse mortgage specific forms and disclosures
• Potential processing issues
• Frequently asked questions at closing

To register, visit http://www.campusmba.org/products/default.aspx?product_code=E2901716/REGIS.
Pricing

Registration fees for each online workshop: Member: $95.00 per workshop, per person; Nonmember: $195.00 per workshop, per person.

To register for individual workshops, select the workshop above and follow online registration instructions or call (800) 348-8653.

Special Series Pricing: Register for the entire Reverse Mortgage LIVE Online Series and save. Member: $199.99 per person; Nonmember: $249.99 per person.

Understanding Reverse Mortgages Workshop
Upcoming dates include: December 12 in Dallas, April 24 in Chicago and August 7 in Washington, D.C.

This timely new course from CampusMBA presents a comprehensive overview of reverse mortgage industry and the loan products that it offers. Students follow a reverse mortgage loan from the first contact with a prospective borrower all the way to closing, discussing key guidelines that cause origination and processing issues. They also learn how loan calculations and payments are derived.

Special focus is given to the responsible selling of reverse mortgages, including understanding borrower needs, qualification requirements, dealing with borrower heirs and trusted advisors and common myths that surround this type of loan.

Finally, students review key guidelines that cause origination and processing issues and discuss the purchase of reverse mortgages.

To lean more or register for an upcoming course, visit http://www.campusmba.org/AllLearningProducts/ReverseMortgageCentral.htm?wt.mc_id=NLFallReverseMortgageCentral  or call (800) 348-8653.

MBAs Reverse Mortgage Lending Fall Conference
October 1-2, Miami

To register, visit http://events.mortgagebankers.org/rmlf2008/default.html?wt.mc_id=FallRevMortfromNLFHACentral.
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The primary focus of this project is to develop and maintain a database and process to facilitate sharing of key data that will improve a mortgage lender's ability to identify and stop fraud at the point of origination. The project described in the RFP, which will be implemented in phases, presents a very powerful opportunity for the mortgage industry to prevent fraudsters from harming both lenders and honest homeowners.

"We are eager to move forward with the final RFP as we explore new technologies that will enable the industry to better track fraud and share information,” said MBA Chairman Kieran Quinn, CMB. “The database will allow lenders to better protect themselves—as well as consumers, taxpayers and communities—from the substantial costs associated with mortgage fraud. Lenders, servicers and investors will be able to interface with the Database directly as well as through authorized agents.”

Within both the lending community and law enforcement, there is increasing concern that mortgage fraud perpetrated against residential mortgage lenders has grown considerably over the past several years with significant consequences to lenders as well as to taxpayers, consumers and communities.

To view the RFP, click www.lendertechnologies.com.
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