MIT Lending, New York City, promoted Sharon Bitz and hired R.J. Arnett as senior vice presidents of the Western region. Both Bitz and Arnett are responsible for loan production, as well as maintaining and initiating MIT Lending Branches in 13 western states. Bitz, an active member of the California Mortgage Bankers Association, served as vice president of the Western region prior to her promotion. Arnett, a member of CMBA and MBA, joins MIT Lending with 18 years of mortgage banking experience.

BridgeSpan Inc., Frisco, Texas, named Lynelle Dahn chief financial officer. Prior to joining BridgeSpan, Dahn served as key advisor for company CEOs and various boards of directors and management teams. She also provided financial, operations and change-management consulting services to a number of companies.  

eLynx Ltd., Cincinnati, Ohio, appointed Joe Beck and Michael Pelfrey as regional sales managers. Beck is regional sales manager for the Northeast division, where he will develop new customer acquisitions and introduce new products and services to increase eLynx’s market share. He worked as the director of business development for IMC, Inc. prior to joining eLynx. Pelfry will lead eLynx’s west coast sales effort. Before joining eLynx he held a number of management positions for Automatic Data Processing.

Atone Software Inc., Stateline, Nev., hired Marty Heck, Kurt Schultz, Richard Collins and Fred Portner. Heck is the new CEO. He has more than 35 years of experience with GE and GE Capital which includes serving as president and general manager of GE Capital Mortgage Insurance Cos. for nine years. Schultz was named COO.  With 22 years of information technology experience, he will provide leadership for the strategic information technology resources. Collins, Atone Software co-founder and a member of MBA, was appointed CTO. He previously served as Atone Software’s CEO. Prior to founding Atone Software, he was CEO of QACPS, a Homeland Security company. Portner was named senior vice president of business development and he will strive to build the partnership with companies such as Calyx Software, Inc.  

LandAmerica Financial Group, Richmond, Va., named Michael Rooney president of LandAmerica Commonwealth Title of Dallas, Inc. He brings 29 years of title experience to LandAmerica. Before joining LandAmerica he served in numerous positions of importance that helped bring him to where he is today.

LandAmerica Financial Group also hired Lloyd Draper, Margaret Foster, Dave Koshork, John Obzud, Gary Opper and Jim Sindoni as regional leaders.  Draper is the new executive vice president, southwest regional leader.  He will manage New Mexico, Oklahoma and Texas. He previously served LandAmerica as senior vice president, southwest division manager. Foster is executive vice president, west regional leader and is responsible for Arizona, California, Hawaii and Nevada. In addition to serving as executive vice president, Koshork is the northwest regional leader. He is responsible for Colorado, Idaho, Montana, Oregon, Utah, Washington and Wyoming. Obzud will now serve as southeast regional leader in addition to his duties as an executive vice president. He is a past member of Maryland Mortgage Bankers Association. Opper is executive vice president Midwest regional leader. He previously served LandAmerica as executive vice president, Midwest division manager. Sindoni is executive vice president, northeast regional leader. He is currently a member of the Mortgage Bankers Association of Greater Philadelphia.

The California Mortgage Bankers Association, Sacramento, Calif., appointed Mark Runyon, president of MortgageTree Lending, Modesto, Calif., to its board of directors.

Runyon will serve a three-year term on the volunteer CMBA board. He has been involved with the CMBA since 1986. He is a founding member of the Innovative Mortgage Originator Council, based in Washington, D.C., which works with HUD and other state regulatory agencies to help ensure lasting success in net branching and other forms of innovative origination.
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The company, a member of the California Mortgage Bankers Association, Sacramento, Calif., also announced a donation of $5,000 each to the Steve Rucker Fund and Doug McDonald Fund. These funds were formed to help the families of these firefighters who have experienced personal tragedy while serving to protect the homes of many Californians during this epic fire. 

“We strongly encourage our member companies to offer charitable donations during these disastrous times," said CMBA Chairman Matthew Soto, Sr.

Impac Mortgage Holdings contribution will help the Southern California Wildfire Relief Fund respond immediately to victims of the wildfire who may feel overwhelmed by the issues they must address. CMBA also urged its member mortgage companies to offer mortgage relief to borrowers who have lost their homes, suffered damage to their properties or have incurred a loss of employment due to damage to their workplaces. CMBA asked members to make a donation to the American Red Cross Disaster Relief Fund.

