“Any portion of the loan up to 100 percent can be swapped into a fixed rate using the [swap] matrix they have,” said Bob Dockerty, the company’s principal.

Dockerty noted although rates should continue to stay low for some time and most borrowers will continue to float, the program is an opportunity to hedge the loan at the borrower’s option during the 3-year term with a 2-year option. Interest rate and debt service coverage were not disclosed.

“Some people might want to take a portion of the loan, just to be conservative, and swap it into a fixed rate,” Dockerty said. “It’s a flexible program.”

Linton Office Center is a three-building complex with more than 86,000 net rentable square feet located on 9.9 acres in Delray Beach. The property, built in 1982 and renovated in 1993, is 99 percent leased with tenants that include Bank of America, the State of Florida and SBA Telecommunications.

The office market in Delray Beach is “holding up well,” according to Dockerty, in contrast to the next closest market, Boca Raton, Fla. “[Delray Beach] is a smaller market,” Dockerty said. “Boca [Raton] has more vacancies. Delray seems to be doing just fine.”
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The acquisition of NAC will expand LandAmerica’s service offerings to its customers on commercial real estate loans while also serving as a strategic fit for both companies. NAC’s current clients include real estate investment trusts, insurance companies, commercial mortgage-backed securities (CMBS) lenders and commercial mortgage and construction lenders.

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Scott Cooley, chief strategy officer at Ellie Mae, Pleasanton, Calif., said that simplifying the process and making costs easier to understand for the borrower could make it more likely for consumers to adopt the Internet for mortgage transactions.

“Trust is the largest issue for consumers when it comes to the largest financial decision in their life,” Cooley said. “The RESPA reforms makes it easier for them to trust the numbers.”

According to the proposed rules, originators must let borrowers know that they should compare prices and shop for the best originator, mortgage product and settlement service provider.

Borrowers have mostly been using the Internet to compare interest rates and shop for a mortgage, rather than actually applying and closing a loan through a Web site.

HUD also believes that the proposed rules could have a positive effect for the Internet as consumers search for more “transparent” mortgage rates with fewer variables.

But John Crowley, vice president, product strategy at ALLTEL Information Services, Little Rock, Ark., said that the current trend of bundling a “one-fee” product will go further to having consumers shop for a mortgage rather than regulatory rules.

“It’s definitely a trend that is gaining some momentum in the industry,” Crowley said.

Still, mortgage technology companies such as ALLTEL Information Services, Ellie Mae and GHR Systems of Wayne, Pa., anticipate that they might have to retool their systems depending on the regulations adopted from the proposed rules. Many have already begun planning and assessment stages in anticipation of an eventual final rule.

The new Good Faith Estimate (GFE) requires mortgage brokers and all other loan originators to describe their services and inform borrowers of different payment options, show borrowers the effect of higher interest rates or yield spread premiums and their effect at settlement and disclose discount points paid by the lender in brokered loans.

According Crowley, the Annual Percentage Rates (APRs) are calculated multiple times “on the fly” without storing it into the database until it is correct. But reporting the information on the APR would cause systems to store the rate continuously into the database.

“A lot of systems don’t store that off anywhere,” Crowley said. “Some do and some don’t.”

GHR Systems does not create and rep and warrant the documents generated, but its partner VMP Mortgage Forms, Fraser, Mich., will make those changes.

“Our applications will have to be modified around the guidelines or, more specifically, around the rules in which our lender clients choose to deploy and enforce [from] those guidelines,” said Gregg Phillips, senior vice president, head of product management, at GHR Systems.

For Loan Origination Systems (LOS’s) used by a number of mortgage brokers, the retooling process could be more extensive and involve different forms of code, according to Cooley.

“The immediate impact is that all of the loan origination systems must have substantial upgrades performed to adopt to the new documentation requirements along with modifying the core calculations,” Cooley said. “These changes are actually more difficult than most would expect because of the extreme complexity of these systems. The core calculation routines alone have thousands of lines of code where a minor change requires that significant testing be performed.”

On the Internet, however, changes might not be as complicated as for the loan origination systems, Cooley added. “One of the longer term impacts is that it will become much easier to build Web sites that quote all-inclusive pricing,” he said.

Mortgage brokers must also disclose the maximum amount of compensation they could receive from a transaction within three days of the application, or during the GFE stage, according to the HUD proposed rule.

GHR Systems spokesperson Melissa Skehan said the company can now set up “switches” for lenders to determine who is able to make any changes in price and when they are able to do it. “Those broker-specific fields will be locked down at the lender dictated time frame,” Skehan said.

The HUD proposal also guarantees one closing cost fee to consumers through bundled settlement services called a “Guaranteed Mortgage Package Agreement (GMPA)” in exchange for a lender exemption from Section 8 of RESPA. GHR Systems Product Manager Kyle Chaney said the company is designing a system to connect lenders with their service providers through GHR’s network.

“The lender has the ultimate flexibility of choosing who those vendors are and how they display or bundle the dollar figures or the fees to the borrower on the GFEs,” Chaney said.

GHR Systems currently has a National Closing Cost database to generate the GFE and it works with lender clients on their fees and defining the line items.

“To the extent the bundling of fees are to be represented on any particular HUD line item, that is a simple business rule,” Phillips said, adding that incorporating changes or additional data is not a major initiative like it is in mainframe applications.

Crowley noted that the proposed HUD rules might simplify the entire process from a programmatic standpoint, but not necessarily from a developmental perspective.

“When it comes time to actually set up, define, bring products to the market and help lenders make those types of changes to the application, from a configuration standpoint, it would help to simplify things,” Crowley said.

But vendors in the mortgage industry charge maintenance fees on software to add the changes that should not be anything extraordinary from changes that are expected occur in the mortgage industry every 3 to 5 years, according to Crowley. “We expect and anticipate some sort of change along these lines,” he said.

“Regulatory rules happen all the time,” Phillips said. “The rule itself is not driving the change in technology. It’s the change in technology that is facilitating the ease of deployment in those regulatory changes.”
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