Additionally, MBA holds a graduation ceremony for its Future Leaders program this morning. The program provides leadership training to top staff of member companies.

MBA NewsLink will continue to provide coverage of breakout sessions that occurred this week at the convention.
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The MBA survey showed 30-year mortgage rates dropping to 5.54 percent, a level not seen since March 26 of this year, but still well below the record 4.99 percent set in June 2003. Rates for 15-year fixed mortgages fell by 13 basis points to 4.90 percent from the previous week. Meanwhile, one-year adjustable rates increased by 12 basis points from the previous week, to 3.93 percent. 

The Market Composite Index of mortgage loan applications stood at 703.9, a decrease of 0.8 percent on a seasonally adjusted basis from 709.9 one week earlier. The MBA seasonally adjusted Purchase Index fell by 4.4 percent to 440.9 from 461.4 the previous week. The seasonally adjusted Refinance Index increased by 3.6 percent to 2233.8 from 2155.2 one week earlier. The refinance share of mortgage activity increased to 47.7 percent of total applications from 45.6 percent the previous week, while the adjustable-rate mortgage share of activity increased to 34.9 percent of total applications from 34.8 percent the previous week.

Other seasonally adjusted index activity included the Conventional Index, which increased by 0.1 percent to 1050.4 from 1049.7 the previous week; and the Government Index, which fell by 11.8 percent to 125.9 from 142.8 the previous week.
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That’s a reality that Calabasas, Calif.-based Countrywide Financial Corp. experienced when it chose the United Kingdom as its first point of entry into the international mortgage market, said Michael Lea, principal at Cardiff Economic Consulting and formerly with Countrywide, speaking at the Mortgage Bankers Association’s 91st Annual Convention & Expo here yesterday.

Countrywide chose the U.K. based on its size, common language, an open competitive arena in the U.K. and the country’s need for cost reduction and new technology, Lea said. However, Countrywide first attempted to adapt its legacy U.S. systems into the U.K. business model. The attempt was unsuccessful, he said.

But Countrywide also adjusted quickly. Four months into its entry, Countrywide realized the technology transition was not going to happen, Lea said. So it developed a comprehensive suite of mortgage processing systems for the U.K. market, Lea said. Global Home Loans, formed in 1999 as a joint venture first with Woolwich and then with Barclays, one of four large clearing banks in the U.K., increased its applications per month by 11,000 and its servicing portfolio by $56 billion. With nearly 1.2 million loans in 2003, GHL is the largest end-to-end third party processor in the U.K., Lea said.

“There is product variety around variable and short-term fixed products,” Lea said.

Low interest rates contributed to market in growth in the U.K., similar to the U.S. market, making mortgages more affordable. Securitization, however, remains relatively small at five percent to six percent of the mortgage stock, compared with 60 percent to 65 percent of mortgages in the U.S.
 
“Most of the securitization in the U.K. comes from non-conforming or subprime mortgages,” Lea said.

Tony Porter, executive vice president and managing director of The PMI Group Inc., San Francisco, said big banks do the most lending in countries outside of the United States with a highly concentrated amount of mortgage shares. And Tony Gill, executive director of Macquarie Bank Limited in Australia, said major banks still dominate the market but there is a growth of mortgage brokers.
 
“This is a phenomenon that is very much following the American model,” Gill said. He noted that residential mortgage-backed securities (RMBS) makes up 90 percent of all Australian securitization and losses are low by global standards.
 
Lea said Germany has “true mortgage banks” in which they are made up of banking units. Statistics from Deutsche Bundesbank and VDH (the Association of German Mortgage Banks), show that saving banks make up more than 27 percent of the banking sector in Germany, followed by mortgage banks with 21.2 percent of the primary market distribution channels, the cooperative sector at 15.7 percent and building societies with 9.9 percent of the market. The cooperative sector, including cooperative mortgage banks, account for 21 percent of the market.
 
