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Mortgage Monitor - Nebraska Mortgage Association

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					        Nebraska

              Mortgage Monitor                                       www.nebraskamortgageassociation.org
     A Newsletter Sponsored by Nebraska Mortgage Association                                             Dec., 2005

        2005-2006                                           MBA Weekly Mortgage
         Officers                                            Applications Survey
President, Marlin Hupka
                                            The Mortgage Bankers Association (MBA)released its Weekly Mortgage
TierOne Bank., Lincoln                      Applications Survey for the week ending November 18. The Market Composite
402/473-6143 Fax 402/473-6218               Index — a measure of mortgage loan application volume – was 635.4, a decrease
                                            of 3.4 percent on a seasonally adjusted basis from 657.6 one week earlier. On an
Vice President, Jan Meister
Bank of the West, Omaha                     unadjusted basis, the Index increased 4.8 percent compared with the previous
402/827-2592 Fax 402/827-2594               week, but was down 11.8 percent compared with the same week one year earlier.
Treasurer, Mark Johnson                                                                                   Continued Page -3-
CBSHome Mortgage, Omaha
402/964-4612 Fax 402/964-4677
Secretary, Gina Jerauld
                                                        Finding Common Ground:
Bank of the West, Omaha                       Realtors and originators seek mutually beneficial association. By Terri
800/824-2860 Fax 402/918-8859
                                              Murphy, GRI, CRS, LTG, CREC
Board of Directors                            This is certainly an interesting, competitive, and rewarding time to be a Real-
George Akers       Tony Johnson               tor or loan originator. The Internet, and the proliferation of low-budget
Jack Hobbie        David Horak
                                              brokerage and lending flood today’s consumer with so many choices and op-
Jacalyn Ayoub      Sherri O’Callaghan
Robert Rutan       E. Dean Neidan             tions without personalization—it is overwhelming. We can only imagine the
Cindy Muhlbach     Susan Grieger              consequences of such choices in years to come; and, more importantly, where
                                              does it position the services of loan and real estate professionals?
Education Committee Chair,
Shelley Sullivan                                   According to a survey conducted by www.E-Satisfy.uk.com, specifically
MidAmerican Mortgage, Lincoln                 addressing customer satisfaction for the banking industry, today’s consumer is
402/436-3145 Fax 402/436-3191                 seeking more one-stop shopping venues; but in the case of the buying process,
Lobbyist, John Boehm                          a venue steeped in true expertise coupled with a high trust factor. They are de-
Butler, Galter & O’Brien Law Firm,            pending on their loan and real estate professionals for high-level referrals to
Lincoln                                       expert consultants to support all phases of the buying and selling process.
402/475-0811 Fax 402/475-6416
                                                                                                         Continued Page -3-
Editor, Mary Byrnes
First State Bank, Omaha
402/597-0500 Fax 402/596-9485
                                             Changes to Our Conventional Loan Limits
Also in this issue…
  New Officers/Board Members (Page 2)       Amends these Guides: Selling
  Lender of the Year 2005 (Page 2)
                                            The purpose of this Announcement is to publish the new maximum mortgage
                                            amount limits effective for 2006 for all conventional mortgages.
  Annual Membership Dues (Page 3)
  News Tidbits (Page 6)                     Conventional Loan Limits
  President’s Corner (Page 6)                    We are increasing our maximum mortgage amounts to reflect the increase in
  PFI Notice – Announcing                   the national average price for single-family homes. These new amounts will apply
  Enhancements to Guides (Page 7)           to all conventional mortgages that are delivered to us under any outstanding con-
  Revised Refinance Transactions (Page 9)   tracts or commitments for cash purchase or MBS pool issuance on or after
  FHA Loan Limits (Page 9)                  January 1, 2006 (including mortgages originated prior to that date, provided the
                                            original unpaid principal balance was equal to or less than the new maximum
  Residential Loan Application (Page 10)
                                            limit). Lenders are reminded that a modified mortgage that had an original un-
  Call to Action (Page 10)                  paid principal balance that exceeded our current maximum limit, even though the
  Terrorism Risk Ins. Renewal (Page 10)
                                                                                                           Continued Page -2-
                                                                                      Dec., 2005                Page 2

 Changes to Our Conventional Loan Limits… from Page -1-
 balance may have been paid down at the time of the modification to or below
                                                                                       David Stemper
 our current maximum limit, is not eligible for purchase by us.
