In its post-meeting statement, the FOMC said the economy has “slowed markedly,” citing declining consumer spending and weaknesses in business spending and industrial production and potentially soft exports as global growth slows. It also noted that intensified financial market turmoil will likely cause financial markets to tighten further, which will hurt business and consumer spending.

Reference to inflation was brief; the FOMC said it expected inflation to moderate going forward as a result of the drop in the prices of energy and other commodities as well as a weakening economy. Absent from yesterday’s statement was the phrase “inflation has been high.” This has appeared regularly in past statements and its absence suggests that inflation risks are no longer a concern for the Fed.

The FOMC said recent policy actions to strengthen financial systems should “help over time” to improve credit conditions. It added that the “downside risks to growth remain,” suggesting that more rate cuts could follow if needed. The October 8 statement did not mention any risks to economic growth.

The FOMC also lowered the discount rate by 50 basis points to 1.25 percent. The fed funds rate decision was unanimous.

One economic report released yesterday offered encouragement: new orders for manufactured durable goods rose by 0.8 percent in September, helped by strong transportation orders. New orders for civilian aircraft surged by 30 percent for the month and defense aircraft orders and automobile orders also rose. The increase in overall orders came after a 5.5 percent decline in durable goods orders in August, revised down from a previously reported 4.8 percent drop.

Excluding the volatile orders for transportation equipment, orders were down by 1.1 percent after a 4.1 percent drop in August. Shipments for nondefense capital goods excluding aircraft—a component used in the calculation of economic growth in the third quarter—rose by 1.5 percent after a 2.2 percent drop in the prior month. 

Despite the improving headline, the report indicated weakening future business investment spending. Nondefense capital goods orders excluding aircraft—a proxy for business investment in equipment and software in the coming quarters—dropped by 1.4 percent following a 2.2 percent decline in the prior month. The back-to-back large drops are discouraging for capital expenditure and economic growth outlook for the current quarter and the first quarter of next year.  

(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 pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.

In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate in coming quarters to levels consistent with price stability.

Recent policy actions, including today’s rate reduction, coordinated interest rate cuts by central banks, extraordinary liquidity measures, and official steps to strengthen financial systems, should help over time to improve credit conditions and promote a return to moderate economic growth. Nevertheless, downside risks to growth remain. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 1-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Cleveland and San Francisco."
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FHFA appointed several OFHEO and FHFB staff into deputy director positions:

• Edward DeMarco as senior deputy director, chief operating officer and deputy director for housing mission and goals;
• Stephen Cross as deputy director of the Division of Federal Home Loan Bank Regulation;
• Chris Dickerson as deputy director of the Division of Enterprise Regulation; and
• David Lee, the FHFB’s director of the office of management, as FHFA’s chief administrative officer.

Watt Commercial Properties Taps Rorison as President
Watt Cos., Santa Monica, Calif., named Susan Rorison as president of Watt Commercial Properties. She will lead strategic development, leasing and management services for the company’s retail, residential, office and industrial properties throughout the United States.

Rorison brings three decades of retail sector experience to this position, including serving as national head of asset management for Centro Watt, a national real estate investment trust specializing in shopping centers. While at Centro Watt, Rorison helped direct the Trust’s shopping center portfolio to more than $11 billion in assets and grew its presence to 38 states. Prior to joining Watt, Rorison directed national asset management for Burnham Pacific Properties and was western regional vice president for Prudential Real Estate Investors.

NewOak Capital Appoints Truglia as Managing Director
NewOak Capital, New York, appointed Vincent Truglia as managing director of global economic research.

Truglia has 31 years experience. Prior to joining NewOak Capital, he was managing partner of WHAnalysis.com and managing director of the Sovereign Risk Unit at Moody’s Investors Service. Earlier he worked for the Federal Reserve Bank of New York, the Bank of New York/Irving Trust and NCNB, the parent company of Bank of America.

LenderLive Network Hires Tanenbaum as SVP Technology  
LenderLive Network Inc., Denver, appointed Mitch Tanenbaum as senior vice president of technology, responsible for overall software development, data center operations and information security. He will monitor architecture, strategy and implementation of all software systems, as well as oversee production and test environments for all internal and customer data management. He also will be responsible for ensuring protection of all LenderLive customer information.

Tanenbaum has more than 30 years of experience in the real estate, financial services, consulting and telecommunication industries, in addition to expertise in defense systems and application service providers. He spent 12 years at Mercury Cos. Inc. prior to joining LenderLive, most recently serving as chief technical officer. Before that, he spent 15 years at Texas Instruments Inc. He is a member of MISMO.