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The Federal Deposit Insurance Corp. announced signing of a Money Smart Alliance Program agreement that will make its Money Smart financial education curriculum available to all 11th and 12th grade students in Arkansas public high schools. 

Arkansas is the first state to promote a statewide financial education program in its school system. Under terms of the agreement, the Center for Financial Training (CFT) and the Arkansas Community Bankers (ACB) will work with the Arkansas Department of Workforce Education to teach Money Smart in high schools that request it. 

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HUD awarded grants to build affordable housing for low-income elderly people and people with disabilities in four Minnesota cities. In addition, the University of Minnesota received $400,000 from HUD to improve a St. Paul neighborhood.

HUD awarded capital advance grants to nonprofit groups in Delano, Minneapolis, Owatonna and Shakopee. These grants, ranging from $2.1 million to $4.3 million, cover the cost of developing the housing. The money need not be repaid if at least 40 percent of the housing is made available to low-income people or people with disabilities.

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Bankruptcies reached a record level in 2003, according to latest figures from the Administrative Office of the U.S. Courts.

The Courts’ annual study showed that more than 1.625 million personal bankruptcies occurred in the fiscal 2003 year ending September 30. That, combined with 36,183 business bankruptcies, made 2003 the year with the most bankruptcies ever. Since 1994, bankruptcy filings in federal courts have increased 98 percent, the Courts said.

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Looking for the best business climate in the nation? According to Site Selection magazine, try North Carolina.

The magazine rates states based on an annual survey of corporate real estate executives and new business performance. Rounding out the top five were Michigan, Tennessee, Ohio and Virginia.

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BMC Mortgage Inc., Dallas, Texas, announced an agreement to acquire privately held Loan Star Capital Funding, Inc., a mortgage brokerage firm specializing in the multi-family and commercial property sectors. 

BMC CEO Carl Esrey said the acquisition of Lone Star would strengthen BMC.  “This acquisition enables BMC to extend its lead in the small scale, multi-family and commercial mortgage sector. In addition to adding to its revenue base, the acquisition also provides BMC with several new proprietary lending relationships.”

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The Office of Thrift Supervision said the nation's thrift industry reported net income of $3.44 billion in the third quarter, up 16 percent from the $2.97 billion earned in the third quarter of 2002, but down 3 percent from the record $3.53 billion earned in the second quarter of this year. This marks the second best earnings quarter in history, and the fourth time that quarterly income for the industry has topped $3 billion.

"The thrift industry continues to enjoy robust earnings, profitability and capital levels," said OTS Director James Gilleran in announcing the results, "as well as excellent asset quality and a very low number of problem institutions."

Profitability, as measured by return on average assets (ROA), was 1.28 percent in the third quarter, up from 1.22 percent in the comparable year ago quarter, but down from the second quarter record of 1.34 percent.

The number of problem thrifts—those with composite examination ratings of 4 or 5—fell to seven from eight in the prior quarter, and 17 one year ago. Assets of problem thrifts declined to $0.6 billion at the end of the third quarter, a significant decrease from $3.6 billion in the year-ago quarter, and the lowest level since OTS was founded in 1989.

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DocsDirect, McKinney, Texas, a document solutions provider, integrated its Internet-based DataSync(tm) solution into Del Mar Database's DataTrac, enabling users of the DataTrac system to directly access the closing document solution. DocsDirect's DataSync automatically identifies discrepancies in information used in mortgage closing documents so brokers can correct errors before finalizing documents, potentially saving wholesale lenders millions of dollars.

DataSync serves as an interface between multiple external databases for both the wholesale lender and its brokers. Once the broker enters the details for a loan into his loan origination system (LOS), DataSync then compares the information against the data specified by the lender and identifies any discrepancies between the external databases. Once errors have been identified, users make the appropriate changes to ensure accuracy of the closing documents before printing.

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The First American Corp., Santa Ana, Calif., a provider of business information and related products and services, introduced a consolidated bundle of products and services to complete home purchase transactions.

