“I’ll bet against it containing the dual packaging,” said Paul Mondor, principal at the Law Offices of Paul Mondor in Washington, D.C., speaking here at GHR’s Client Conference 2003. “I think HUD is beleaguered and has no appetite for anymore go-round on this. I think it could not come out with dual packaging without re-proposing [RESPA reform].”

Mondor said that under the administrative procedures act, HUD could not legally put in dual packaging.

“The real drivers of this are true believers who think this rule is right as they propose it and they want it done,” Mondor said.

Rod Alba, director of government affairs at the Mortgage Bankers Association, said that dual packaging would define a “completely different set of people” from lenders, not covered by the statute as far as disclosure responsibilities, to give out the disclosures.

“It doesn’t make sense,” Alba said. “It is an attempt to get out of the package. It is a counterproposal by several industry groups that simply was not well thought out.”

In addition, lenders would bear the burden of costs from the settlement services industry.

“Lenders cannot suffer the consequences of their misdisclosures and of their excessive charges,” Alba said. “That’s exactly what’s going to happen under this proposal and that is exactly why MBA has opposed it. It may provide certain solutions to some of the problems out there right now but, as proposed, it simply doesn’t work.”

But Vincent Deluzio, president and CEO of ValuAmerica Consulting, LLC, said that ValuAmerica’s approach is to “give us the rules and we’ll compete.”

“It all comes back to the same issue,” Deluzio said. “How many different ways do you need to disclose the costs associated with the loan that the consumer pays directly or indirectly?”

Deluzio said that the lenders are the focal point of a number of parties trying to bring the pieces together to close a loan, but the consumer needs to receive the quality of choice and be fairly treated.

The title industry has generally been opposed to the reform because it could involve bundling third party services into a Guaranteed Mortgage Packaging Agreement (GMP) because it might force title companies to lower their costs.

But Deluzio is confident that the title industry would continue to prosper within the new environment through technology, and title companies would not be dependent on the size of the lenders.

“The title companies are becoming totally integrated providers of service,” said Deluzio said. “The only thing they’re not going to do is lend money and, who knows, that might be in the picture too.”

Despite Deluzio’s confidence that RESPA reform would not hurt the title industry as much as the American Land and Title Association (ALTA) believe, Mondor said that the title industry will most likely draft a complaint asking for a preliminary injunction following the announcement of a final rule. For that reason, Mondor expects HUD to publish the final rule so that there is a voluntary compliance provision before the usual mandatory 60 to 90 day lead time.

Mondor said that should ALTA decide to litigate against the rule, HUD could show there is no “irreparable harm” in the title industry since it has not “gone out of business.”

“If [ALTA] cannot get a preliminary injunction, they can’t win that case,” Mondor said.
 
But, Deluzio pointed out that congressional members on the House Financial Services Committee, both Republicans and Democrats, have indicated there could be litigation that deals with rule-making. But he said the final rule would inevitably go to Congress and “reform is going to happen.”

“If they think that even a successful litigation is going to stop this reform movement, it’s not going to happen,” Deluzio said. “Congress itself is going to deal with this issue.”
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“The winners are going to be those who look for the opportunities,” said Regina Lowrie, president and CEO of Gateway Funding Diversified Mortgage Services, Fort Washington, Pa.

Gateway Funding projects loan volume at $2.5 billion this year, and the company continues to recruit loan producers responsible for about $50 million to $60 million per year through its “retail plus” strategy.

In “retail plus,” Gateway provides broker-like pricing to the retail plus loan officers, but the branch offices cover all of their expenses. As a result, Gateway hold consistent profit margins regardless of interest rates and branches make 100 percent profit.

“They still operate under our policies and procedures,” Lowrie said.

Unlike a net branch, the retail plus loan officers are W-2 employees of Gateway with health benefits who register loans under the Gateway secondary market.

Although Gateway makes less money with loan officers under the retail plus program, the recruitment of $50 million per year loan officers makes it worthwhile, Lowrie said.

Gateway is also planning to establish a home equity division as homebuyers start to tap into their equity, comparable to the low interest rates they saw while purchasing or refinancing their home.

“We’re going to have to become experts at that,” Lowrie said.

Meanwhile, Homecomings Financial, a division of GMAC, Minneapolis, Minn., finds success in its consumer origination department through retention business. The consumer origination area is part of the servicing group but differentiates from the wholesale division, said Ann Roess, director of strategic operations at Homecomings Financial.

Homecomings performs data mining through its technology to create a “book of business” and leveraging the overall runoff rate on loans in servicing.

“We’re keeping those customers,” Roess said.

The company provides its staff with information from its MLS database that shows listings of consumers who have put their homes on the market within the past 60 days.

“We’re going to start some outbound sales to those [borrowers] and try to reach our customers that way.”

Roess also said that home equity lending would be a product that Homecomings could be pushing into the market.

