Since November 2007, sales have been in a narrow range of 4.8 million to 5.0 million units as foreclosure sales propped up the market. By contrast, new home sales posted a double-digit drop for the month after showing signs of stabilization over the last several months.

The relatively stronger performance of existing home sales over new home sales largely reflected rising shares of foreclosed homes that were sold through the multiple listing service. Many homebuyers found that foreclosed homes that were recently built and are being sold at deep discounts are substitutes for newly built homes. The National Association of Realtors estimated that foreclosures accounted for about one-third of the existing home market, indicating that activity would have been much weaker had it not been for distressed sales. 

The months’ supply measures for both new and existing homes stayed above 10 months, which is worrisome given over two years of the housing downturn. For new homes, the Census Bureau does not revise data to account for cancellations of sales contracts, which makes it difficult to gauge the true market conditions. If cancellations are rising, inventory would be temporarily understated. 

Major home builders continued to report rising cancellation rates. For example, KB Homes reported on Friday that, for the quarter ended August 31, the cancellation rate (cancelled units divided by gross orders) rose to 51 percent, up from 27 percent in the second quarter. With tighter lending standards and reduced credit availability, potential buyers have trouble selling existing homes and securing financing.

All measures of home prices released this week showed accelerating price declines.  The median price for total existing homes posted the largest decline on record at 9.5 percent, compared with a sizable 6.2 percent drop for new homes. The monthly purchase-only index from the Federal Housing Finance Agency fell 0.6 percent in July from June and 5.3 percent from July 2007. The large monthly drop was disappointing as the index had shown a slower pace of decline in May and June, offering some hope that home price declines would start to moderate. 

Outside of housing, the durable goods orders report confirmed a sharp loss of momentum in manufacturing and business investment spending. The report was consistent with the view that economic growth is sharply slowing in the third quarter to just half the 2.8 percent annualized pace in the second quarter. The final estimate of gross domestic product also showed a downward revision in corporate profits, which fell 3.8 percent in the second quarter, compared with a 2.4 percent drop in the preliminary report. This marked the fourth consecutive decline in profits, the first time this has happened since 1989, suggesting that businesses will likely cutback their spending significantly in the coming quarter. 

Interest Rates:
Long-term Treasury yields were little changed this week as investors awaited the news on the government’s rescue plan. The yield on the 10-year Treasury note stayed around 3.81 percent by mid-Friday afternoon, about five basis points higher than the rate on the previous Friday. 

Housing and Mortgage Indicators:
Total existing home sales were down 2.2 percent in August to a seasonally-adjusted annualized rate of 4.91 million. Both single-family home sales and condo sales fell 1.4 percent and 8.2 percent, respectively. Sales of single-family homes during the first eight months of this year were down 16.1 percent from those during the same period last year. The year-to-date decline has been worse for condo sales, at 23.6 percent lower than those last year. 

Existing home sales fell in two regions, led by a 6.6 percent drop in the Northeast and 5.3 percent in the West. Sales were relatively flat in the Midwest and the South. From a year ago, the West was the only region that posted an increase in sales, with sales up by 4.9 percent.   

The number of total homes available for sale was down 6.7 percent in August from July, led by a 15.5 percent decline in the number of condos available for sale. (The data are not seasonally-adjusted.) From a year ago, the number of total homes available for sale fell 2.9 percent, the first year-over-year drop since March 2005. Despite the slower sales pace, a large drop in inventory pushed down the months’ supply (or the inventory-sales ratio) of existing single-family homes to 10.0 months in August from 10.4 months in July. The huge drop in the number of condos for sale pushed down the months’ supply to 14.0 months from 15.3 months.

The median price for new homes was down 9.5 percent in August from a year ago, the largest on record. The median home price does not necessarily give the true picture of home price trend, however, as it can be distorted by the mix of sales. The large decline in the median home price may have been overstated since sales dropped the most in the West and Northeast regions, where the value of a typical house is more than the national average. The decline in the median home price in the West from a year ago was 23.8 percent, also the largest on record. 

New homes sales fell 11.5 percent to a seasonally-adjusted annualized rate of 460,000 units, the largest decline since November 2007. During the first eight months of this year, new home sales were down 36.6 percent from the same period last year. 

New home sales declined significantly in the West and the Northeast by 36.1 percent and 31.9 percent, respectively. Sales dropped 2.1 percent in the South and rose 7.3 percent in the Midwest.

The number of new homes available for sale fell 4.5 percent, the 16th consecutive monthly decline. This was the biggest drop since November 1963 and the second largest drop in the history of the series. The steady decline in inventory, which has reached the lowest level since August 2004, reflected considerable cutbacks in single-family starts, which have posted 15 declines over the past 16 months.

The length of time that houses have spent on the market continued to break record highs. The median number of months rose to 9.1 in August from 8.5 in July and from 5.7 in August 2007.

Despite the huge drop in inventory, a large drop in sales pace pushed up the months’ supply (or the inventory-sales ratio) to 10.9 months from 10.3 months in July. The median price for new homes was down 6.2 percent in August from a year ago.

Economic Indicators:
Durable goods orders fell 4.5 percent in August, the first decline in four months, led by huge drops in aircraft and auto orders. Excluding the volatile orders for transportation equipment, durable goods orders were down 3.0 percent, the biggest drop since January 2007. Shipments for nondefense capital goods excluding aircraft—a component used in the calculation of economic growth in the current quarter—declined 1.7 percent after a 0.4 percent gain in the prior month.

