TABLE OF CONTENTS

* MBA Chairman Robbins Testifies on Subprime and Predatory Lending

* Congressman Barney Frank, Chair, House Financial Services Committee Addresses
  Massachusetts MBA Members

*  Subprime Lending Falling

* Mortgage Delinquencies Rise in the Fourth Quarter

* Mortgage Applications Decrease Slightly in Latest MBA Survey

* Dems Want to Help Borrowers By Boosting FHA Loan Program

* Report:  Minorities Pay More for Loans in Six (s) Cities

* Subprime Fallout May Not Infect Broader Market

* Introducing the Volunteers of the Public Relations Committee

* Programs Scheduled

MBA Chairman Robbins Testifies on Subprime and Predatory Lending

WASHINGTON, DC (March 27, 2007) -  John M. Robbins, CMB, Chairman of the Mortgage Bankers Association (MBA), testified today before the U.S. House of Representatives' Financial Services Committee's Subcommittee on Financial Institutions and Consumer Credit.  In his testimony, Robbins pledged MBA would work with consumers, legislators, regulators and other stakeholders to help ease the pain caused by the current troubles in the subprime market.  

"While we must ask what lessons we should learn from our mistakes, it is equally important for those in positions of authority to help current home owners stay in their homes," said Robbins.  "Working together, I suggest we must accomplish three things.  We must stabilize the subprime mortgage credit system; provide assistance for homeowners facing foreclosure; and finally prevent this from ever occurring again.  Sound perspective and a prudent regulatory hand will sooth investors, calm editorial writers and help consumers."

"For subprime borrowers who are facing foreclosure, industry and policymakers must partner to help provide options so that as many as possible are able to remain in their home," continued Robbins.  "Chairman Dodd recently called for a summit of all parties to address this problem.  MBA embraces that idea.  And we at MBA strongly encourage all borrowers that find themselves unable to continue making payments to contact their lender immediately.  Lenders lose money in foreclosure and have a strong desire to make any number of arrangements that will allow a borrower to start making payments again and keep his or her home.

Lawmakers, regulators and industry must work to ensure that this situation does not occur in the future.  An absence of pricing transparency coupled with a daunting and complicated closing process has permitted certain actors to prey on the unsophisticated.  The mortgage market is desperate for a rewrite of the nation's settlement laws and a strong uniform lending standard to trap predators and bring them to justice."

In his statement, Robbins also acknowledged that some lenders had made mistakes providing loans to some subprime borrowers.

"What I have seen of late troubles me deeply.  Responsible lenders only extend credit to borrowers who are willing and able to make mortgage payments.  They do not trick borrowers into loans that are unsustainable. And they do not hold out something that is only a mirage of the American Dream. 

Yet bad loans were made.  They were not made responsibly or with the best interest of consumers in mind."

Robbins' full testimony can be found at www.mortgagebankers.org.

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 500,000 people in virtually every community in the country.  Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 3,000 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site: www.mortgagebankers.org.

Congressman Barney Frank, Chair, House Financial Services Committee
Addresses Massachusetts MBA Members

By Massachusetts MBA Executive Director Kevin Cuff
Reprinted with permission

March 12, 2007 – the Massachusetts Mortgage Bankers Association played host to Congressman Barney Frank at the MMBA Learning Center in Burlington as the second installment of the new MMBA Luncheon & Issues Series. 

Barney Frank is the United States Representative from the 4^th Congressional District of Massachusetts.  The 4^th Congressional District is a peculiar, fish hook shaped district running from the Boston line in the north through Brookline, Newton, Wellesley and sweeping south east through the communities of Taunton, Dighton, Raynham and ending on the shores of Buzzards Bay in the coastal communities of Fall River, New Bedford up to the banks of the Cape Cod Canal. 

The Congressman is perhaps “considered” more of a consumer advocate, but he has proven to be and his remarks yesterday supported him as a prudent free marketer. 