First American said the company leveraged its menu of services and technology to electronically produce a new Purchase Money Bundle, which they said is the first specially priced, integrated package of mortgage information and settlement services from a single source.

The basic Purchase Money Bundle consists of all of origination and settlement services required by mortgage lenders to originate mortgages in purchase transactions, including credit reporting, flood zone determination, property valuation, title insurance and closing services. A version of the Purchase Money Bundle will also be available to title agents wishing to offer a bundle of real estate information products to complement their own title and settlement services.

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Standard & Poor's Ratings Services, New York City, said it would continue to rate structured finance transactions in Illinois and Oklahoma despite new lending laws that tighten definitions of “predatory” loans.

S&P said the Illinois High Risk Home Loan Act and the Oklahoma House Bill 1574, both of which become effective January 1, do not contain the kind of “assignee liability” provisions that would make it impossible to rate the risk of structured finance transactions.

“Lenders who wish to avoid making high-risk home loans should be able to do so,” S&P said.

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Dorado Corp., San Mateo, Calif., said it would provide lenders with point-of-sale access to First American guaranteed discount packages of real estate settlement services, which are designed to help under-served families achieve homeownership.

First American services would be integrated with Dorado ChannelMaster™, enabling seamless access to service bundles that will help lenders better attract and serve minority and lower income borrowers. Dorado has also created Spanish-language versions of the ChannelMaster home loan consultant Web sites for Countrywide Home Loans, Calabasas, Calif.
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The Moody’s report explores how changes in collateral composition over time could affect the capacity of the collateral pool to support the repayment of securitized debt. It said that a typical single-borrower CMBS loan with substitution and release provisions is secured by multiple properties that are cross-collateralized.  

"The borrowers are most commonly REITs [real estate investment trusts] or pension fund advisors that value flexible loan arrangements along with the attractive cost of funds available through a CMBS securitization" said Moody's Brian Furlong, vice president and senior analyst in the structured finance group at Moody’s and the author of the report.

Furlong pointed out some key considerations on the CMBS loans, including the collateral quality and diversity at the start of a transaction, and how those characteristics might change throughout the life of the loan following substitution and release events.

"The borrower holds the option to change the collateral composition,” Furlong said. “Except as constrained by the terms of the loan, the borrower could release the best assets, substitute lesser-quality assets into the collateral pool, or diminish diversity.”

The Moody's report also examines the effectiveness of the various protections for credit quality under circumstances where collateral composition might change.

The protections include:

• restrictions on the extent and nature of allowable events of substitution and release;
• the use of release premiums applied to principal pay down; and,
• adjusting the sizing of the certificate classes at the onset of the transaction to account for the risks not otherwise mitigated.

"A well-structured loan and CMBS transaction can provide the borrower valuable flexibility, while maintaining the credit quality that CMBS investors seek for certificates with a given rating," Furlong said.
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Village Center, located in a highly visible location parallel to the I-15 freeway and adjacent to the Mall at VictorValley, is 97 percent leased to tenants that include Best Buy, Petsmart, Chase Mortgage, Outback Steakhouse, Factory 2U, AT&T Wireless, and Jack in the Box.

Brad Umansky and Vicki Donkin, of Sperry Van Ness represented the seller, Lincoln National Life Insurance Co.  Lawrence Han of Pacific Allied Asset Management represented the buyer, Han & Bros, LLC.

“More and more we are seeing private investors looking to acquire larger real estate assets,” Umansky said. “The buyer of this property out bid institutional buyers and paid $109,000 above the listed price.”

Umansky, in the Ontario office of Sperry Van Ness, represented the seller, Empire Commercial Real Estate for a KinderCare facility to private investor Robert Smith for $1.2 million.  KinderCare, built in 1988, is a single-tenant, 6,500 square-foot facility located in Rialto, California.

Dee Muller Sampson of Lee & Associates represented the buyer, private investor Robert Smith.

“Investors are continually looking for properties that provide stability with ease of management,” Umansky said.  “The buyer was attracted to this property because it was a triple net, single tenant property.”

KinderCare, founded in 1969, now operates more than 1,250 learning centers and serves over 120,000 children between the ages of six weeks and 12 years.

Meanwhile, Sperry Van Ness completed the sale of the Waterman Medical Building to Carter Commercial LLC for $3.659 million. The Waterman Medical Building is a one building, 36,000-square-foot medical office building located in San Bernardino, Calif. 