The report also indicated weakening future business investment spending. Orders for nondefense capital goods excluding aircraft—a proxy for business investment in equipment and software in the coming quarters—fell 2.0 percent following a 0.4 percent increase in July. 

Both shipments and orders for nondefense capital goods excluding aircraft were revised downward considerably. This bodes ill for the current economic growth, which is projected to slow to half the second quarter’s pace. The outlook for the next six months has also worsened.  Inflation-adjusted business investment spending growth is poised to slow significantly in the fourth quarter and will likely decline during the first half of next year.

Real gross domestic product grew at a seasonally adjusted annualized rate of 2.8 percent in the second quarter, according to the Bureau of Economic Analysis’ final estimate. This was a downward revision from 3.3 percent reported in the preliminary estimate. Downward revisions to exports, consumer spending and business investment in equipment and software reduced GDP. These downward revisions outweighed an upward revision to residential investment and nonresidential structures.  

The biggest component of GDP, consumer spending, increased 1.2 percent, below the previously estimated 1.7 percent increase. Consumer spending made a contribution of 0.87 percentage points to GDP. The biggest contributor to GDP was trade, which added 2.93 percentage points, a smaller contribution than the 3.10 percentage points reported in the preliminary estimate.

The housing market continued to be the biggest drag to growth. Real residential investment declined 13.3 percent in the second quarter, a smaller drop than the previous estimate of 15.7 percent. This was the 10th consecutive quarter of contraction and the ninth consecutive double-digit decline. From its peak, real investment in residential structures has dropped about 40 percent. The declining residential investment subtracted 0.52 percentage point from economic growth in the second quarter. In the first quarter it took a bite of 1.12 percentage points from growth. 

Inflation was slighter higher than earlier reported. The price index for personal consumption expenditures  increased 4.3 percent, compared with the previously estimated 4.2 percent increase. The core PCE deflator (excluding food and energy items) increased 2.2 percent, slightly higher than the 2.1 percent increase in the previous estimate.

Profits were downwardly revised to $1.53 trillion annualized, a decline of $60 billion from the second quarter. This was the fourth straight quarterly decline in profits. This compares with an estimated decline in profits of $38 billion in the preliminary report.

The University of Michigan’s Consumer Sentiment Index rose to 70.3 in September from 63.0 in August.  This was the biggest monthly increase since October 2006. The improvement in the expectations component of over nine points to 75.0 led the gain. Assessments of current conditions improved four points to 67.2 during the month. Both components of the index were revised downward from their preliminary readings, however.

Inflationary expectations dropped sharply in September. The expected inflation rate one year ahead dropped to 4.3 percent from 4.8 percent in August and from a peak of 5.2 percent in May. Five-year expectations dropped to 3.0 percent from 3.2 percent in the prior month.

This Week:
• Monday—August personal income and personal consumption expenditures
• Tuesday—The Conference Board Survey of Consumer Confidence for September
• Wednesday—August construction spending and the Institute for Supply Management (ISM) manufacturing index 
• Thursday—August factory goods orders
• Friday—September employment report and the Institute for Supply Management (ISM) nonmanufacturing index 

(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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The survey also reported that 74 percent of IT workers, who represent more than one-fifth of employees in the survey sample, in Europe and the United Kingdom expressed similar sentiment. Overall, 68 percent of workers in North America agreed that training would have helped had they received it before doing certain tasks or jobs. Seventy-six percent of workers in Europe said they should have received training before beginning assigned work.

“IT is a continuous training environment,” said Todd Luhtanen, CTO of ISGN, Bensalem, Pa. “The rapid development of new technologies as well as the time necessary to implement them makes it difficult to keep all IT professionals current in their training. Any progressive organization will incorporate both stable, known technologies along with a fully trained staff as well as emerging technologies with a highly competent staff that learns as it goes and discovers best practices.”

Luhtanen said companies that work with vendors could avoid some challenges. “Companies need to understand long-term value in leveraging vendors for technology versus building completely in-house solutions,” he said, “Many decisions are made only on technology currently associated with a project and not implications of transitioning to the next technology advancement afterwards. Vendors, however, have the re-training built into their business model, constantly rotating staff through new technologies.”

“Regardless of location and job title, the majority of workers think ongoing training and development, and the flexibility to take the training when necessary, are essential, no matter what the employee's position,” said John Ambrose, senior vice president of strategy, corporate development and emerging business at SkillSoft.

Ravi Varma, CEO of LendingSpace Inc., South Plainfield, N.J., said there is an acute shortage of good IT resources. “Good resources move to better paying jobs,” he said. “When IT managers lose resources in the middle of projects and are trying to meet deadlines, they are forced to fill positions with individuals from other projects or hire new resources who do not necessarily understand the project.”

Of surveyed workers in the U.K., 67 percent said training is most important for senior managers; 52 percent of U.S. workers reported a similar sentiment. Throughout Europe, 51 percent said training was most important for senior managers.

“The good news for employers is that managers across the globe concur that training and development is an essential part of their organizations' strategy,” Ambrose said. “But survey data suggests that basic training is not enough, and that management skills training is a neglected area, leading managers to feel less confident in their ability to manage and lead people.”

