August 2006
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TABLE OF CONTENTS
* Mortgage
Bankers Association Releases Lender Perspectives
of FHA
*
House Passes Bill to Modernize FHA
*
Real
Estate Finance Industry Changes Expected Over
Next Ten
Years, According to New Report
*
Just the Facts
*
Security Freezes in NH, VT, and ME
*
U.S.
Supreme Court has Agreed to Hear States' Rights
Banking Case
*
Beautiful Evening for Summer Cruise on Lake
Sunapee
*
Program
Schedule
Mortgage Bankers
Association Releases Lender Perspectives of FHA
WASHINGTON, D.C. (August 3, 2006) -
Lenders see the lack of a zero-down payment loan product as
a major reason for the decline in market share for the
Federal Housing Administration (FHA) according to a study
released today by the Mortgage Bankers Association (MBA).
The study, "Lender Perspectives on FHA's Declining Market
Share," was commissioned by the
Research Institute for Housing America (RIHA), a 501(c)(3)
trust fund of MBA, and
conducted by Bernadette Kogler, Ann Schnare and Tim Willis
of the Hollister Group. 61 lending institutions of varying
size and with varying degrees of experience with FHA
participated in the study. 
"With
legislation pending in Congress, this study provides
relevant and timely information
to MBA members and
policymakers regarding the FHA program," said Doug Duncan,
MBA chief economist and senior vice president of research
and business development. "Lenders see value in FHA but
there are barriers that FHA needs to overcome to allow it to
provide additional options for borrowers and to be more user
friendly for lenders."
Key
findings from the study include:
·
Over two-thirds of lenders believed that
FHA's lack of product offerings was a major factor
underlying its declining market share.
·
Almost 70 percent of lenders reported
that the addition of a zero-down payment product to FHA's
product line would result in a "significant" or "major"
increase in the number of FHA loans that they originate.
·
One-third of lenders believed that an
expanded product line would lead to a "significant" or
"major" increase in their FHA volume.
·
46 percent of lenders believed that a
stronger cash-out refinance program would make FHA programs
significantly more competitive, particularly in the current
interest rate environment.
·
62 percent of lenders identified the
closing and post-closing process of FHA loans as a
"significant" or "major" contributor to higher origination
costs of FHA loans.
Survey
results also suggest that there is a consistent interest in
FHA lending and that there are numerous opportunities to
improve FHA program offerings.
Since the
survey was administered,
the U.S. House of Representatives passed
H.R. 5121, Expanding American Homeownership Act of 2006,
legislation which empowers and revitalizes the Federal
Housing Administration (FHA). Additionally, the
FHA has made a number of enhancements to its programs and
processes. The HUD-92564-VC form, commonly known as the "VC
Sheet" which appraisers were required to complete while
reviewing a property's condition, has been retired.
Additionally, HUD's recently announced Lender Insurance
program and new appraisal protocols are expected to address
the cumbersome workload in the closing and post-closing
process of FHA loans. In fact, 61 percent of lenders said
that they would participate in the program and 87 percent
were planning to participate anticipated a decline in the
average cost of FHA loan originations.
"The
retirement of the VC Sheet and announcement of the Lender
Insurance program are steps in the right direction for FHA,"
said Duncan. "Other issues that have been uncovered in this
survey would require congressional action for changes to be
made and MBA plans to support such action."
House Passes Bill to Modernize
Federal Housing Administration
The U. S. House of Representatives passed "The Expanding
American Homeownership Act," which will increase
homeownership opportunities for millions of Americans by
modernizing the Federal Housing Administration (FHA) and
returning it to its traditional role as an important
financing option in today's housing market.
FHA was created in 1934 to give homebuyers access to
reasonably priced mortgages under fair terms. Over the
years, it has been able to help more than 34 million
families become homeowners and now it needs to be able to
adapt to today's marketplace. This legislation will
bring FHA into the 21st Century and offer hard-working
Americans a variety of safe homeownership options at a fair
price.