Congressman Frank spoke passionately about this nation’s needs around affordable housing and affordable lending products.  He was complimentary about the efforts of the Federal Home Loan Bank around affordability.  He expects (or hopes) to see equal cooperation out of Fannie and Freddie in the flexibility of loan limits as he believes maximum loan amounts should keep pace with rising real estate values particularly in high value regions like here in the northeast.  Just last Friday, the Congressman introduced comprehensive GSE reform legislation which would tackle just this issue among many others as well as placing the GSEs under a strong federal regulator with control over capital, mortgage portfolios and new products of Fannie and Freddie.  In addition, the Congressman felt that some of the economic benefit afforded the quasi-governmental GSEs might be leveraged to realize more affordable lending programs perhaps through a $500 million per year program funded by our good friends at Fannie and Freddie. 

The Congressman is in support and he will introduce legislation surrounding a uniform lending standard in order to further curtail risky loan practices.  This uniform standard, we learned yesterday is likely based upon the Massachusetts state law enacted in November 2004 which sets “high cost” loan triggers and establishes a “borrower’s interest” provisions for any refinance loan made within five years of a past transaction.  A uniform lending standard would take precedence over the many state and local anti-predatory lending laws. 

Again, worth stating (1.) ~ The Congressman is likely to base the new lending standard proposal after Massachusetts current law. 

And, speaking of “borrower’s interest”, the Congressman made some revealing comments about a consumer’s “ability to repay” and a lender’s responsibility on assessing the consumer’s “ability to repay”.  These remarks were made in the context of a longer discussion about the current state of the subprime mortgage market.  The Congressman did acknowledge a significant resetting of the secondary market guidelines within the subprime market but he also acknowledged the significant dangers of high LTV lending and the markets past proclivity toward negative amortization loans. 

Again, worth stating (2.) ~ I pressed the Congressman on his establishment of a suitability standard or applying a fiduciary duty upon the mortgage lending industry.  Never known to suffer fools gladly, the Congressman hates the term “suitability” and he expressed his frustration toward legitimate consumer protections such as an “ability to repay” assessment, but “the industry should not be left to be the finance police”.  The Congressman concluded: “I spend enough time trying to protect people from each other.  I do not have time to protect them from themselves.” 

The Congressman has a long political pedigree as the once Chief of Staff for former Boston Mayor Kevin White and Chief of Staff for former Salem Congressman Michael Harrington.  He also served in the Massachusetts state legislature from 1973 – 1980 and was successfully elected to the ninety-seventh Congress in 1981 and each succeeding Congress since. 

Congressman Frank currently serves as the ranking majority member and Chair of the extremely powerful Financial Services Committee.  The Financial Services Committee oversees all components of the nation’s housing and financial services sectors including banking, mortgage banking, insurance, real estate, public and assisted housing, and securities.  The Committee continually reviews the laws and programs relating to the US Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corp., Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund.  The Committee also ensures the enforcement of housing and consumer protection laws such as the US Housing Act, Truth in Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws.

Subprime Lending Falling

By Peter Francese

My heart goes out to anyone trying to sell a home when the wind chill is below zero. But tough New Hampshire REALTORS® persevered to sell over 1,400 homes and 520 condominiums in the first two months of this year, according to Northern New England Real Estate Network (NNEREN). They tabulate home sales, but they don’t get a count of frozen toes.

Home sales (excluding condos) declined slightly statewide, but increased over the same period last year in four of the state’s 10 counties and rose the most in Rockingham and Strafford.  While the statewide average sale price edged down 1.5 percent, it increased in five counties.  In both Merrimack and Rockingham counties, sales rose but prices fell, in large part because of fewer multi-million dollar transactions.

The national press continues to be filled with stories about the fallout from the excesses in the sub-prime mortgage lending business.  It appears that a good part of those deals were more like a scam than legitimate business.  I’m shocked, just shocked.

Nevertheless, the big losses in the sub-prime end of the market (and consequent drop in value of more than a few mortgage-backed securities) may cause some lenders to react by over-tightening their lending practices.  That could put a damper on spring sales if potential buyers can’t get financing.