      First Mortgage Limits: For first mortgages, the maximum allowable
                                                                                       Lender of the
 original loan amount will be:
 Number           Contiguous States,                 Alaska, Guam, Hawaii
                                                                                         Year 2005
 ofUnits         District of Columbia                   &Virgin Islands                                 At the fall confer-
                    & Puerto Rico                                                                       ence, David L.
 1                     $417,000                            $625,500                                     Stemper was hon-
 2                     $533,850                            $800,775                                     ored as Lender of
 3                     $645,300                            $967,950                                     the Year 2005.
 4                     $801,950                           $1,202,925                                         David currently
                                                                                                        is the 2nd Vice Presi-
      Second Mortgage Limits: For second mortgages, the maximum allow-                                  dent and Manger of
 able original loan amount will be $208,500 (or $312,750 in Alaska, Guam,            the Wholesale Lending Department
 Hawaii, and the Virgin Islands). Furthermore, the sum of the original loan          for First National Bank since the in-
 amounts of the first and second mortgages cannot exceed $417,000 (or                ception of the department in 2000.
 $625,500 in Alaska, Guam, Hawaii, and the Virgin Islands). These limits ap-         Previously, he was Senior Vice
 ply whether or not we own or have an interest in the first mortgage.                President and Senior Underwriter for
      Lenders should contact their Customer Account Manager or Underwriting          First Commerce Mortgage Company.
 Consultant in their lead Fannie Mae Business Center if they have any ques-               David has served four years on
 tions about this Announcement.                                                      the Allocations Committee for the
                                                                                     United Way of Lincoln-Lancaster
                                                                                     County, and participated on the fund
                                                                                     raising committee of Habitat for Hu-
         New Officers/Board Members                                                  manity. He is currently a member of
                                                                                     the Secondary Market Advisory
         Announced at Fall Conference                                                Council for Fannie Mae of Chicago
                                                                                     and has been a member of the Board
                          The Nebraska Mortgage Association announced it’s new       of Directors for the Nebraska Mort-
                          Officers and Board Members at the Annual Fall Confer-      gage Association for over eight years,
                          ence held October 12-13, in Nebraska City. New officers    serving as the 2003-2004 Nebraska
                          are: President - Marlin Hupka, TierOne; Vice President -   Mortgage Association President.
                          Jan Meister, Bank of the West; Treasurer - Mark                 He has been a continued sup-
                          Johnson, CBSHome Mortgage; Secretary - Gina Jerauld,       porter of the American Heart
                          Bank of the West.                                          Association, Muscular Dystrophy and
                               Board of Directors for the 2005-2006 year are E.      related diseases, Juvenile Diabetes,
                          Dean Niedan, American Mortgage Company; George             Friendship Home, and Habitat for
                          Akers, First Mortgage Company; David Horak,                Humanity, Lincoln City Mission and
       Marlin Hupka       Mortgage Guaranty Insurance; Cindy Muhlbach, Platte
    President 2005-2006
                                                                                     Peru State Alumni Association.
                          Valley State Bank & Trust Co.; Sherri O’Callaghan,              David is a graduate of Peru
United Nebraska Bank; Tony Johnson, First National Bank; Robert Rutan, First         State College where he earned a
National Bank of Omaha; Jacalyn Ayoub, Home Federal Savings & Loan                   Bachelor of Science degree with
Association, Jack Hobbie, Professional Mortgages Services, Inc. and Past             Distinction in Business Administra-
President, Susan Grieger, US Bank.                                                   tion. He is also a graduate of the
     Members of the 2005-2006 Education Committee are: Chair, Shelley                School of Mortgage Banking of the
Sullivan, MidAmerican Mortgage; Vice Chair, David Olson, Equitable Mortgage          National Bankers Association.