 The
Expanding American Homeownership Act will:
1) Eliminate the current statutory three percent
minimum down payment, reducing a significant barrier to
homeownership. FHA's existing down payment
requirement does not meet the demands of today's
marketplace, where most first-time homebuyers put down two
percent or less. The "new" FHA would offer a variety
of down payment options.
2) Create a new, risk-based insurance premium
structure for FHA that would match the premium amount with
the credit profile of the borrower. It would
replace the current structure, in which there is standard
premium amount for all borrowers, while still protecting the
soundness of its Insurance Fund. FHA would have a
flexibility to charge a lower premium for low-risk
borrowers, and to charge higher-risk borrowers a slightly
higher premium.
3) Increase and simplify FHA's loan limits. FHA's
loan limit in high-cost areas would rise from 87 to 100
percent of the GSE conforming loan limit and in lower-cost
areas from 48 to 65 percent of the conforming loan limit.
This change is crucial in today's housing market. In
many areas of the country, the existing FHA limits are lower
than the cost of new construction, eliminating FHA financing
as an option for buyers of new homes in those markets.
FHA has simply been priced out of the market in other areas,
such as California, where FHA insured only about 5,000 home
mortgages in all of 2005, down 95 percent from 109,000 in
2000.
HUD is the nation's housing agency committed to increasing
homeownership, particularly among minorities; creating
affordable housing opportunities for low-income Americans;
and, supporting the homeless, elderly, people with
disabilities and people living with AIDS. The
Department also promotes economic and community development,
and enforces the nation's fair housing laws. More
information about HUD and its programs is available on the
Internet at www.hud.gov and
www.espanol.hud.gov.
Real Estate
Finance Industry Changes Expected Over Next Ten Years,
According to New Report
 Over
the next five to ten years, the real estate finance industry
will face dramatic changes in the economy; in capital
markets; in borrowers, products and processes; and in
technology, according to the report of The Council to Shape
Change released on August 11, 2006. The Council is an
independent group of 19 real estate finance industry leaders
created by the Mortgage Bankers Association (MBA) as a means
of helping the MBA and its members better identify and
prepare for the changes that the $12 trillion real estate
finance industry will likely face in the next five to ten
years.
The Council was created in the fall of 2005 by Regina Lowrie,
CMB, Chairman of MBA with the mission of identifying and
evaluating the major forces and trends shaping the industry;
developing an intellectual framework to understand the
impact of these forces and trends on the future structure,
scope, products and profitability of the industry; and
utilizing the resulting framework to provide strategic
insights that businesses may use to optimize their planning
and development efforts.
The Council was led by Andy Woodward, former Chairman of
Bank of America Mortgage and of the MBA. "The Council
was given a huge assignment: To identify the major
forces and trends shaping the industry; to develop a
framework for understanding the impact of these forces and
trends; and to provide strategic insights that both the MBA
and its members can benefit from," said Woodward.
"The last four years were record years for this industry.
However, the only thing we know for certain is that the
future holds change in the US and global economies and
financial markets," said Lowrie. "The Council's report
is the result of numerous meetings, candid and lively
discussion and helps to lay out the strategic
framework for what the next decade may look like for real
estate finance firms and the industry in general.
 The vision will provide the grounding for future decisions
regarding business, policy and advocacy as well as serve in
developing MBA's future strategic plan." Because of
the independence of the Council, the opinions expressed in
this report aren't necessarily those of the MBA.
Likewise, individual members of the Council and their
respective companies may hold different opinions on some
issues than those put forth by the group as a whole.
Additionally as with any forecast, this report represents
conclusions drawn at a particular point in time, under
conditions that are subject to change. The findings
presented in the report represent the Councils'
deliberations on what the future might look like for the
industry.
Please contact
MBBA-NH if you would like to order Outlook for the
Real Estate Finance Industry. The cost is
$67, which includes shipping and handling.