Jon Sorokowski, senior advisor for Sperry Van Ness represented the seller, San Bernardino RE LLC.  Kevin Carter of Carter Commercial represented the buyer, Carter Commercial LLC.

“The buyer recently sold a medical office building in Santa Barbara and wanted to exchange into something that provided a higher return,” Sorokowski said. “This medical building is in a prime location across from the St. Bernardine Medical Center.”

Built in 1989 of block and steel frame, the Waterman Medical Building has a 97 percent occupancy rate. The medical center is located near the 30 and 215 freeways.
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Access Capital Mortgage, LLC, Bethesda, Md.
ACEX, Chicago, Ill.
Advance Mortgage Corp., Nottingham, Md.
Allied Lending Corp., Laguna Hills, Calif.
Alpha Mortgage USA, Dallas, Texas
American Lending Group, Inc., Earth City, Mo.
American Mortgage & Finance Group, Inc., Frederick, Md.
Amerifunding/Amerimax Realty Group, Inc., Englewood, Colo.
Analytic Solutions.com, Englewood, Colo.
ANB and Associates, LLC, Birmingham, Ala.
APB Mortgage LLC, Louisville, Ky.
Assurity Financial Services, LLC, Englewood, Colo.
Atlantic Coast Federal, Jacksonville, Fla.
ATone Software, Inc., Stateline, Nev.
Available Mortgage Funding, LLC, Dallas, Texas
Bankers Assistance Ltd., Grand Prairie, Texas
Barnard Capital Inc., Moraga, Calif.
Barnes Banking Co., Layton, Utah
Benchmark Mortgage, Frisco, Texas
Best Rate Funding Corp., Santa Ana, Calif.
Blossom Valley Mortgage, Inc., Lakeside, Calif.
Bogman Inc., Silver Spring, Md.
Brooks Systems Financial Technologies, New London, Conn.
BuyBankHomes.Com, LLC, Westminster, Colo.
C & G Financial Services Inc., Upland, Calif.
Carter & Burgess, Inc., Oklahoma City, Okla.
CFS Mortgage Corp., Phoenix, Ariz.
Chu & Associates dba Fidelity Funding, South Pasadena, Calif.
Cilicia Home Loans, La Verne, Calif.
Commerce National Bank, Irvine, Calif.
Commerzbank AG-New York, New York, N.Y.
Compass Financial Corp., Denver, Colo.
Countywide Mortgage, Inc., Whitefish, Mont.
CRMNOW, Aliso Viejo, Calif.
CU West Mortgage, Inc., Rancho Cucamonga, Calif.
Descap Securities Inc., New York, N.Y.
Direct Mortgage Corp., Midvale, Utah
Directors Residential Lending Inc., Victorville, Calif.
Equity Funding Group, LP, San Diego, Calif.
Equity Settlement Services, Inc., Smithtown, N.Y.
Express Funding, Inc., Naperville, Ill.
Express One Mortgage Corp., Gilbert, Ariz.
Farmers and Merchants State Bank of Bushnell, Bushnell, Ill.
Financial Service Solutions, Charlotte, N.C.
First Choice Leads, Covina, Calif.
First Choice Mortgage, Inc., Waukesha, Wis.
FirsTrust Mortgage, Inc., Olathe, Kan.
FloodExpress, Houston, Texas
Fox Commercial Mortgages, Inc., Fairfax, Va.
Gateway Title Co., Corona, Calif.
Gibraltar Bank, FSB, Coral Gables, Fla.
Gold Goast Mortgage, Chicago, Ill.
GuideMark, Nashua, N.H.
GW Mortgage Investments, Miami, Fla.
Highland Equity Group, LLC, Atlanta, Ga.
Hollander Financial Holding Inc., dba American Financial Services, Upland, Calif.
Home Sweet Home Equity, Roseville, Minn.
iDatix Corp., Clearwater, Fla.
Image Technology Corp., Indianapolis, Ind.
Infoloan, Inc., San Jose, Calif.
International Mortgage Investors, Key Biscayne, Fla.
ISEVA, Inc., Irving, Texas
Just Valuation, Inc., Altamonte Springs, Fla.
Koshman Enterprises, Inc. dba KEC Financial, Tarzana, Calif.
Lancaster Mortgage Bankers, Warren, N.J.
Largo Canada Ltd., Getzville, N.Y.
LASON, Troy, Mich.
Latin American Mortgage LLC, dba Mortgage Ventures, Naples, Fla.
Lead Generations, Inc., San Clemente, Calif.
Legacy Mortgage, Inc., Plano, Texas
Lenders Direct Capital Corp., Lake Forest, Calif.