Technical tasks ranked second in a list of top 10 tasks managers in the U.S. were asked to undertake without receiving proper training. Compliance-related tasks ranked sixth and finance-related tasks ranked seventh.

“Lack of training does bring up issues of security and other risks, and while it does appear to increase risk, most companies and employees are aware of this and use the vast amount of resources—from vendors to the internet to industry experts—to mitigate those risks and use best practices,” Luhtanen said.

In Europe, technical tasks ranked fourth, finance-related tasks ranked fifth and compliance-related tasks ranked seventh.

"This survey not only shows the significance of leadership training, but it also proves workers need to be trained at all stages of their careers," Ambrose said. "Regardless of a company's training program, on-boarding plays a key role in getting employees properly acclimated, and as the employee matures, efforts need to fit the specific employee role."

Respondents in the U.S. identified supervisors (70 percent), customer service teams (54.2 percent) and IT teams (52.5 percent) as most in need of training.

“An ability to be agile and responsive to market change in order to remain competitive is imperative for organizations, regardless of industry sector and geographical location,” the report said. “This can only be effectively achieved by investing in the skills and competences of the people who make up the workforce. Organizations that allocate time and resources to nurturing the talents of their employees—providing them with opportunities to grow and progress—are more likely to be heralded…typically amongst the most successful in the world—financially, culturally and socially.”
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An early August view of the data indicated a decline of 10.8 percent from a year ago. This continues the positive trend of no further acceleration in the pace of the rate of decline.

Virgin Money USA Enters Mortgage Industry
Virgin Money USA, Waltham, Mass., announced its entry into the mortgage lending industry. The move was made possible by the company’s recent acquisition of Lendia LLC, a mortgage lender and provider of outsourcing for originators.

Virgin Money is licensed as a mortgage lender in 23 states—representing a 61 percent increase since June—with plans to be licensed nationwide. In addition to conventional mortgages, it offers FHA-approved loans.

Softub, Metavante Launch Canadian Retail Financing Program
Softub Inc., Sudbury, Ontario, partnered with Metavante, Milwaukee, a provider of banking and payments technology, to launch a retail financing program in Canada. The program will be deployed in more than 120 of Softub's retail dealer locations across Canada.
 
Softub will provide consumers with in-store point-of-sale financing using Metavante’s CreditWorx technology platform. CreditWorx is a browser-based lending platform that helps lenders and vendors drive greater loan volume, reduce costs and increase profitability. Metavante will also provide Softub with dealer support and training, including account management, as well as loan contract auditing and funding fulfillment services.
 
Inlanta Mortgage Expands
Inlanta Mortgage, Waukesha, Wis., expanded its products and services to Indiana, Missouri and North Dakota. The company has existing partner branches in Florida, Illinois, Iowa, Michigan, Minnesota and Wisconsin.

The company’s partner branches focus on originating loans while the headquarters provides support in compliance, processing, technology, human resources, training, accounting, marketing, legal and in-house funding.

Ibis Software Integrates Mortgage Cadence Finale
Ibis Software, San Francisco, integrated its Reverse Mortgage Originator product with Finale from Mortgage Cadence, Denver. Finale offers document technology that supports reverse lenders and new lenders. The integration provides Ibis RMO customers document preparation and delivery.

Mortgage Cadence Finale has native data links within RMO, enabling lenders to create and return initial disclosures and closing packages in under 10 seconds, delivering them to the borrower or settlement agent over the web. Also, necessary calculations take place locally within Ibis RMO, preventing disparate data on multiple platforms.

Zillow Mortgage Marketplace Expands
Zillow.com, Seattle, announced that it will issue average weekly rates for the nation and select cities via press release or within Mortgage Marketplace. The rates will be released as averages of thousands of real rates quoted by lenders on the web site.

Other resources added include live rate tables and Mortgage Unzipped, a consumer-focused mortgage blog written by industry insiders. Mortgage Widget allows users to track latest mortgage rates on a website or blog.

Vantium Capital Acquires Acqura Loan Services
Vantium Capital Inc., Dallas, a mortgage company, acquired assets of Acqura Loan Services, a mortgage servicer, and two affiliated companies, Strategic Recovery Group, an asset recovery company, and Go Financial Solutions, a lender. The servicing and collection companies will remain in the Dallas area. Go Financial will relocate its operations to Dallas from Seattle.

lendingSTAT.com Launches signSTAT and VendorPRO,
lendingSTAT.com, Fresno, Calif., an on-demand software-as-a-service provider for the lending industry, launched its signSTAT and VendorPRO products for settlement service, title, lender, broker and mobile notary companies. In the U.S., national or regional settlement services, title offices, lenders and brokers can use signSTAT to manage signing service/mobile-notary line of business. VendorPRO is a tool for mobile notary and attorney vendors to receive and manage work orders submitted by customers using signSTAT.
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U.S. select service hotels tend to be more economical and suited more for a budget-conscious traveler and, based on the survey, select service hotel buyers outnumber sellers by 4 to 1, according to JLL's hotel investor survey. Despite more conservative underwriting standards, 75 percent of investors in the survey target mid-market and upper mid-market brands for investment in the next six months.