Corp.; Treasurer, Mary Byrnes, First State Bank, Secretary, Bob Gondring,                 The Lender of the Year Award is
TierOne, and Members at Large, Jacki Young, NIFA, Thad Follet, Equitable             given to lenders that are active in the
Mortgage, and Cindi Hill, American Mortgage Company.                                 Mortgage Banking business through-
     If you have any questions or comments regarding the Nebraska Mortgage           out the State of Nebraska, and are
Association, please contact any officer or board member. Contact information is      active in their local community af-
available at our website: www.nebraskamortgageassociation.org.                       fairs with emphasis on education and
                                                                                     integrity of the lending functions.
                                                                                       Dec., 2005                Page 3

 MBA Weekly Mortgage Application Survey… from Page -1-                                Common Ground … from Page -1-
       The seasonally-adjusted Purchase Index decreased by 1.2 percent to 472.3       Realtor/LO ProfileToday’s savvy
  from 477.9 the previous week whereas the Refinance Index decreased by 6.9           Realtors understand the power of
  percent to 1584.1 from 1702.4 one week earlier. The Refinance Index is down         building an unmatchable team of ex-
  17.4 percent compared to four weeks ago when the index was 2144.5 Other             perts who demonstrate cutting-edge
  seasonally adjusted index activity includes the Conventional Index, which de-       expertise in their industry. True top
  creased 2.8 percent to 953.4 from 980.8 the previous week, and the                  producers are clear that designing
  Government Index, which decreased 11.4 percent to 104.6 from 118.1 the pre-         strategic alliances with lenders ex-
  vious week.                                                                         pands their service models and
       The four week moving average for the seasonally-adjusted Market Index is       ensures reciprocal qualified leads.
  down 1.7 percent to 650.3 from 661.2. The four week moving average is up 0.3              In addition to the advent of turn-
  percent to 463.4 from 461.9 for the Purchase Index, while this average is down      key client relationship management
  4.6 percent to 1737.0 from 1820.2 for the Refinance Index.                          systems to enhance Realtor and
       The refinance share of mortgage activity decreased to 39.9 percent of total    builder partnerships, the smart Realtor
  applications from 40.4 percent the previous week. The adjustable-rate mortgage      works with LOs who support ongoing
  (ARM) share of activity increased to 33.2 percent of total applications from        business development and put less
  32.9 percent the previous week.                                                     value on a luncheon or a round of
       The average contract interest rate for 30-year fixed-rate mortgages de-        golf. Such structured alliances support
  creased to 6.26 percent from 6.33 percent one week earlier, with points             the real estate agent from the listing
  decreasing to 1.11 from 1.26 (including the origination fee) for 80 percent loan-   through the sale, along with buyers
  to-value (LTV) ratio loans.                                                         and past client follow up.
       The average contract interest rate for 15-year fixed-rate mortgages de-              For the most part, many of the
  creased to 5.83 percent from 5.87 percent, with points decreasing to 1.12 from      over one million licensed real estate
  1.24 (including the origination fee) for 80 percent LTV loans. The average con-     agents in this country are relatively
  tract interest rate for one-year ARMs decreased to 5.41 percent from 5.46           new to the real estate business. These
  percent one week earlier, with points increasing to 0.99 from 0.97 (including       agents have never experienced a mar-
  the origination fee) for 80 percent LTV loans.                                      ket where rates are considerably
       **SPECIAL NOTES** The survey covers approximately 50 percent of                higher and selling requires an invest-
  all U.S. retail residential mortgage originations, and has been conducted weekly    ment of time and expertise to build
  since 1990. Respondents include mortgage bankers, commercial banks and              relationships based on earned trust;
  thrifts. Base period and value for all indexes is March 16, 1990=100.               nor have they had to be accountable
       The Mortgage Bankers Association (MBA) is the national association rep-        for their services, striving predomi-
  resenting the real estate finance industry, an industry that employs more than      nately to be “superstar” producers
  500,000 people in virtually every community in the country. Headquartered in        based on sales volume, not service.