Lenders Investment Corp., Costa Mesa, Calif.
Lending Strategies, Bellevue, Wash.
Liberty Financial Group, Bellevue, Wash.
Liberty Mortgage, Inc., Salt Lake City, Utah
LoanCert, Inc., Glen Allen, Va.
Loancorp Financial Inc., Covina, Calif.
Loanisland, Carlsbad, Calif.
Lock/Line Credit Protection Services, LLC, Shawnee Mission, Kan.
Lombardi Software, Austin, Texas
MacQuarie Mortgages USA, Inc., Memphis, Tenn.
markadams.com, Los Altos, Calif.
MarketerNet, LLC, Chicago, Ill.
Massachusetts Discount Mortgage, Inc., La Jolla, Calif.
MCIG Capital Corp., Ontario, Calif.
Millennium Mortgage Corp., Palm Desert, Calif.
Mississippi Mortgage Co. LLC, Saint Paul, Minn.
MLS Direct, LLC, Newport Beach, Calif.
More2Lend Financial, Huntington Beach, Calif.
Mortgage Financial Group, Inc., Mount Dora, Fla.
Mosaic Financial, LC, Scottsdale, Ariz.
MP Funding Inc., Melville, N.Y.
Nationwide Card Services, Inc., Memphis, Tenn.
Next Loan Financial Corp., Doylestown, Pa.
North American Home Loans, Inc., Westlake Village, Calif.
Omega Financial Services, Inc., Union, N.J.
Ozark Lending, Inc., Little Rock, Ark.
Paradise Financial Group, Inc., Pleasant Hill, Calif.
Paragon Prime Funding, Cohoes, N.Y.
Paramount Bank, Farmington, Mich.
Parker McCay Criscuolo P.A., Marlton, N.J.
Peak Performance Consulting Group, Grand Rapids, Mich.
PGNF Home Lending Corp., Westmont, Ill.
Pinnacle Mortgage Co., Brandon, Miss.
PlainsCapital Mortgage One LLC, Amarillo, Texas
Planet Mortgage Corp., Anaheim, Calif.
Plus One Mortgage Group, Spring, Texas
Quality Financial Services LC, Salt Lake City, Utah
RAP Technology, Beverly Hills, Calif.
Real Estate Mortgage Network, Inc., River Edge, N.J.
RealtyDebtRelief.com, Broomfield, Colo.
ReKaren Inc., West Hills, Calif.
Renaissance Home & Mortgage, Milpitas, Calif.
Republic Lending Corp., Boca Raton, Fla.
Residential Finance America, Newport Beach, Calif.
Resmor Trust Co., Calgary, Alberta Canada
Response Mail Express, Tampa, Fla.
Riverbank Mortgage Corp., Roswell, Ga.
Rockmount Financial Corp., Calgary, Alberta, Canada
Salem Realty Capital LLC, North Salem, N.Y.
Santa Cruz Mortgage Co., Santa Cruz, Calif.
Schwartz and Associates, Mc Kinney, Texas
Security Atlantic Mortgage Co., Inc., Edison, N.J.
ShadowNet Management Technologies, Englewood, Colo.
Silver Mountain Mortgage, Park City, Utah
Silver State Mortgage, Henderson, Nev.
SM Lending, LLC, Golden, Colo.
SPRINT, Reston, Va.
Star Funding Inc., Downey, Calif.
Street Solutions Inc., New York, N.Y.
Summit Investment Management, Denver, Colo.
Supreme Mortgage Corp., Bonita, Calif.
TD Canada Trust, Toronto, Ont., Canada
Team Mortgage LLC, Plaistow, N.H.
The Lending Group, Inc., Jacksonville, Fla.
The Mortgage Network, Tampa, Fla.
The Turning Point, Inc., Sedona, Ariz.
TL Signing Inc., Benicia, Calif.
TRT Home Loans, Inc., La Mirada, Calif.
Unified Solutions Group, LLC, Grand Rapids, Mich.
UniTrust Mortgage, Inc., San Diego, Calif.
Valley Vista Mortgage Corp., San Diego, Calif.
Valley Wide Home Loans, Inc., Fresno, Calif.
Values Based Lending, Cary, N.C.
Vintage Mortgage Corp., Stratford, N.J.
Westfield Mortgage, Westfield Center, Ohio
Wilshire State Bank, Los Angeles, Calif.
Wilson Resources, Inc., Granite Bay, Calif.
Xetus Corp., Palo Alto, Calif.
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Because Congress is in such a hurry to complete its work, details change almost hourly. What is included in this week's Advocacy Update reflects MBA's best knowledge and expectations of current actions on Capitol Hill. Be assured that MBA continues to monitor issues of concern to MBA members.