“While the debt markets remain far less active than 18 months ago, lenders, particularly regional and community banks, remain receptive to financings under $20 million,” said Adam McGaughy, executive vice president for Jones Lang LaSalle Hotels.

Jim Butler, chairman of global hospitality at the Los Angeles law office Jeffer Mangels Butler & Marmaro LLP and author of www.HotelLawBlog.com, said the attitude at this year's Phoenix Lodging Conference reflects mostly caution.

"The optimists are cautious and hope for a quick fix of the economy with a turnaround in 12-18 months," Butler said. "The pessimists think this could be a four to five year downturn or something of major proportions, like 1988 or 1989."

Mark Woodworth president of PKF Hospitality Research, Atlanta, said airline capacity cuts would hinder travel in 2009, capital market turmoil would continue to pause new construction until 2010 and supply and demand imbalance would drag rate growth until a 2010 recovery.

Despite higher oil costs, less travelling and a supply and demand imbalance, Woodworth also said the downturn in the hotel industry would be the mildest in 20 years.

However, Standard & Poor's, New York, lowered its outlook on Friday for Starwood Hotels & Resorts Worldwide Inc. from stable to negative—a BBB- corporate credit rating on Starwood.

"The negative outlook revision reflects prospects for an extended economic slowdown in the U.S. that is likely to cause U.S. industry revenue per available room [RevPAR] to be flat to down slightly in 2008, and to decline up to 5 percent in 2009," said Emile Courtney, credit analyst at S&P.

McGaughy said nearly 37 percent of U.S. select service hotel investors surveyed said they intend to buy during the next six months, but they have less interest in larger select service portfolios because of difficulty in securing financing.

“For more than 70 percent of select service investors, balance sheet lenders such as local and national banks and finance/insurance companies are now the dominant sources of funding,” said Mark von Dwingelo, senior vice president for Jones Lang LaSalle Hotels.

Von Dwingelo said a 5.5 percent investor increase in targeting select-service hotels for northeastern U.S. was based on greater supply constraint and strong demand fundamentals. Investor interest also increased in the mid-atlantic and southwest U.S., primarily Dallas, Houston, Phoenix and Denver.
 
“Each of these markets provides significant opportunities to replace older product and ‘up’ flag to a more premium select service brand,” von Dwingelo said.

Expectations for select service hotel operating performance during the next six to 12 months declined, but a two-year investor outlook increased from the survey six months ago, which McGaughy called “particularly optimistic.”

“Given the lack of quality assets available for sale, now is a good time to bring quality product to the market,” McGaughy said.
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Visit CampusMBA’s Residential Servicing Central at http://www.campusmba.org/AllLearningProducts/Servicing.htm?wt.mc_id=CMBASeptServNL.

For your staff: Most CampusMBA servicing programs can be offered at your location or online for your employees at your convenience. Visit www.campusmba.org or call (800) 348-8653 for more information about bringing residential servicing education to your staff.

Courses are scheduled throughout the United States over the next year. Two of the scheduled public courses are offered as preconference education (additional registration required) before MBA events.

Loss Mitigation Workshop
This popular new interactive workshop is designed to provide participants with insight on common reasons for default, investor and insurer loss mitigation requirements and loss mitigation options. Throughout the day, students engage in five hands-on exercises, including the design of a loss mitigation workout plan.

Upcoming offerings of Loss Mitigation Workshop include:

December 10 in Dallas (Register now at  http://www.campusmba.org/products/default.aspx?product_code=E2901763/REGIS)

February 16, 2009 in Tampa, Fla., at MBA's National Mortgage Servicing Conference & Expo
(Register now at http://www.campusmba.org/products/default.aspx?product_code=E2901763A/REGIS)

May 14, 2009 in Chicago (Register now at http://www.campusmba.org/products/default.aspx?product_code=E2901763B/REGIS)

August 10, 2009 in Washington, D.C. (Register now at http://www.campusmba.org/products/default.aspx?product_code=E2901763C/REGIS)

To register by phone for any of the above listings, call (800) 348-8653.

School of Mortgage Servicing
The School of Mortgage Servicing reviews mortgage servicing functions and the potential risks of not applying appropriate processes. The themes covered range from loan administration and default administration to financial controls and investor administration. The school walks through considerations for establishing strategy and managing risk.

This course fulfills a requirement for the popular Residential Certified Mortgage Servicer designation.

Upcoming offerings of School of Mortgage Servicing include:

March 24-26, 2009 in Westlake, Texas (Register now at http://www.campusmba.org/products/default.aspx?product_code=E2901895/REGIS).

August 18-20, 2009 in Jacksonville, Fla. (Register now at http://www.campusmba.org/products/default.aspx?product_code=E2901895A/REGIS)

To register by phone for any of the above listings, call (800) 348-8653.
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“We are fortunate to be holding the convention in San Francisco this year as the Moscone Center West is state-of-the-art green,” said Elaine Howard, MBA’s vice president of meetings and conferences. “It will give us a jumpstart on the green initiative.”

The MBA effort to go green has transcended the organization, including the recent opening of its new headquarters in Washington, D.C. The building at 1331 L St. NW has been pre-certified at the Silver level through the U.S. Green Building Council's (USGBC) LEED for core and shell green building rating system. Now, MBA continues to expand the concept to its meetings and conferences.