  Washington, D.C., the association works to ensure the continued strength of the           A recent study emphasized how
  nation‘s residential and commercial real estate markets; to expand                  competitive the real estate industry
  homeownership and extend access to affordable housing to all Americans.             has become. A survey of 12 residen-
  MBA promotes fair and ethical lending practices and fosters professional excel-     tial real estate markets conducted by
  lence among real estate finance employees through a wide range of educational       Pennsylvania State University re-
  programs and a variety of publications. Its membership of over 3,000 compa-         searchers concluded that in most
  nies includes all elements of real estate finance: mortgage companies, mortgage     areas, the market share held by top
  brokers, commercial banks, thrifts, Wall Street conduits, life insurance compa-     firms is shrinking. In seven of the 12
  nies and others in the mortgage lending field. For additional information, visit    markets, and four of the six largest,
  MBA‘s Web site: www.mortgagebankers.org.                                            franchised firms have a larger per-
                                                                                      centage share of the market than do
                                                                                      the other locally owned firms. All
                NMA Annual Membership Dues                                            markets are growing, but growth is
Notices for NMA Annual Membership Dues were mailed out last month, and are            greater and competition is more in-
currently due. To be listed in the 2006 Membership Directory, dues must be re-        tense in the larger markets. “What we
ceived by December 15th. Please be sure to provide up-to-date contact                 find is that selling real estate is inten-
information for each of the individuals that are to be listed with your firm when     sively competitive,” said Steve
returning your dues invoice. Invoice are to be sent to Nebraska Mortgage Asso-        Sawyer, professor at Penn State’s
ciation, P.O. Box 6141, Lincoln, NE 68506. Questions regarding your dues              School of Information Sciences &
invoice, can be directed to Carmen Skare at nebrmortassn@neb.rr.com.                                       Continued Page -4-
                                                                                          Dec., 2005               Page 4

Finding Common Ground… from Page -3-
Technology. “Consumers have more                 Several originators include a select         If the lead comes from the
information, they demand more ser-          group of Realtors on their teams to ser-     Internet, dual notification through
vices, and they have more agents and        vice and secure for sale by owner            web linking handles the urgency fac-
business models to choose from than         prospects and other leads. Other LOs         tor and has both team members on
ever before.”                               have secured their Realtor license (a re-    board to service their request. This re-
     At the same time, it’s obvious that    quirement in California and other            quirement for real-time
there are many “new faces” within the       states) as a way to better to understand     communication has met with reti-
loan originator ranks. Many of today’s      the Realtor experience and mindset.          cence on the part of the real estate
loan originators got into the business           The key to successful partnering        community, and makes the case for
when the re-finance market was in           lies with clear objectives, clear guide-     appropriate team service real time re-
full swing, with little need to invest in   lines, and a structured support system       sponse.
relationship selling or learn about al-     for both team members that results in        New Consumers Jeremy Conaway,
ternative loan products that might          a consistent flow of quality prospect        founder and president of RECON In-
better suit the customer’s real, long-      services for both parties.                   telligence Services, a consultant firm
term financial needs.                       Who’s on First? Generally, both Re-          to the real estate industry, said,
     Real estate agents and loan origi-     altors and originators would state that      “Today’s consumer is a more edu-
nators, in many instances, have not         they should be the first call. Loan origi-   cated and sophisticated individual that
warmly embraced the escalation and          nators argue that it’s important             requires more control in the transac-
use of electronic communication de-         borrowers are prequalified before they       tion. They want more involvement,
vices, nor have they integrated the         set out on their house hunting travels       and have a definite idea of what expe-
electronic programs and tools neces-        with Realtors. On the other hand, Real-      rience they want to have, with a clear
sary to step up the standard to support     tors would prefer they are the first point   sense of value from the transaction
the consumer’s need for more control.       of contact, enabling them to refer cus-      and the parties involved.”