Legislative Update

FCRA Reauthorization Will Finish This Year
After negotiating for three days, the Senate and House announced Friday that they have reached an agreement on the legislation reauthorizing the Fair Credit Reporting Act. This is tremendous news for industry as there was some concern that FCRA would not be reauthorized this year. 

The agreed-upon bill gives consumers significant protections and includes the following highlights:

• Consumers can receive a free credit report once a year;
• Identity theft provisions provide consumers greater protection and recourse;
• Consumers can place "fraud alerts" on there credit reports;
• Consumers can opt out of affiliate sharing for marketing purposes;
• Lenders will have to disclose credit scores; and,
• Lenders will issue "Risk Based Pricing Notices" to consumers—an issue on which MBA worked diligently.

During negotiations last week, MBA lobbied hard to change a provision requiring lenders to issue consumers a "Risk-Based Pricing Notice" where the consumer was not offered the "most favorable" terms available from that lender. Sen. Richard Shelby, R-Ala., and Senate Banking Committee staffers have been committed to this provision since a review of FCRA issues began.

The provision requires the Federal Reserve Board and the Federal Trade Commission to engage in rulemaking to determine at what point during the transaction a creditor should issue such a notice to a consumer. MBA was able to persuade the Senate Banking Committee that the mortgage lending industry is unique in that consumers can select from a variety of mortgage products to satisfy that consumers needs and circumstances. Further, the terms of various mortgage products may be manipulated to meet the needs of a consumer, e.g., buying up or down a rate. Because of this, determining of the most favorable terms is a highly subjective exercise—a point that MBA wanted highlighted in the legislation.

MBA successfully communicated these concerns with committee staff, pointing out that the provision could subject lenders to needless liability. Committee staff agreed to include conference report language related to this provision, clarifying the unique concerns of the mortgage lending industry. This report language will provide the agencies guidance as they engage in the rulemaking process. Inclusion of this report language was a significant accomplishment for MBA.

The final version of the bill was expected to pass both the House and Senate Friday, clearing its path for the White House. The President is expected to sign the bill in December.

For more information, please contact Erick Gustafson at 202/557-2913 (egustafson@mortgagebankers.org), or Mary Jo Sullivan at 202/557-2859 (msullivan@mortgagebankers.org).   

Omnibus Appropriations Bill
As mentioned above, the holiday season is near and Congress is trying very hard to adjourn. Before it does so, it must pass the rest of the 13 Fiscal 2004 appropriations measures. 

Still unresolved are five funding bills: VA-HUD, Agriculture, Labor Health and Human Services (Labor HHS), Commerce-Justice-State, and District of Columbia. Omnibus conferees have successfully negotiated most of the major sticking points. However, the most significant sticking point remains a potential deal-breaker. Sen. Arlen Specter, R-Pa., said he will not back down from his commitment to the Senate-passed Harkin amendment that would prevent the Department of Labor from finalizing its rule updating the overtime provisions within the Fair Labor Standards Act (FLSA). Proponents of DOL's proposal, including the leaders of the House and Senate as well as the White House, remain just as committed to allowing DOL to go forward with the rule.
 