“A few cooperative banks transfer risk to DG Hyp and then sell to the capital markets,” said Markus Bolder, director and head of credit treasury at DG Hyp. Bolder said key challenges in Germany include growth limits and customer demands. “We have decreasing margins and increasing costs,” he said.
 
But the market in Germany is under change as the Basel II Accords present a new legal framework for every institution in Germany. Meanwhile, there is a high demand for securitizations in Germany.
 
“The investor can define MBS [mortgage-backed securities] and other parts of covered bonds [pfandbriefs],” Bolder said.

With liquidity and funding from banks, Lea said there is strong political resistance to a government-sponsored enterprise in Europe, although a Pan European GSE could enhance competition and allow products into the market.
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GatorSearch provides its users with the ability to execute self-service title searches, designed to reduce turnaround times associated with traditional examiner/courthouse abstracting. Reports can be run from the office or home computer to provide searches. Users choosing not to run reports from their own computers can use the system’s Examination Network, a team of professional abstractors who can return a report within eight hours of receiving the order.
 
GATORSystems: www.gac.com
Fiserv: www.fiserv.com
 
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Entyre, Ann Arbor, Mich., a provider of Web-based mortgage closing documents, and U.S. Bancorp, the sixth-largest financial services holding company in the United States, announced a strategic alliance in which U.S. Bank will exclusively use Entyre’s eMortgage-X4 to power the mortgage document preparation component of its Automated Closing Solution. U.S. Bank will make this available to more than 1,200 brokers using ACS.

U.S. Bank began working with Entyre earlier this year on a pilot project in which Entyre created a private labeled version of eMortgage-X4 Wholesale Lending System specifically for U.S. Bank’s ACS.

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Charles Schwab Bank, Reno, Nev., introduced Schwab Pledged Asset Mortgage, a new product that enables borrowers to use their stock portfolio as collateral for buying a home. 

Schwab Pledged Asset Mortgage leverages eligible securities in a client’s investment portfolio as an additional guarantee for a mortgage loan, rather than necessitating the sale of stock for a downpayment. Applicants must have at least $250,000 in assets and meet other requirements to qualify.

Schwab Pledged Asset Mortgage provides up to 100 percent home financing. Upon approval of the mortgage and corresponding Pledged Asset Account, the prescribed amount of eligible securities are transferred into a separate Pledged Asset Account where the funds are held during the term of the loan. Clients have access to their Pledged Asset Account and can execute trades.   
 
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Hansen Quality, Jacksonville, Fla., a division of Fidelity National Financial, Inc., and a provider of collateral valuation and appraisal review products, said it expanded its due diligence service to include credit and compliance reviews of mortgage loan packages.  The service will allow clients to outsource comprehensive loan file evaluations to ensure that verifications, reports and worksheets are accurate, especially prior to loan sales or the creation of securities. 

Founded in 1991, Hansen Quality provides collateral valuation services, including AVM reports, risk assessment scores and appraisal reviews. With introduction of this new service offering, Hansen Quality will also analyze loan fees and terms for compliance with federal and local predatory lending regulations, as well as adherence to underwriting guidelines. The service will also include consolidated reporting and analytics for collateral, compliance and credit.

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Document Processing Systems, Inc., Novi, Mich., announced release of the DPS eMortgage Studio, a mortgage processing system that provides a secure web-based work environment that is used to electronically create, execute, register, and store all documents for a settlement.

The system includes three interconnected modules: DPS eMortgage WorkSpace, an online doc prep collaborative environment that hosts all parties, including lenders, title agents, borrowers, sellers and attorneys; DPS eMortgage Closing Table, a digital signing technology and embedded process that controls and eliminates “wet” signatures; and DPS eMortgage Repository, which allows secure document delivery, storage and retrieval throughout the life of the loan. The electronic repository eliminates all costs associated with handling and delivering hard copies of the loan including fax, courier, or postage charges.

DPS recently provided the technology to complete the Industry’s first truly paperless, digitally signed, and electronically MERS-registered eMortgage.
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The seller of the property was Villa Capri Ventures LLC, a Delaware limited liability company. Representing both buyer and seller was Ernest Reyes of Lincoln Brokerage Company of Newport Beach, Calif. Debt financing was provided by Wells Fargo.