With the age gap that exists between        tomers without financing arrangements             This information clearly identi-
the average Realtor and today’s buyer,      to one or more originators. The Na-          fies that today’s consumer seeks a
findings reveal that the Gen-X con-         tional Association of Realtors (NAR)         higher-quality experience when work-
sumer is unwilling to accept the            has developed an ambitious market-           ing with well-trained, expert-level
breach in service and communication.        ing campaign to convince consumers           professionals and those who are ancil-
Integrating automated web contact           that they should first consult with a        lary to the property purchase.
and automated response programs             Realtor. The campaign has included                Loan originators and real estate
solves this problem. Agents for both        TV and radio commercials, along              agents are faced with a uniquely em-
industries who choose to ignore this        with print ads and posters. While the        powered Internet consumer. What was
shift are increasingly at risk of losing    primary message was that consumers           once proprietary information is now
their business.                             should do business with Realtors,            available to the public. This empow-
Symbiotic Relationship Historically,        rather than agents who aren’t mem-           erment has aided them in the demand
real estate agents and loan originators     bers of the NAR, or spokesperson             for more control, coupled with higher
have had a symbiotic relationship in        noted that the overall philosophy ex-        expectations, and more “consumer-
exchanging prospects, but not in a          tends to originators as well.                centric” services than ever before.
structured, consistent process. Many             Of course, there is a “middle                Both professional parties must
originators are less than delighted to      ground,” enabling originator and Re-         also consider the emergence of a new
work with Realtors, and vice versa,         altor to work together as a team.            consumer profile that includes immi-
while other very successful LOs and         Today’s consumer is more likely to           grants, ethnic buyers, and foreign
agents enjoy a thriving business fu-        scout out housing information before         investors. Neither the real estate com-
eled by reciprocal lead exchange. The       securing finance qualification. This is      munity nor loan origination
key to an effective partnership is in       why LOs with a Realtor partner have          management has geared up their train-
the selection process: finding agents       a distinct advantage: they can provide       ing and programs to address this
and LOs who “get it” and respect and        “team guidance” to the prospect, and         emerging demographic. To survive
understand the expertise of their team      begin building the value of their par-       and to prosper, they must develop and
member. Interviews reveal that de-          ticular expertise. Should the prospect       deliver special training programs to
pendable, consistent updating of all        contact the real estate agent first for      better equip agents with communica-
developments increased the effective-       housing info, the introduction to their      tion and service models to meet these
ness, success, and ongoing loyalty of       loan partner is a smart second step for      emerging needs.
the partnership.                            all parties.                                                      Continued Page -5-
                                                                                        Dec., 2005               Page 5

Finding Common Ground … from Page -4-
     The consumer is inundated with        demand for “a good real estate experi-      fail to understand the full power of
pitches for low rates and zero-based       ence,” not just an “experienced             structured relationships that are made
fees—regardless of whether the loan        top-producing agent.”                       up of a select, elite group of profes-
product is actually appropriate with             QSC agents are required to earn       sionals that yield consistent lateral
their financial scenario—from every        their certification on an ongoing ba-       referral business.
medium, including the Web. Options         sis, verifying their high customer                Real estate companies are seek-
for instant quotes and competing           satisfaction through surveys con-           ing alternate revenue streams as
“bids” direct the consumer to choices      ducted in real-time with                    broker profitability continues to
based on commoditizing rather than         independently validated results. Larry      shrink; thus the proliferation of cre-
financial expertise that would have        Romito, president and CEO of QSC,           ative business arrangements that
them carefully examining the full          reports “consumers who work with            include mortgages, title, and other
spectrum of services that a true lend-     QSC agents are 45 percent more              services indigenous to the real estate
ing professional could offer.              likely to be ‘very satisfied’ with their    transaction. Herein lies the opportu-
Better Understanding My consult-           service experience and 70 percent less      nity for both agents to profit from a
ing, coaching, and interviews have         likely to be ‘dissatisfied’ or ‘very dis-   partnership that provides true expert
repeatedly indicated that neither loan     satisfied’ with service.” Such results      financial counseling to Realtor’s cus-
originators nor real estate agents un-     signal increased repeat and referral        tomers that should be made available
derstand the real service demands of       business.                                   by their mortgage professional
today’s consumer. According to NAR               The consumer continues to drive       through the agent, and not counseled
statistics, the average age of a Realtor   the standards higher as we scramble         by a real estate agent.