NetMore America Appoints King as RVP
NetMore America Inc., Walla Walla, Wash., hired Susan King as regional vice president of the company’s western region. She will manage the company’s growth throughout the western United States, including Arizona, California, Colorado, Idaho, Missouri, Nevada, Oregon, Washington, Utah and Wyoming.

King brings more that 16 years of combined sales and management experience in both the mortgage industry as well as the title and escrow industries. Most recently, she served as area sales manager of wholesale lending in Northern California for National City Mortgage. Prior, she was manager of builder developer services for Fidelity National Title.

Precision Risk Management Systems Hires Barden to Head New Hedge Services Dept.
Precision Risk Management Systems Inc., North Little Rock, Ark., hired Lee Barden to lead its new Managed Hedge Services, which will provide managed pipeline risk management for lenders.

Barden has more than 20 years of secondary marketing and trading experience; he worked previously for regional lenders and a top 10 lender.

LECG Adds Holliday as Director in D.C. Office
LECG, Emeryville, Calif., hired Kathryn Holliday as a director in its Washington, D.C. office.

Holliday comes to LECG from Fannie Mae, where she spent nearly two decades, most recently as vice president of credit analytics at Fannie Mae. She has also served as a visiting economist for the Federal Home Loan Bank Board and as an assistant professor of finance and economics at the College of William and Mary.
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CampusMBA will hold SOMB I and II courses at its new headquarters in Washington, D.C., November 18-21. Register today and enter save an extra $500 off registration fees for SOMB I.

SOMB Course I: Introduction to the Real Estate Finance Industry
The course presents an overview of associated disciplines essential to a complete understanding of mortgage banking, loss mitigation, predatory lending, capital markets, real estate law and regulation and real estate mathematics.

NEW Registration for SOMB I (with $500 off SOMBSAVE code): MBA Member: $1,745; Nonmember: $2,306. Be sure to mention promo code SOMBSAVE online or on the phone to receive the discounted price.

SOMB Course II: Managing Profitability and Risk
Managing Profitability and Risk emphasizes organization and management of the production, servicing and secondary marketing departments for the purpose of controlling risks and maximizing bottom-line profits. This course covers new market development, production management, servicing portfolio management and valuation, marketing risk management, pricing strategy and commercial lending.

Registration for SOMB II: MBA Member: $2,245; Nonmember: $2,806

To learn more about MBA’s School of Mortgage Banking and see other course offerings, visit http://www.campusmba.org/Tools/ProductLists.aspx. To register by phone, call (800) 348-8653.
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Last month, the Federal Reserve released 2007 HMDA data, which provides important insights into industry performance and the performance of individual lenders. Join top experts from the Federal Reserve, law firm Skadden Arps, Slate, Meagher and Flom LLP and the MBA from the comfort of your office learn more about these data and what they means to your company.

During this LIVE Online Conference, Federal Reserve senior economist Robert Avery will review recent HMDA data. Experts from Skadden Arps, including Andrew Sandler and Anand Raman, as well as MBA’s Ken Markison, will discuss how your company can use the data and otherwise comply with fair lending laws.

In addition, the program covers Federal Reserve revisions to its HMDA reporting rules (Regulation C) to redefine a “triggered” or “higher priced” mortgage loan requiring “rate spread” reporting. The rule begins to take effect October 1, 2009. Compliance is mandatory for loan applications take on or after that date and loans that close after January 1, 2010, regardless of their application date.

Register for this LIVE Online Conference and receive a FREE electronic copy of MBA's new publication on fair lending, developed with assistance from Skadden Arps, to manage regulatory, litigation and reputational risks associated with data reported under HMDA. The publication illustrates the manner in which HMDA data can be used in enforcement actions or litigation involving discrimination in loan pricing and underwriting, as well as related claims, such as “redlining,” “steering” and “predatory lending.” It also provides background information describing the fair lending laws, including the Fair Housing Act and the Equal Credit Opportunity Act.

This LIVE Online Conference is an excellent opportunity to ask questions of experts on how to protect your company and comply with fair lending laws in today’s challenging market. Please note that this program was originally scheduled for September and was rescheduled for this date.

Register Now
If you are interested in participating in this LIVE Online Conference, you must register. The fee is $175 per site for MBA members and $225 per site for nonmembers. To register online, click http://www.campusmba.org/products/default.aspx?product_code=E2801716AF/REGIS&wt.mc_id=CMBAHMDAE1 or call (800) 348-8653.