“We created a plan to implement ‘green meetings’ for MBA, Howard said. “We try to fully consider the importance of environmentally friendly events with the goal to minimize our carbon footprint and environmental impact from our meetings and events.”

Several months ago MBA began implementation of its Green Meetings Initiative. First steps included substantially reducing paper by printing abbreviated conference notebooks, offering presentation materials via a web link or CD-ROM and nearly eliminating handouts. 

“We are offering the conference materials on a web link or CD-ROM,” Howard said. “We hope that sharing our intentions to the membership ahead of time will help get more buy in.”

MBA also uses recycled paper for printed brochures and show guides. The paper used for brochures, Cascades Rolland Enviro100, is made from 100 percent post-consumer content; is certified by the Forest Stewardship Council; and is made using a chlorine-free process. By being 100 percent recycled, every ton of Enviro100 used saves 17 mature trees, reduces water use by 10,196 gallons, reduces air emissions by 2,098 pounds and reduces solid waste by 1,081 pounds. Additionally, the paper is made in North America, which reduces transportation needs and conserves fuel.

Many eco-friendly changes will be visible to attendees at this year’s Annual Convention & Expo, such as recycling bins throughout the facility; use of water stations instead of individual bottles of water; and reduced use of disposal items, such as paper cups. Additional steps will take place behind the scenes, such as using locally grown food and donating unused expo hall items and conference materials to local charities. 

MBA encourages exhibitors and sponsors to join the effort by using recycled or recyclable materials for giveaways and reducing printed materials (i.e. pre-conference mailings). MBA also urges attendees to reduce, reuse and recycle in an effort to reduce the carbon footprint of the Annual Convention & Expo.

For more information about the MBA Annual Convention & Expo, which features an all-star lineup of speakers including Steve Young and Jay Leno as well as timely workshops and seminars to help you grow your business in these challenging times, visit the conference web site, http://events.mortgagebankers.org/95th_annual/default.html. For more information about the Convention’s ticketed events, visit http://events.mortgagebankers.org/95th_annual/ticketed_events/.
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For reprint information on stories in MBA NewsLink, contact Stefanie Lauff at (800) 394-5157 ext. 26.
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Last week also saw the collapse of the largest thrift in the country, Washington Mutual, as well as the wholesale restructuring of the final two independent U.S. owned investment banks, Morgan Stanley and Goldman Sachs. Please know that MBA's staff and leadership are on top of all of these events and others as they develop and are advocating sensible solutions—ones that will stabilize the market, help people stay in their homes and avoid a repeat of the problems we have seen, all without doing permanent harm to the mortgage and global financial markets.

TARP Legislation Update
Congress and the Bush Administration worked tirelessly over the weekend to negotiate details of the Treasury's proposed Troubled Asset Relief Program. Negotiators reached a deal on Sunday and published the bill; the House is scheduled to vote on the bill today (Monday); the Senate is scheduled to vote on Wednesday.

TARP would, among other things, restore liquidity to the financial markets by enabling Treasury to purchase up to $700 billion in illiquid mortgage-related assets from financial institutions. The bill also contains concessions to Democrats and Republicans on other issues, such as executive compensation and additional tools to help homeowners avoid foreclosure.

President Bush on Sunday issued a statement (https://www.whitehouse.gov/news/releases/2008/09/20080928.html) supporting the legislation. the presidential candidates, John McCain and Barack Obama, also expressed "cautious support" for the legislation. MBA will continue to work with the Administration, the House and the Senate this week as the bill becomes finalized.

On Sept. 25, MBA and other industry associations sent a letter (http://www.mortgagebankers.org/files/AU/Recoverytradeletter.pdf) to members of Congress urging their support for TARP. The letter refutes the notion that Wall Street and Main Street are separate and distinct and stresses the interconnectivity of institutional market participants, individual investors, small businesses and pension funds, all of which reflect the broad range of Americans who have a great deal at stake in this debate. The signatories believe the Treasury plan offers an opportunity to return to an orderly market.

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

MBA Opposes Bankruptcy Provisions in TARP
On Sept. 23, MBA Chief Operating Officer John Courson sent a letter (http://www.mortgagebankers.org/files/AU/LettertoCongress92308.pdf) to members of Congress applauding efforts to pass legislation intended to stem the financial crisis by enabling Treasury to purchase distressed mortgage-backed assets. MBA raised serious concerns about the addition of unrelated proposals to the bill, specifically bankruptcy "cramdown."

MBA pointed out previous drafts of TARP by House and Senate leaders intended to alleviate a fundamental threat to the U.S. and global economies, not to address problems in the primary mortgage market. Additionally, MBA warned that changing the bankruptcy code will raise the cost of credit and further destabilize the market, as lenders further mark down the value of their mortgage portfolios to reflect the additional new principal losses.

In a similar letter sent the same day, (http://www.mortgagebankers.org/files/AU/
Bankruptcy_MortgageAssetProposal__JointLetter_092308.pdf), MBA, as part of an industry coalition, urged members of Congress to exclude bankruptcy provisions in the legislation implementing Treasury's proposal to stabilize mortgage markets. Instead of adopting bankruptcy provisions, MBA recommends that Congress work with Treasury to provide flexibility for modifications of loans that are purchased by the government.

In related news, MBA sent out a call to action urging MBA Mortgage Action Alliance members to contact their representatives and ask them to pass this legislation quickly without including bankruptcy reform legislation.