Built in 1972, the apartment community consists of 10 two-story buildings with one-, two- and three-bedroom apartments with an average size of 919 square feet. Amenities include swimming pool, playground, fitness center and club house. Asking rents at the property average $680 per unit. Manco Abbott, Inc. will provide property management services.

“Bakersfield has enjoyed significant appreciation over the past five years as the overall Central Valley has recovered from the overbuilding and loss of jobs the area suffered in the late 1980s and early 1990s,” said Bascom Managing Director Jerome Fink. “The current occupancy rate in Bakersfield is a healthy 96 percent. In addition, Bakersfield experienced a 5.5 percent rent increase over this past year ranking it as one of the top submarkets in California.”

The city of Bakersfield is the eighth-fastest growing population in California and home to several large corporations including Nestle, Frito-Lay, State Farm, Pillsbury, Texaco and Chevron.
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The survey also showed that execution costs improved as much as 15.38 basis points (bps), a 25 percent to 50 percent pickup in retail lending margins or $450 for the average loan.

"We are very pleased with the results of this study," said Regina Lowrie, chairwoman-elect of the Mortgage Bankers Association, and past chairwoman of the Board of Directors Technology Committee. "We now have real results illustrating the business value of open, transparent standards implementation over proprietary formats."

The study, commissioned in July, was conducted by CC Pace, Fairfax, Va., and The STRATMOR Group, Larkspur, Calif., to evaluate the value of adoption of the standards of MISMO. The “Time and Motion Study” resulted in an economic study of mortgage transactions to measure the value of MISMO standards. The results were released yesterday at MBA’s 91s Annual Convention & Expo here. MISMO was established by MBA to coordinate the development and maintenance of Internet based Extensible Markup Language (XML) real estate finance specifications.

The study focused on several questions to perceive the value and future of MISMO by respondents. The results showed:

• More than 80 percent of respondents agreed that the use of MISMO standards would reduce costs across all business operations;
• More than 67 percent agreed that MISMO standards provide internal efficiencies;
• More than 80 percent agreed MISMO standards would reduce system development costs;
• More than 85 percent agreed MISMO standards would reduce data entry and re-entry costs;
• More than 76 percent agreed that MISMO standards would reduce the costs related to poor data accuracy/data integrity;
• More than 66 percent agreed MISMO standards would reduce the costs of services provided by third-party vendors and suppliers; and
• More than 61 percent agree that MISMO standards would improve competitiveness.

Nearly 30 percent of respondents were neutral, less than 10 percent disagreed and 16 percent said they do not have the resources to adopt MISMO standards.

Lender respondents claimed average time savings of more than 16 percent and cost saving of more than 15 percent when using MISMO standards in their most recent system integration. More than 80 percent of survey respondents are planning to use MISMO in some way.

MISMO continues to conduct research on the values and adoption of its standards. If you would like participate, please click on the links below.

Lender/Servicer Survey
http://websurveyor.net/wsb.dll/9219/MISMOLender_ServicerSurvey2.htm

Subscriber/Vendor Survey
http://websurveyor.net/wsb.dll/9219/MISMOSubscriberSurvey.htm
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For reprint information on stories in MBA NewsLink, contact Al Esposito at 1-800-394-5157, extension 28.
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And if comments from the panelists are any indication, expect regulation of the government-sponsored enterprises and predatory lending to be top priority items, echoing MBA’s political agenda for 2004-2005, which lists both matters as major issues.

“I really expect the first item to be reform and regulation of the GSEs,” said Mark Calabria, senior professional staff with the Senate Banking Committee. Sen. [Richard] Shelby’s [R-Ala.] opinion is that he favors strong regulation of the GSEs. There are questions on Capitol Hill as to the job that OFHEO [the Office of Federal Housing Enterprise Oversight] has done. We don’t necessarily have faith in what we hear from the regulators.”