My sources in the banking community tell me that mortgage loan officers have much less discretion today than they did in the past.  But that’s due more to automated credit scoring than to any problems in the sub-prime end of the market. So far, there seems to be no direct evidence that home sales are being thwarted because lenders are getting more risk averse. Stay tuned.

Residential home sales trends (excluding condos), Jan/Feb 2006 to Jan/Feb 2007:

Source: Northern New England Real Estate Network.  Statistics are based on information from NNEREN for the respective periods shown for the respective regions in the State of New Hampshire or all towns in the State of New Hampshire.  All analysis and commentary related to the statistics is that of the New Hampshire Association of REALTORS® and not that of NNEREN.

This article is reprinted with permission by the author, Peter Francese (peter@francese.com), and the New Hampshire Association of REALTORS®, Inc.  Copyright 2007 New Hampshire Association of REALTORS®, Inc.  All rights reserved.

Mortgage Delinquencies Rise in the Fourth Quarter

Mortgage Applications Decrease Slightly in Latest MBA Survey 

WASHINGTON, D.C. (March 28, 2007) - The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending March 23, 2007.  The Market Composite Index, a measure of mortgage loan application volume, was 671, a decrease of 0.2 percent on a seasonally adjusted basis from 672.1 one week earlier.  On an unadjusted basis, the Index decreased 0.2 percent compared with the previous week and was up 16.6 percent compared with the same week one year earlier.

The Refinance Index decreased 0.5 percent to 2197.7 from 2208.6 the previous week and the seasonally adjusted Purchase Index increased 0.1 percent to 411.1 from 410.6 one week earlier. The seasonally adjusted Conventional Index decreased 0.4 percent to 993.8 from 997.4 the previous week, and the seasonally adjusted Government Index increased 2.4 percent to 132.8 from 129.7 the previous week.

The four week moving average for the seasonally adjusted Market Index is up 1.7 percent to 676.3 from 665.1.  The four week moving average is up 0.6 percent to 410.3 from 407.9 for the Purchase Index, while this average is up 2.9 percent to 2238.2 from 2174.6 for the Refinance Index.

The refinance share of mortgage activity decreased to 45.1 percent of total applications from 45.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 20.2 from 20.9 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.04 percent from 6.06 percent, with points increasing to 1.33 from 1.3 (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 5.77 from 5.79 percent, with points decreasing to 1.14 from 1.17 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 5.84 from 5.88 percent, with points decreasing to 0.72 from 0.73 (including the origination fee) for 80 percent LTV loans.

**SPECIAL NOTES**

The survey covers approximately 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.  Base period and value for all indexes is March 16, 1990=100.

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 500,000 people in virtually every community in the country.  Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 3,000 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site: www.mortgagebankers.org.
 

The following articles are reprinted with permission from the Mortgage Bankers Association's MBA NewsLink:

Dems Want to Help Borrowers by Boosting FHA Loan Program
Investor's Business Daily (03/20/07) P. A1; Graham, Jed
Sen. Hillary Clinton, D-N.Y., is among the Democrats pushing for expansion of the Federal Housing Administration loan program to help borrowers with low credit ratings achieve homeownership. While she wants to boost the FHA mortgage limit to $363,000 to make the program available to borrowers in pricier markets, others are pushing for elimination of the program's 3-percent down-payment requirement. Additionally, the National Community Reinvestment Coalition is looking for support for a proposal that would allow the FHA to refinance defaulted subprime loans, though some critics do not believe it would be a good idea for the government to take on such risk. Meanwhile, Rep. Carolyn Maloney, D-N.Y., has introduced a bill that would force mortgage lenders to determine whether borrowers could afford their monthly payments at the maximum interest rate before writing loans.