There is talk that Congress could opt to remove the Labor HHS bill from the omnibus measure. The omnibus bill is typically a collection of spending measures, but can often include other important legislative issues that Members of Congress want to be acted on before the end of the year.

For more information please contact Erick Gustafson at 202/557-2913 (egustafson@mortgagebankers.org).

Flood Insurance
On Thursday, the House overwhelmingly passed H.R. 253, the "Two Floods and You're out of the Taxpayers' Pocket Act of 2003."  Among other things, H.R. 253 reauthorizes the National Flood Insurance Program through 2007, authorizes the Federal Emergency Management Agency (FEMA) additional mitigation funds to prevent future damages and would require owners of repetitive loss properties to pay premium rates for flood insurance if they refuse any action to mitigate future damages against their properties.

MBA, as part of a coalition of financial services and housing industry groups as well as Fannie Mae and Freddie Mac, sent two letters in the past three weeks to the House of Representatives in support of H.R. 253 and urging Congress to reauthorize the NFIP before the current authorization expires at year's end.
 
The Senate has not yet considered legislation similar to H.R. 253 and does not plan to do so before it recesses. It is likely that the omnibus appropriations bill will contain a provision extending current NFIP authorization for three months to allow the Senate time to consider its own flood insurance legislation.

For more information, please contact Renee Rappaport at 202/557-2758 (rrappaport@mortgagebankers.org).

American Dream Downpayment Act
The House and Senate have completed a "pre-conference" on the American Dream Downpayment Act. The language agreed to by all parties during this process contains provisions advocated by MBA and recently passed by the Senate Banking Committee, including an increase to FHA multifamily loan limits in high-cost areas, and a change to the initial interest rate adjustment on the FHA 5/1 Hybrid ARM. 

Currently, the Senate is seeking unanimous consent to pass this bill. The bill will then go to the House to be considered under suspension of the rules, which requires a vote on the measure without any amendments. If both chambers pass this pre-conference report, the legislation will bypass a conference committee and go straight to the President for his signature.

MBA has lobbied hard all year to gain passage of these three measures. 

For more information, please contact Renee Rappaport at 202/557-2758 (rrappaport@mortgagebankers.org).

VA Guarantee Fees to Increase
The House and Senate have passed H.R.2297, the "Veterans' Benefits Act of 2003." The bill changes the loan guarantee fees charged to veterans and reservists for buying a home through VA's Loan Guaranty Service. The new fees, set to take effect on January 1, will increase costs overall, but will also move active duty veterans and reservists closer to parity. 

The initial use guarantee fee for active duty veterans will increase temporarily to 2.20 percent until October 1, 2004, after which it will drop slightly to 2.15 percent. The initial-use guarantee fee for Reservists will drop from 2.75 percent to 2.40 percent. The subsequent use guarantee fee will be raised for both active duty veterans and reservists from 3.00 percent to 3.30 percent. Reservists make up a small portion of loans, less than 10 percent. Subsequent use of the program has increased from 20 percent to nearly 28 percent over the past several years. The changes are expected to be a relatively large net revenue generator. 

MBA supported the House provisions that move veterans and reservists closer to parity. In addition, MBA supported the House version of lower guaranty fees, as opposed to those contained in the Senate bill.

H.R. 2297, as passed by the house and Senate, is awaiting the President's signature.

For more information, please contact Tim Doyle at 202/557-2860 (tdoyle@mortgagebankers.org), or Burton Wood at 202/557-2806 (bwood@mortgagebankers.org).

Change to Ginnie Mae Charter
MBA is pressing for acceptance by the House and Senate omnibus conferees of recently passed Senate language to reform the Ginnie Mae charter.

The provision included in the Senate-passed Agriculture Appropriations bill would allow Ginnie Mae to guarantee securities backed by Rural Housing Service (RHS) Section 538 multifamily guaranteed loans. The program is designed to increase the supply of affordable multifamily housing through partnerships between RHS and major lending institutions. 

As we have reported, loans currently made under RHA's Section 538 Rural Rental Housing Guaranteed program technically are not eligible for guarantee by Ginnie Mae under the securitization programs. 

MBA has fought for this change all year and will continue to monitor it as it goes through the omnibus appropriations process.

For more information, please contact Renee Rappaport at 202/557-2758 (rrappaport@mortgagebankers.org).