“Up to this point, we’ve had to outsource the sales of home equity [loans] because we couldn’t handle the volume of calls coming in just on our first mortgages,” Roess said.

Although the winners would look for opportunities in technology, new products or standing market share in a changing rate environment, Lowrie said the losers might not realize the magnitude of the regulatory environment with regard to Gramm-Leach-Bliley, the Patriot Act and the detection of fraud.

“The propensity of fraud in our industry has increased dramatically,” Lowrie said. “You may be cutting in some ways but you need to be expanding in the areas of quality control and regulatory compliance.”
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Loan Protector Insurance Services, Solon, Ohio, appointed Joe Laslo vice president. He is responsible for expansion and maintenance of the client base, along with sales and marketing efforts. The 30-year mortgage industry veteran previously worked as an independent contractor for American Family Insurance, where he developed marketing programs and conducted personal insurance reviews.

Option One Mortgage Corp., Ft. Lauderdale, Fla., has selected Steve Greenburg to run its new office in Fort Lauderdale, Fla. He brings more than 25 years of mortgage banking experience to the position. Prior to joining Option One, he was national wholesale subprime sales manager for CitiMortgage.
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The Sept. 16 letter, sent to the leadership of the Senate Banking and Appropriations Committees and the House Financial Services and Appropriations Committees, said the increase in commitment authority would not cost additional money, and would result in revenue for the government while enabling affordable rental housing projects to go forward.

“Affordable rental housing developments will not go forward if this situation is not resolved quickly, and valuable jobs created by these programs may be lost in many communities,” MBA and the groups said. “Simply waiting until next fiscal year is not an answer because some developments must show evidence of financing before the end of September or they will not be built. Others could miss a construction start prior to the beginning of winter if commitments cannot be issued soon. And with rising interest rates, many rental developments and many potential homeowners may simply be priced out of the market.”

On Sept. 13, HUD announced that it had exhausted all of the $23 billion in commitment authority authorized for the General Insurance and Special Risk Insurance Funds. This affects all of the FHA multifamily and healthcare programs as well as a number of single family programs, including condominiums, reverse mortgages for the elderly and rehabilitation loans. These programs, all focused on affordable housing for the working poor and the elderly, have been adversely affected by HUD’s inability to issue commitments to insure new loans.

“We wish HUD had worked with us earlier to help with this situation. We thought we were beyond the point of stops and starts, once we solved the credit subsidy issue,” said Michael Petrie, CMB, MBA vice chairman and president of P/R Mortgage & Investment Corp., Indianapolis, Ind. “We are working with Congress to get the $2 billion increase in commitment authority, and we appreciate the support we have received, particularly from the Senate.”

Joining MBA in the letter were the Healthcare Financing Study Group; the National Apartment Association; the National Association of Home Builders; the National Association of REALTORS ®; the National Housing Conference; the National Leased Housing Association and the National Multi Housing Council.
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The strong second quarter performance of both commercial and multifamily mortgage markets reported by the Fed is consistent with the survey of new mortgage originations released by the Mortgage Bankers Association in August. That data showed very sharp gains in both markets during the second quarter. MBA data reflects refinance activity; the Fed data do not.

Insured depositories and mortgage pools (CMBS) continue to be the biggest players in commercial/multifamily mortgage markets. At the end of the second quarter of 2003, commercial banks and savings institutions held just over half of the commercial and multifamily debt taken together, according to the Federal Reserve definitions and data.  Mortgage pools reportedly accounted for another 17 percent of the total.
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HFF senior real estate analyst Kristin Brozek and director Mark Fisher secured a $30 million permanent mortgage loan for the Greenwich Financial Center, an 80,470-square-foot office building located in the heart of Greenwich, Conn., on behalf of the HB Nitkin Group. HB Nitkin Group is a real estate developer, owner and manager based in Greenwich, with a portfolio of 1.2 million square feet.

Greenwich Financial Center is a four-story, 80,470-square-foot, Class A office building that was fully renovated in 1991. The property includes 60,334 square feet of office space and 19,663 square feet of retail space. Half of the retail space fronts Greenwich Avenue, which hosts high-end retailers such as Saks Fifth Avenue, Tiffany's and Baccarat. The property also fronts the entire block of Fawcett Place between Mason Street and Greenwich Avenue. Located within walking distance of the Greenwich Train Station, the property offers a 39-minute commute to Grand Central Station in New York City. 

"As good as the financing may be, the real story is Nitkin's $26.6 million investment in this property and the Amory Building two years ago,” Fisher said. “Today, Greenwich Financial Center alone is worth $40 million with the Amory worth an additional $8 million.

Greenwich Financial Center is one of six Class A office buildings in Greenwich that primarily host major national financial services organizations, many catering to the vast wealth found within the town of Greenwich and Fairfield County.