Report:  Minorities Pay More for Loans in Six (6) Cities
Jackson Clarion-Ledger (MS) (03/09/07)
Citigroup, Countrywide, General Motors unit GMAC, HSBC, JPMorgan Chase, Washington Mutual and Wells Fargo make out more costlier loans to minorities than whites in Boston, Charlotte, Chicago, Los Angeles, New York City and Rochester, N.Y. According to a new study by the California Reinvestment Coalition, Community Reinvestment Association of North Carolina and four other groups, black and Hispanic borrowers were almost four times as likely to receive a more expensive loan in those cities. The groups studied the prime and subprime lending of the banks. The report concludes that lenders should make all of their mortgage products available to all customers, and regulators should look into the lending practices of large banks (EDITOR'S NOTE: The Mortgage Bankers Association has repeatedly stated that such data do not necessarily reflect all the factors taken into account by lenders in making a decision to lend, such as the borrower's credit rating, borrowing history and other key factors).

Subprime Fallout May Not Infect Broader Market
Wall Street Journal (03/12/07) P. A2; Whitehouse, Mark; Spector, Mike
Federal Reserve Chairman Ben Bernanke and many other economists do not expect troubles in the subprime mortgage niche to impact the overall national economy, citing a low unemployment rate and income gains. Additionally, they point to data from the Labor Department indicating that only 8 percent of consumer spending is tied to the lowest-income Americans, who make up the bulk of subprime borrowers. However, the U.S. economy could suffer if investors and lenders begin shrinking the amount of credit available to prime borrowers--a scenario that sparked previous recessions. Furthermore, rising subprime foreclosures could worsen the housing downturn, with Lehman Brothers chief U.S. economist Ethan Harris anticipating a monthly increase in inventory of as much as 20,000 homes in 2008. California, Florida and other overheated markets--as well as Ohio, Michigan and others plagued by the downturn in manufacturing--would be hit the hardest.

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 500,000 people in virtually every community in the country.  Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 3,000 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site: www.mortgagebankers.org.
 

Introducing the Volunteers of the Public Relations Committee

MBBA-NH has four active committees that include members who volunteer their time.  These volunteers are the backbone of the association; they keep the association current with their valuable ideas and hard work.  In turn, they gain leadership skills and have the opportunity to meet different people in New Hampshire's mortgage finance industry; it's an enriching experience! 

The public relations committee is so valuable to the association.  The committee is responsible for sending press releases on the Certified Mortgage Professional (CMP) designation, loan awards, graduates of the Course 1 and 2, new slate of officers, meaningful contributions to housing non-profits in New Hampshire, etc.  We want the public to know that we are a viable and engaged association in the matters of educating mortgage financial professionals in New Hampshire, as well as supporting vital housing programs in New Hampshire. 

Other responsibilities include the newsletter, spreading the word about the CMP designation, and reviewing the Web site for improvements.  As you can see below in the photo, it's apparent that we have an outstanding group of people on the committee.  If you would like to join the public relations committee, in which brainstorming for ideas is essential and fun, please contact the MBBA-NH office at info@mbba-nh.org.

  PUBLIC RELATIONS COMMITTEE

Back Row (L to R):  Krista Fratus, Decision One Mortgage; Victoria Best, Radiant Mortgage;
Julie Clark, Horizon Settlement Services; David Deziel, Consumer Credit Counseling Service NH - VT
Front Row (L to R):  Andy Cadorette, New Hampshire Housing; Meg Malette, MBBA-NH
(Photo courtesy of Julie Clark, Horizon Settlement Services)

Programs Scheduled

Tuesdays, March 13, 2007, through April 17, 2007—Course 2:  Mortgage Banking Fundamentals at New Hampshire Housing, 32 Constitution Drive, Bedford, New Hampshire, from 9 A.M. to 12 P.M.  Click here for more information and to register. 

Wednesday, May 2, 2007—Preparing for and Responding to the State Examination Process at the Manchester Country Club, 180 South River Road, Bedford, New Hampshire, from 8:30 A.M. to 11:30 A.M. (This is a MUST for mortgage brokers!)  More information to come!

Thursday, May 3, 2007—Annual Dinner at the Puritan Back Room Function Hall, 245 Hooksett Road, Manchester, New Hampshire, with a silent auction to benefit MBBA-NH’s college scholarship fund and after-dinner entertainment.   More information to come!

June 2007—An Emerging Market:  How can Residential Lenders/Brokers Successfully Tap into Their Existing Databases to Cross-Sell Commercial Lending Products?  More information to come!