Just the Facts
Application
Volume Declines in Latest Survey
The Market Composite Index, a measure of mortgage loan
application volume, is the lowest that the index has been
since May 2002 - 527.6. On an unadjusted basis, it was
down 29 percent compared with the same time one year
earlier.
New
Hampshire Delinquency Rates
Q1, 2006 Delinquency Rate - 2.96%
Q1, 2005 Delinquency Rate - 2.64%
New Hampshire Foreclosures in Process
Q1, 2006 in the Foreclosure Process percentage - 0.46%
Q1, 2005 in the Foreclosure Process percentage - 0.40%
National Delinquency Rates
Q1, 2006 Delinquency Rate - 3.96%
Q1, 2005 Delinquency Rate - 3.88%
National Foreclosures in Process
Q1, 2006 in the Foreclosure Process percentage - 0.98%
Q1, 2005 in the Foreclosure Process percentage - 1.08%
During a U.S.
House of Representatives Financial Services Committee field
hearing on August 23, 2006, Michael Fratantoni, Senior
Director for Single-Family Research and Economics at the
Mortgage Bankers Association (MBA) delivered testimony on
the causes and trends in mortgage delinquencies and
foreclosures. "Though
currently low, delinquency and foreclosure rates varied
across the country in the first quarter of 2006," said Fratantoni. "More specifically, the Midwest has maintained
the highest rates of foreclosures, due to the continuing
decline of jobs and relatively weak housing markets as well
as the high level of homeownership in the Midwest."
Security Freezes in NH, ME, and VT
 Many
states have already adopted or will be adopting the option
for a consumer to place a security freeze on his/her
personal credit report. Each credit reporting agency's
Web site has information regarding how or when a consumer
may exercise this option, as well as there may be charges
associated with a freeze if it is not as a result of
identity theft.
Please note that in order to bypass the
freeze, the mortgage applicant can provide you with an
unfreeze code. But make sure that your current method
of credit access provides an option for you to utilize this
code.
U.S. Supreme Court has Agreed to
Hear States' Rights Banking Case
|
 LANSING,
MI -
Attorney General Mike Cox announced on June
20, 2006, that, in a June 19, 2006, order,
the United States Supreme Court granted
Cox's petition to hear a states' rights
banking case which has national
significance. Attorney General Cox
petitioned the Supreme Court on behalf of
Linda A. Watters, Commissioner of the Office
of Financial and Insurance Services (OFIS),
to overturn a decision of the Sixth Circuit
Court of Appeals preventing Michigan from
enforcing the provisions of its Mortgage
Brokers, Lenders, and Servicers Licensing
Act and the Secondary Mortgage Act against
Wachovia Mortgage Corporation.
"I am pleased that the United
States Supreme Court has agreed to hear this
important case," said Cox. "Michigan's mortgage laws give the
Commissioner of OFIS authority to help
protect consumers from unfair, unsound, and
abusive lending practices. My office will
continue to oppose unlawful attempts to
pre-empt valid state laws."
The Mortgage Brokers,
Lenders, and Servicers Licensing Act was
passed in 1987 to address unscrupulous
predatory lending abuses that came to light
in the wake of the AJ Obie-Diamond Mortgage
Company scandal, in which Michigan borrowers
were charged exorbitant fees and title to
their property was often clouded. There,
losses to over 1600 investors totaled
approximately $50 million.
On April 3, 2003, Wachovia
Mortgage, a subsidiary of Wachovia Bank,
changed course and abruptly notified OFIS
that Wachovia would no longer comply with
Michigan's mortgage laws. Wachovia Mortgage
claimed that the National Bank Act and
regulations passed by the Comptroller of the
Currency pre-empted state mortgage laws as
to a subsidiary corporation of a national
bank. The Attorney General and Commissioner
Watters disagreed.