Calabria said he was “hopeful” that a GSE reform bill, (which MBA supports in concept) could pass the Senate next year, noting that there appears to be momentum to improve GSE regulation in some form or another.

Cindy Chetti, senior professional staff with the House Financial Services Committee, agreed. “There is general agreement on the need to create a world-class regulator with powers to oversee the GSEs,” she said. “This is definitely going to be a top priority for the 109th Congress.”

Scott Olson, senior professional staff for Rep. Barney Frank, D-Mass., said when it comes to the Financial Services Committee, typically the standard has been to reach bipartisan agreement on issues. This bodes well for issues such as GSE reform and predatory lending.

“I think there is not a real disagreement between parties that there is a desire and will to strengthen the GSE regulator,” Olson said. “Almost everyone agrees that strengthening the regulator is important, and it is not unrealistic to believe that a consensus can be reached.”

Olson said that Democrats would respond to legislation that not only strengthens regulation, but does not have an impact of the housing market. “We should focus on why Fannie Mae and Freddie Mac do have special status—that they are designed to serve a special role in the market.” Frank would push for language that emphasizes the GSEs’ ability to serve underserved markets, such as manufactured housing, subprime lending and affordable housing preservation.

On predatory lending, Chetti said she expected bipartisan support for a predatory lending bill, noting that both Reps. Robert Ney, R-Ohio, and Paul Kanjorski, D-Pa., have pledged support to move a bill through the Financial Services Committee.

“This is key, because we have a senior Democrat on the committee and a senior Republican on the committee who have pledged to work together to move a bill forward,” Chetti said. “I’m hopeful that we can work with Mark and perhaps craft something that the Senate could agree to.”

But Calabria sounded less optimistic about a predatory lending bill from the Senate side. “I frankly don’t see 60 senators agreeing on this, and you need that consensus to make it happen,” he said. “I’m not trying to sound dismissive of the costs to your businesses, but I don’t see it happening realistically in the Senate next year.”

Calabria did note that both Shelby and the Banking Committee’s ranking Democrat, Sen. Paul Sarbanes, D-Md., sat on the committee when the savings and loan crisis occurred. “And neither want to see a repeat of this happening with the GSEs,” he said.

Chetti said any predatory lending bill would require a homeowner counseling element, which MBA lists as part of its efforts to combat abusive lending practices.

On RESPA reform, Chetti said she expected interest in the House. “I’ve been on the Hill for 25 years and we’ve been talking about RESPA reform for 25 years,” she said. “I know there is some frustration at HUD on RESPA reform, but I expect the HUD Secretary to put out a new rule and we will be part of that process.”

Steve Nesmith, HUD assistant secretary for congressional and intergovernmental relations, said HUD Secretary Alphonso Jackson remains committed to continuing the work of his predecessor, former HUD Secretary Mel Martinez, in crafting RESPA reform.

“My take on that is that at the end of the day, in order to advance the bill, you’re not going to get everyone to agree with you,” Nesmith said. “Secretary Jackson and HUD will move forward next year with RESPA reform.”

But Nesmith acknowledged that HUD was “in error” in the process, in working with industry groups and Congress. “We can’t all have an agreement on the entire package,” he said. “It’s not going to happen. At some point, working with Congress and the industry next year, we’re going to have enough blockers and move RESPA reform downfield, and I am confident that we can do it.”

Nesmith also reiterated FHA Administrator John Weicher’s earlier comments that the FHA Zero Downpayment legislation would move forward next year. “We think we can resolve the outstanding issues and move this forward,” he said.

Weicher did not want to discuss HUD’s proposed affordable housing goals, but Nesmith said both GSEs can serve the affordable housing market without eating into FHA’s market. “The question is in how you do it,” he said. “The GSEs have done a very good job. But they could be doing better.”

Olson said FHA would be a priority of House Democrats. Specifically, Olson said that committee members would push for higher FHA loan limits in high-cost areas. “FHA has been on the moon as far as this issue is concerned,” he said.
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