MBA's FHA Special LIVE Online Conference is part of a regularly scheduled series with senior FHA staff. The next regular installation of this online conference will take place on Wednesday, November 20 from 2:00-3:30 p.m.

MBA's LIVE Online Conferences are powered by CampusMBA, the education division of MBA. This interactive format enables participants to easily view presentations, download articles and analyses and interact with experts through their desktop or laptop computers. All that is needed to participate in this convenient and inexpensive format is a computer with an Internet connection and a phone. This saves both travel expenses and time away from the workplace.

To learn more about LIVE Online Conference Policies, visit http://www.campusmba.org/AboutCampusMBA/CampusMBAPolicies.

Designation Credit
Participants receive one half point toward the MBA Certified Mortgage Banker (CMB) designation. To learn more, visit http://www.campusmba.org/IndustryDesignations/CertifiedMortgageBanker?wt.mc_id=LOCFCRA or call (202) 557-2873.

To learn more about CampusMBA and its programs, visit www.campusmba.org.
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“In a time of limited resources, we must ensure that MBA is focusing its efforts on [members] top priorities,” said MBA Chief Operating Officer John Courson. “Only by knowing what you value most can we ensure that MBA is best supporting your company during these turbulent times.”

The survey takes less than 15 minutes to complete. It asks questions about why members choose to belong to MBA; which products, services and issues are of most importance to members, and where MBA can improve.

Respondents are asked to submit their surveys by the end of this week.
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The report said prospects of building equity would improve in only 36 out of 100 large metropolitan cities by 2012. Of the 64 cities considered “negative equity” cities, two in Florida—Cape Coral-Ft. Myers and Orlando-Kissimmee—are expected to turn from negative to positive equity cities because of rapidly falling house prices.

Compared to an earlier study this spring, in which 64 cities were also projected to have negative equity, only nine declined further and severity of house price depreciation dissipated in 24 cities.

The report, which evaluated median house price and fair market rent as determined by HUD, said wide diversity is prevalent in housing markets across the country. It said in many “bubble-inflated” markets, homeownership remains a “costly and risky proposition”—monthly homeownership costs in such markets exceeded rental costs by as much as 300 percent.

“While many metropolitan housing markets continue to be subject to real estate bubbles, prices are not out of line with rents in large parts of the country,” said Danilo Pelletiere, research director at NLIHC and a co-author of the report. “[It shows] the importance of not relying on a one-size-fits-all solution to the current housing crisis.”

At the peak of the housing boom in 2006, the report said the national ratio of median annual rents to the median house prices exceeded 25 to 1—a ratio that far exceeds the equilibrium ratio of 15 to 1.

Of 33 metropolitan areas that saw a decrease in ownership costs, 26 were in “bubble markets,” of which 19 were in California and Florida—areas most affected in the past two quarters, the report said. Only 14 “bubble” markets experienced an increase in ownership costs out of 67 metro areas with inflated house prices.

California and Florida also contributed most to the increase in mortgage delinquency rates, which stood 6.41 percent at the end of the second quarter, as reported by the Mortgage Bankers Association’s National Delinquency Survey.

Jay Brinkmann, chief economist and senior vice president for research and economics, said increases in foreclosures in California and Florida overwhelmed improvements in other states. “California and Florida alone accounted for 39 percent of all the foreclosures started in the country during the second quarter and 73 percent of the increase in foreclosures between the first and second quarters,” he said.

“Despite the extreme downward pressure in homeownership and labor markets, rental vacancy rates remain stable and rents continue to inch up,” Pelletiere said. "There was a critical need for affordable rental housing before the foreclosure crisis and the problem is only getting worse. Creating affordable rental housing in the face of foreclosure is important to keep people in their communities and stabilize housing markets.”

Dean Baker, co-director of CEPR and an author of the report, said many families would have to forego other expenses to make their mortgage payments. “Furthermore, since prices are still falling in these markets, many homeowners won't ever accrue any equity,” he said.”

The report said that though prospects have improved, most homeowners would continue to have negative equity by 2012—if house prices return to trend levels. For example, the report said that in New York, homeowners will have $101,964 of negative equity and in Los Angeles, the shortfall would be $168,069.

“It seems likely that prices will continue to fall in some bubble markets and that the mismatch between current home prices and rents will persist and, in some areas, grow,” Pelletiere said. “Even in areas with positive equity predictions, recent price increases have lowered estimates in many instances.”
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