State officials
in 32 states, including Attorneys General
and regulators of mortgage lenders,
supported the legal position of Attorney
General Cox. Iowa, Alaska, Arizona,
Arkansas, California, Colorado, Connecticut,
Florida, Hawaii, Idaho, Illinois, Indiana,
Kansas, Kentucky, Louisiana, Maine,
Maryland, Minnesota, Mississippi, New
Jersey, New York, North Carolina, North
Dakota, Ohio, Oregon, South Carolina, South
Dakota, Tennessee, Texas, Vermont,
Washington, and Wisconsin filed an amicus
brief with the Supreme Court in support of
state regulation.
Cox added, "I
appreciate the support of other states who,
like me, are deeply concerned that the
states should not be barred from regulating
 an
important category of state-chartered
corporations for the purpose of preventing
fraudulent or unscrupulous financial
activities."
No hearing date
has been announced by the Supreme Court.
Wachovia
Mortgage Corporation is a state-chartered,
non-bank, operating a subsidiary
corporation, Wachovia Bank, organized under
North Carolina's laws. Wachovia Mortgage
holds a Certificate of Authority to transact
its mortgage business in Michigan as a
foreign profit corporation.
Wachovia Bank,
N.A. is a large national bank whose main
office is located in Charlotte, North
Carolina. Wachovia Bank has no physical
presence in Michigan. It has no branch
offices in Michigan, in contrast to the
branch offices it has in some 17 other
states across the country. |
|
Beautiful Evening for Summer
Cruise on Lake Sunapee
It was MBBA-NH's first summer cruise on Lake Sunapee.
The views were breathtakingly beautiful, the food
scrumptious, and the 70 passengers thoroughly enjoyed
themselves during the two-hour cruise on Wednesday, July 19,
2006.
The evening was further enhanced by the round trip bus
transportation from the Bedford and Concord area and was
generously provided by the following sponsors:
Connecticut Attorneys Title Insurance Company (CATIC)
Home Trust Title
Radiant Mortgage
Horizon Settlement Services
Silver Hill Financial
Downeast Mortgage Corporation
Old Republic Title
St. Mary's Bank
THANK YOU!
Sunset on the M/V Kearsarge on Lake Sunapee
(Photo Courtesy of Julie Clark, Horizon Settlement
Services)
Programs Scheduled
September 20 - 22, 2006 - New England Mortgage
Banking Conference at the Westin Hotel, Providence, Rhode
Island. Click here
for more information.
Wednesday, October 4, 2006
- Half-day morning seminar on fraud, credit scoring, opt
in/opt out, mortgage insurance, trigger, credit freeze,
identity theft, and disputes (and how to resolve them) at
the Manchester Country Club, 180 South River Road, Bedford,
New Hampshire. More information to be announced.
Tuesday, October 10, through
Tuesday, November 14, 2006 - Course 1:
Mortgage Banking Fundamentals from 9 to 12 P.M. for six
consecutive weeks at New Hampshire Housing, 32 Constitution
Drive, Bedford, New Hampshire. Course 1 is for
employees with less than one year of experience in
residential mortgage lending. Cost to attend is
$195/members and $250/non-members. For individual
classes $35/members and $50/non-members. More
information to be announced.
Wednesday, October 18, 2006
- Breakfast workshop on the ins and outs of reverse
mortgages at the Manchester Country Club, 180 South River
Road, Bedford, New Hampshire. More information to be
announced.
November 2006 - Sales training for loan
originators. More information to be announced.
Tuesday, December 12, 2006
- Annual holiday party at the Manchester Country Club, 180
South River Road, Bedford, New Hampshire, from 5:30 to 9
P.M. to benefit the United States Marines Corps "Toys for
Tots." Please bring an unwrapped toy to support this
campaign. More information to be announced..
Tuesday, February 13, through
Wednesday, February 14, 2007 - Annual Joint
Mortgage Conference at the Radisson Hotel, Center of New
Hampshire, Manchester. National sales trainer,
cocktail reception with exhibitors, fraud prevention,
economic update, compliance, etc. More information to
be announced.
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