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

MBA Suggests Improvements to TARP
MBA made several suggested improvements (http://www.mortgagebankers.org/files/AU/
MBAImprovementstoTARPLegislation.pdf) to TARP when the first versions of House and Senate legislative language were issued on Sept. 21 (which have subsequently been superseded by the the latest draft negotiated on Sunday, Sept. 28).

To improve the draft bill, MBA recommended that: bankruptcy "cram down" provisions be excluded; the definition of financial institutions to include mortgage banks and servicers; contingent shares or warrants to be received by Treasury in the selling institution be further clarified; and that consumer disclosure requirements that often slow down the modification process be revised in order to accelerate relief to consumers. MBA urged Congress to accommodate these issues in the legislation.

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

MBA Makes Recommendations to Treasury, FHFA on GSE Conservatorship
On September 26, MBA COO John Courson sent a letter (http://mortgagebankers.org/files/AU/
MBAonGSEConservatorLettertoTreasury.pdf) to Treasury Secretary Henry Paulson Jr. and Federal Housing and Finance Agency Director James Lockhart III expressing appreciation for the focused efforts to address disruptions in the financial markets.

MBA offered several recommendations that Treasury and FHFA could take to restore liquidity to the housing finance markets. MBA suggested both single-family and multi-family mortgage considerations, although neither set of recommendations require statutory or regulatory modifications.

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

MBA Helps Lead Coalition in Meeting with OMB to Discuss RESPA
On Sept. 25, MBA played a leadership role in a joint trade association meeting with the Office of Management and Budget concerning HUD’s final Real Estate Settlement Procedures Act rule, which HUD submitted to OMB for review prior to publication. 

Meeting participants included a broad coalition of financial services and real estate related associations including the American Bankers Association, the National Association of Realtors, the American Land Title Association and the Center for Responsible Lending. At the meeting, the groups made clear that while they strongly supported simplification of the mortgage disclosure process for consumers. They believe the right way to accomplish reform is to combine HUD's RESPA reform efforts with those of the Federal Reserve to reform TILA disclosures.

The point was made that consumers need to understand both the costs of credit, TILA's concern, as well as settlement costs, RESPA's concern, to shop effectively and understand their mortgages. Greater understanding of both credit and cost considerations would empower borrowers to better protect themselves from unscrupulous actors. Despite the many concerns articulated, it is possible that HUD may be permitted to go forward to finalize the rule within the near term with a relatively long period for implementation.

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

Court of Appeals Denies Class Certification for TILA Rescission Case
In a significant victory for the mortgage industry, the U.S. Court of Appeals for the 7th Circuit last week, in Andrews v. Chevy Chase Bank, (http://www.mortgagebankers.org/files/AU/Andrewsv.ChevyChaseBank.pdf) held that class actions for claims seeking rescission under the Truth in Lending Act may not be maintained.

This decision aligned the 7th Circuit with decisions on this issue by the 1st and 5th Circuit Courts of Appeal and avoided the possibility of a split in the federal appellate courts on this important issue. MBA joined other trade associations as amicus curiae on behalf of Chevy Chase Bank.

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

FHFA, GSE Leadership to Address MBA's Annual Convention
Attend MBA's 95th Annual Convention & Expo to hear the latest developments on the Treasury's recent decision to place the government-sponsored enterprises into conservatorship. During the opening general sessions, attendees will hear Federal Housing and Finance Agency Director James Lockhart III discuss new FHFA authority and roles of the agency. Additionally, Freddie Mac CEO David Moffett and Fannie Mae President Herbert Allison Jr. will discuss their plans to move the entities forward. Don't miss your chance for key information from top government officials.

Register today by visiting the Annual Convention web page at http://events.mortgagebankers.org/95th_annual/default.html.

As Fiscal Year Nears End, Congress Proposes Continuing Resolution
With fiscal year 2008 coming to an end on Sept. 30, Congress is completing work on a continuing resolution (http://appropriations.house.gov/pdf/CRSummary09-08.pdf) to fund government operations.

This CR would provide $52 million to fund Federal Housing Administration modernization and staffing; $5 million to the Federal Bureau of Investigations to investigate mortgage fraud; $37.5 million to fund legal services for families facing foreclosure; and $3.4 billion to the Rural Housing Service to fund direct and guaranteed loans. Additionally, the continuing resolution would extend the National Flood Insurance Program to March 7, 2009.

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

Fed, Other Central Banks Announce New Swap Lines
On Sept. 24, the Federal Reserve Board authorized  a $30 billion expansion of its temporary swap lines with the central banks of Australia, Denmark, Norway and Sweden (http://www.federalreserve.gov/newsevents/press/monetary/20080924a.htm).

The week before, the Fed made a similar announcement, authorizing a $180 billion expansion of swap lines with the central banks of England, Japan, Canada, Europe and Switzerland. To date, the Federal Reserve and other central banks have made $277 billion available for short-term funding markets. These actions are "designed to improve liquidity conditions in global financial markets."

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

Schwarzenegger Vetoes Several Mortgage Bills, Signs Others
On Sept. 25, California Gov. Arnold Schwarzenegger (R) acted on several bills affecting the mortgage industry. MBA, member companies and the California Mortgage Bankers Association worked diligently throughout the legislative session to amend and improve many of the bills.