GSE Reform Put Off Until Next Year
Last week, Senate Banking Committee Chairman Richard Shelby, R-Ala., said that further GSE reform consideration would be put off until next year, as Congress hurries to complete work on many other matters before it adjourns. Many in Washington had hoped that oversight reform of Freddie Mac and Fannie Mae would be completed by year's end. MBA testified twice before the House Financial Services and Senate Banking Committees in support of the Treasury Department's and HUD's proposal for GSE reform.

As we reported, at a hearing on GSE reform before the Senate Banking Committee last month, the Congressional Budget Office (CBO) and the chairman of the Council of Economic Advisors expressed support for the Administration's GSE reform proposals and called into question the extent to which the federal benefits enjoyed by Fannie Mae and Freddie Mac reduce the cost of mortgages to consumers. A study by the Board of Governors of the Federal Reserve on the same subject is expected next month. It is reported that the study will say that the GSEs are largely unnecessary and don't lower mortgage costs much.

On Friday, Freddie Mac issued a restatement of its earnings saying, as has been widely expected, that it underrepresented its profits by $5 billion for the years 2000-2002. However, in a new twist, Freddie Mac disclosed that during 2001 it had over-reported its GAAP net income by $1 billion. This latest announcement gives proponents of GSE reform additional fuel for their cause and will likely receive scrutiny when Congress returns next year. The Office of Federal Housing Enterprise Oversight is expected to soon issue a report on Freddie Mac's accounting practices.

For more information, please contact Chris Harrington at 202/557-2863 (charrington@mortgagebankers.org).  

15-year Depreciation of Leasehold Improvements
As we reported, the House Ways and Means Committee recently passed H.R. 2896, the "American Jobs Creation Act of 2003." The bill, which deals with international and domestic tax relief, contains a real estate provision providing for 15-year depreciation of leasehold improvements placed into service in 2004 and 2005. After that, property depreciation would revert to the current law schedule of 39 years.

The House still needs to act on H.R. 2896 and Senate still needs to act on its version of the bill, S.1637, the "Jumpstart our Business Strength (Jobs) Act."  S.1637 does not include the 15-year depreciation of leasehold improvements provision that H.R. 2896 includes. Because it is so late in the game, it is unlikely that the measure will be approved this year.

MBA, as a member of the Leasehold Improvement Depreciation Coalition, has supported efforts to reduce the term to 10 years and make it permanent.

For more information, please contact Burton Wood at 202/557-2806 (bwood@mortgagebankers.org).

Regulatory Update

RESPA Update
MBA continues to closely monitor developments related to Real Estate Settlement Procedures Act reform. Despite recent reports that HUD may be preparing to issue a final soon, MBA believes that no such action is imminent. Our view is based on recent conversations with key congressional leaders, policymakers and other industry representatives.   

On November 19, senior MBA staff met with staff at the Office of Management and Budget (OMB) to discuss our concerns with the RESPA rule. We will continue to meet with congressional offices and other policymakers to ensure that our viewpoint is considered. 

Speculation continues that HUD Secretary Martinez will announce his candidacy for the U.S. Senate seat being vacated by Florida Sen. Bob Graham, D-Fla. Some observers believe that such a move could increase efforts by Martinez to finalize a RESPA rule, while others believe that the erosion of industry support for the rule may prompt a re-proposal. Recently, other industry groups have publicly called for HUD to re-propose the rule—letters to this effect were recently sent by the Housing Policy Council of the Financial Services Roundtable, as well as America's Community Bankers, the American Bankers Association and the Consumers Bankers Association. 
 
MBA will provide additional updates as developments warrant. For more information, please contact Steve O'Connor at 202/557-2867 (soconnor@mortgagebankers.org).
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Upcoming Reports/Events:
Nov. 25: Gross Domestic Product (3rd Quarter revised), Bureau of Economic Analysis
Nov. 26: New Home Sales, Commerce Department
Nov. 26: MBA Weekly Mortgage Application Survey
Nov. 26: Existing Home Sales, National Association of Realtors
Nov. 27: Thanksgiving Day Holiday (MBA NewsLink will NOT publish)
Nov. 28: Day after Thanksgiving (MBA NewsLink will NOT publish)
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