The Dallas office arranged a $10.87 million acquisition financing for Woodlake Apartments, a 799-unit multifamily community in Oklahoma City, Okla. Director Scott Fowler worked on behalf of Andrew Meieran to secure the 4.96 percent fixed-rate, ten-year financing through Citibank West, a bank/thrift lender.

Woodlake Apartments is situated on more than 45.5 acres at 6446 North Peniel Avenue in the northwestern area of Oklahoma City. The property has easy access to two major roadways leading to local business and retail centers–Northwest 63rd Street and Northwest Expressway. The 799 units average 778 square feet each and feature patios/balconies. Originally built in four phases between 1972 and 1978, the property will undergo a series of renovations under the new ownership.  The property is approximately 88 percent occupied.

"This is a wise acquisition for Mr. Meieran because of the property's central location and excellent condition," said Fowler. "The property also has plenty of economic upside that will be captured with the planned improvements."
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Did you know that an appraiser can reappraise a property for a second client after appraising it for the first client? Did you know that the Uniform Standards of Professional Appraisal Practice (USPAP) now requires appraisers to analyze a three-year sales history for the subject property? What about the comparable sales?

The Appraisal Standards Board is the congressionally authorized source of appraisal standards in the United States. Virtually all appraisers performing appraisals for mortgage lenders are subject to these standards (USPAP). If you are an underwriter, loan processor, loan officer, quality control professional, and anyone else utilizing or reviewing appraisal reports, you don't want to miss this enlightening event. 
 
Join industry expert Danny Wiley, chairman of the Appraisal Standards Board, to learn what you need to know about recertification of value versus updates, transferring appraisals, and other information lenders need to know about appraisals.

Listeners will learn about:

• Recent changes to USPAP that clarify the difference between an "Appraisal Update" and a "Recertification of Value;"
• Upcoming changes to USPAP that clarify appraisers' responsibilities when it comes to "readdressing" (transferring) an appraisal report;
• Comparable sales, now that USPAP requires appraisers to analyze a three-year sales history for the subject property;
• Upcoming changes that clarify the process of a reappraisal of a property for a second client after appraising it for the first client; and
• Other common misconceptions and misunderstandings between appraisers and mortgage lenders.

For more information about the program, go to the program site at CampusMBA, http://www.campusmba.org/index.cfm?STRING=content.cfm?section=469.
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ProtectInfo was created in response to the information security needs of financial institutions, including mortgage bankers and brokers subject to regulation by the Federal Trade Commission (FTC). Based on the Gramm-Leach-Bliley Act (GLBA or the Privacy Act) and subsequent regulations, including the FTC’s Information Safeguards Rule, financial institutions are required to have in place customer information security programs to protect their customers’ nonpublic personal information. The ProtectInfo website (www.protectinfo.com) features products and services designed to assist companies with developing those customer information security programs.

“Providing tools to assist financial institutions with keeping non-public customer information private is a major reason the MBA through LTC has become involved in this project,” said Dan Thoms, MBA’s vice president of education and business development and vice president of LTC. “ProtectInfo is an invaluable resource to mortgage bankers and brokers in their pursuit of compliance with the current regulations.”

ProtectInfo provides many services, including an online Compliance Assessment Tool that helps determine if a company meets a threshold of customer security in the context of the FTC Safeguards Rule. ProtectInfo also offers the ProtectInfo Seal Program, and SafeGuardian, a web-based software solution that will help companies to develop a Customer Information Security Program. This software was developed by the American Information Security Group, LLC (AMIS Group).

“Recognizing the need for a cost-effective and comprehensive software solution, the AMIS group created SafeGuardian. This application is ideal for mortgage companies looking to get into compliance with the FTC Information Safeguard Rule, but who lack the resources and expertise needed for security program development,” said Mark Piesner, president of the AMIS Group.

“We are very excited to be working with LenderTechnologies and the ProtectInfo website. We see this site as the number one source for financial services firms seeking assistance with their information security and privacy initiatives,” Piesner said. “Specifically, the ProtectInfo Seal Program offers an innovative and cost-effective method for mortgage companies to assess not only their own information security and privacy practices, but also the commitment to customer privacy of current and potential service providers.”

To earn the ProtectInfo Seal, a company must use the Compliance Assessment Tool. The Compliance Assessment Tool is an Internet-based software service that provides an adaptive questionnaire, which measures an applicant’s information security and privacy practices. The tool assists a company in determining if it is doing what is necessary to comply with the FTC Safeguards Rule. Items reviewed include Applicability of the rule to the business, Risk Assessment, Information Systems, Security Management, and a host of other issues.

At the end of the process, the company not only receives a score, but a detailed report that breaks down the score, and contains suggestions for those organizations that failed to meet the threshold of the ProtectInfo Seal Program. Companies earning the ProtectInfo Seal are granted a license to display the Program Seal in their offices and on their Web sites showing their commitment to customer privacy.

For more information about ProtectInfo, visit www.ProtectInfo.com or call 202/557-2915.
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