Among the bills the governor vetoed were AB 1830, which would have placed restrictions on a new category of "higher-priced" mortgages; and AB 529, which would have required a notice to borrowers 90 to 120 days prior to payment adjustments for certain loans. Schwarzenegger also signed several bills, including AB 69, which requires loan servicing data be submitted to the Commissioner of Corporations. A press release can be found at http://gov.ca.gov/press-release/10618/, as well as statements on AB 529 (http://www.mortgagebankers.org/files/AU/AB529TorricoVetoMessage.pdf); AB 1830 (http://www.mortgagebankers.org/files/AU/AB1830LieuVetoMessage.pdf); AB 2586 (http://www.mortgagebankers.org/files/AU/AB2586TorricoVetoMessage.pdf); and SB 1240 (http://www.mortgagebankers.org/files/AU/SB1240MachadoVetoMessage.pdf).

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

HUD Allocates $4 Billion to Stabilize Neighborhoods
On Sept. 26, HUD Secretary Steve Preston allocated $3.92 billion to states, particularly those areas with high foreclosure rates. (http://www.hud.gov/news/release.cfm?content=pr08-148.cfm).

The funding is provided through HUD's Community Development Block Grant program under the Housing and Economic Recovery Act of 2008. States and local communities may use the funds to purchase property; rehabilitate or demolish property; and offer down payment and closing cost assistance to low- to moderate-income consumers. HUD used several sources to determine how the grant would be allocation, including MBA's National Delinquency Survey.

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

GAO releases Study on Terrorism Insurance
The Government Accountability Office last week released Terrorism Insurance: Status of Efforts by Policyholders to Obtain Coverage (http://www.gao.gov/products/GAO-08-1057).

The report found that many industry participants found terrorism insurance to be available at reasonable rates. However, policyholders in high-risk areas, including Manhattan, and to a lesser extent, Chicago and San Francisco, may experience increased difficulty obtaining coverage at reasonable rates. The study also weighs the advantages and disadvantages of public policy options to increase the availability of terrorism insurance.

For more information, please contact George Green at (202) 557-2840 (ggreen@mortgagebankers.org).

Fed Approves Policy Statement on Equity Investments in Banks
On Sept. 22, the Federal Reserve announced approval of a policy statement on equity investments in banks and bank holding companies. This statement provides further guidance on minority equity investments. (http://www.federalreserve.gov/newsevents/press/bcreg/20080922c.htm) 

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

MBA Maintains Web pages on HERA and GSE Conservatorship
Please visit the GSE Resource Center at http://www.mortgagebankers.org/IndustryResources/ResourceCenters/GSE.htm; and the latest information on HERA at http://www.mortgagebankers.org/IndustryResources/ResourceCenters/
2008HousingandEconomicRecoveryAct.htm.
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"For Wachovia customers, today's action will ensure seamless continuity of service from their bank and full protection for all of their deposits." said FDIC Chair Sheila Bair. "There will be no interruption in services and bank customers should expect business as usual."

Citigroup Inc. will acquire the bulk of Wachovia's assets and liabilities, including five depository institutions and assume senior and subordinated debt of Wachovia Corp. Wachovia will continue to own AG Edwards and Evergreen. The FDIC has entered into a loss sharing arrangement on a pre-identified pool of loans. Under the agreement, Citigroup Inc. will absorb up to $42 billion of losses on a $312 billion pool of loans. The FDIC will absorb losses beyond that. Citigroup has granted the FDIC $12 billion in preferred stock and warrants to compensate the FDIC for bearing this risk.

The FDIC determined that open bank assistance was necessary to avoid serious adverse effects on economic conditions and financial stability.

"On the whole, the commercial banking system in the United States remains well capitalized. This morning's decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury," Bair said. "This action was necessary to maintain confidence in the banking industry given current financial market conditions."
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The Mortgage Bankers Association's Fall Reverse Mortgage Conference begins this Thursday, Oct. 2, in Miami.

Upcoming Reports/Events:

Sept. 29: Personal Income, Bureau of Economic Analysis 
Sept. 29: Dallas Fed Manufacturing Survey 
Sept. 29: Chicago Fed Midwest Manufacturing Index 
Sept. 30: S&P/Case-Shiller Home Price Indices 
Sept. 30: Chicago Purchasing Managers Index 
Sept. 30: Consumer Confidence, The Conference Board
Sept. 30: Metropolitan Area Employment and Unemployment, Bureau of Labor Statistics
Oct. 1: MBA Weekly Application Survey
Oct. 1: ADP National Employment Report 
Oct. 1: Construction, Bureau of the Census 
Oct. 1: ISM Index, Institute for Supply Management
Oct. 1: CampusMBA FHA Fundamentals Workshop
Oct. 2-3: MBA Reverse Mortgage Lending Fall Conference, Miami
Oct. 2: Manufacturer Shipments, Inventories and Orders, Bureau of the Census
Oct. 3: Joint Economic Committee Statement 
Oct. 3: Employment, Bureau of Labor Statistics
Oct. 3: ISM Services, Institute for Supply Management
Oct. 7: Consumer Credit, Federal Reserve
Oct. 8: MBA Weekly Application Survey
Oct. 8: Housing Forecast/Pending Home Sales Index, National Association of Realtors
Oct. 9: Wholesale Trade, Bureau of the Census
Oct. 9: CampusMBA FHA Fundamentals Workshop
Oct. 10: CampusMBA FHA Fundamentals & Operations Workshop
Oct. 10: Imports/Exports, Bureau of Labor Statistics
Oct. 10: Trade Balance, Bureau of Economic Analysis
Oct. 10: Treasury Monthly Statement
Oct. 13: Columbus Day Holiday (MBA offices open)
Oct. 15: MBA Weekly Application Survey
Oct. 15: Producer Price Index, Bureau of Labor Statistics
Oct. 15: Advance Retail Sales, Bureau of the Census
Oct. 15: Empire State Manufacturing Survey
Oct. 15: Business Inventories, Bureau of the Census
Oct. 15: Beige Book, Federal Reserve
Oct. 15: N.J. Employment and Unemployment 
Oct. 16: Consumer Price Index, Bureau of Labor Statistics
Oct. 16: Real Earnings, Bureau of Labor Statistics
Oct. 16: Industrial Production and Capacity Utilization, Federal Reserve
Oct. 16: Philadelphia Fed Survey
Oct. 16: Cleveland Fed Median CPI 
Oct. 16: N.Y. Employment and Unemployment 
Oct. 17: New Residential Construction, Bureau of the Census/HUD
Oct. 17-18: MBA State & Local Workshop, San Francisco
Oct. 18: CampusMBA Introduction to Real Estate Finance
Oct. 18: CampusMBA Commercial Loan Origination 301
Oct. 19-22: MBA 95th Annual Convention & Expo, San Francisco
Oct. 20: Composite Indexes, The Conference Board
Oct. 21: Regional and State Employment and Unemployment
Oct. 21: Chicago Fed National Activity Index 
Oct. 22: MBA Weekly Application Survey
Oct. 23: OFHEO Monthly House Price Index
Oct. 24: Existing Home Sales, National Association of Realtors
Oct. 27: Revised Building Permits, Bureau of the Census
Oct. 27: New Residential Sales, Bureau of the Census/HUD
Oct. 27: State and Local Building Permits, Bureau of the Census
Oct. 27: Dallas Fed Manufacturing Survey
Oct. 27: Chicago Fed Midwest Manufacturing Index 
Oct. 28: Advance Durable Goods, Bureau of the Census
Oct. 28: S&P/Case-Shiller Home Price Indices
Oct. 28: Consumer Confidence, The Conference Board
Oct. 28: Housing Vacancies and Homeownership
Oct. 28: Richmond Fed Survey
Oct. 28-29: Federal Open Market Committee
Oct. 29: MBA Weekly Application Survey
Oct. 29: Metropolitan Area Employment and Unemployment 
Oct. 30: Gross Domestic Product (advance), Bureau of Labor Statistics
Oct. 30: Kansas City Fed Manufacturing Survey
Oct. 31: Employment Cost Index, The Conference Board
Oct. 31: Personal Income, Bureau of Economic Analysis
Oct. 31: Chicago Purchasing Managers Index
Nov. 5-7: RESPRO Fall Seminar, New Orleans
Nov. 6-7: MBA Residential Underwriting Conference, Tampa
Nov. 11: Veterans Day holiday (MBA offices closed)
Nov. 18: CampusMBA School of Mortgage Banking II
Nov. 27-28: Thanksgiving holidays (MBA offices closed)
Dec. 4-5: MBA Commercial/Multifamily Capital Markets Winter Conference, Washington, D.C.
Dec. 5: CampusMBA Train the Trainer Workshop
Dec. 8: Office of Thrift Supervision National Housing Forum, Washington, D.C.
Dec. 10-12: MBA Accounting, Tax & Financial Analysis Conference, Las Vegas
Dec. 10: CampusMBA Loss Mitigation Workshop, Dallas
Dec. 12: CampusMBA Understanding Reverse Mortgages Worskshop, Dallas
Dec. 16: Federal Open Market Committee
Dec. 25: Christmas holiday (MBA offices closed)
Dec. 26: MBA offices closed.

2009
Jan 1: New Years Day (MBA offices closed)
Jan. 13: CampusMBA School of Mortgage Banking I
Jan. 27-28: Federal Open Market Committee 
Feb. 8-11: MBA CREF/Multifamily Housing Convention & Expo, San Diego
Feb. 10: CampusMBA School of Mortgage Banking II
Feb. 16: CampusMBA Loss Mitigation Workshop, Tampa, Fla.
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. 16-18: MBA National Fraud Issues Conference, Las Vegas
Mar. 17: Federal Open Market Committee
Mar. 24-26: CampusMBA School of Mortgage Servicing, Westlake, Texas
April 19-22: MBA National Secondary Markets Conference, Chicago
Apr. 28-29: Federal Open Market Committee
May 12-15: MBA Commercial/Multifamily Servicing & Technology Conference, New Orleans
May 14: CampusMBA Loss Mitigation Workshop, Chicago
June 9: CampusMBA School of Mortgage Banking III
June 23-25: Federal Open Market Committee
Aug. 10: CampusMBA Loss Mitigation Workshop, Washington, D.C.
Aug. 11: Federal Open Market Committee
Aug. 18-20: CampusMBA School of Mortgage Servicing, Jacksonville, Fla.
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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