is 52-53 years old, with the average       to keep up with the needs and inter-        Co-Op Partnerships In their book,
buyer at 39 years old. This disparity      ests of our customers and clients. This     “The One to One Future,” Peppers &
in age is one of the major contribu-       clearly indicates that it is time to pay    Rogers disclose that it is infinitely
tions to the “service” issue, or lack      more attention to the consumer’s ex-        cheaper and smarter to retain old cus-
thereof, as the older “boomer” agents      perience during the buying or selling       tomers than it is to get new ones. This
prefer the now-outdated “agent-cen-        process with an outcome that goes be-       is one of the primary reasons loan
tric” delivery of services and             yond adding another “sale” to the           originators and real estate agents
communication. The newly empow-            annual volume of the professional Re-       should partner to support past clients
ered Gen-X’er is highly expectant of       altor or originator.                        and customers.
immediate everything: communica-           In-House Real Estate Mortgage                     Realtors traditionally do not have
tion, expert consultation, delivery,       Services According to Conway, 85            consistent systems to keep a past cli-
accountability, and service. Yet qual-     percent of consumers who enter a real       ent “connected.” Originators, in most
ity service remains more talk than         estate firm’s sphere are “mortgage eli-     cases, have infinitely more business
reality, in that few LOs or Realtors       gible.” Yet traditional real estate         opportunities than a real estate agent
are equipped with the technology/au-       agents demonstrate a clear propensity       does to serve the customer after the
tomation systems to support the 24/7       to not refer to in-house mortgage op-       sale, e.g., with additional financing
demands for real-time response.            tions. This figure helps shatter the        services. In the course of a year, many
Education with Accountability Now          excuse that LOs can’t secure loans          past customers may have experienced
for the good news: the real estate in-     from companies that offer in-house          life-changing issues that require an
dustry has recently addressed              mortgage services. In-house reps in real    “Annual Mortgage Fitness Check-
customer satisfaction by initiating        estate offices are not necessarily a bar-   up.” This annual check-up is a
certification programs aimed at ac-        rier to outside mortgage companies.         powerful, value-added way to con-
countability for services rendered.        More often than not, the in-house LOs       tinue to stay connected.
One program offers a “Quality Ser-         are too busy to service all the agents            The loan industry has several
vice Certification” for real estate        properly. Many agents surveyed pre-         programs and systems for client rela-
agents and loan originators, which         fer LOs who provide consistent              tionship management, but managing
rates them on their level of service. It   communication on their transactions         the relationship is only half the battle.
helps consumers find and select the        demonstrating their desire to build re-     Building a database of current, Web-
best professional service providers        lationships through “earning” their         based information is the key to
and to help professional service pro-      business, not “expecting” it.               keeping clients and their information
viders deliver their best service (see           The fact is that most agents work     organized and accessible 24/7.
www.QualityCertified.org). The need        with loan originators they know, like,            Choose a program that offers a
to measure services as well as sales       and trust, as we all do with any ser-       “Realtor Partnership” option. Since
production, speaks to the consumer         vice provider. However, many LOs                                 Continued Page -6-
                                                                                      Dec., 2005             Page 6

Common Ground … from Page -5-
both parties share the customer, the
loan originator can bridge the gap for
                                                                   News Tidbits
the real estate agent and the past cus-   House Committee Discusses Broker Licensing
tomer by including them in                The House Financial Services Subcommittee on Housing and Community
communications that support the cli-      Opportunity recently met to hear testimony on H.R. 1295, The Responsible
ent after the purchase—on behalf of       Lending Act of 2005. Title V is a critical element of the proposed legislation.
both professionals. Many originators      It would give states three years to pass uniform statutes for the licensing of
and their Realtor partners have devel-    mortgage brokers, create federal mortgage broker requirements for states that
oped unique co-op programs                don’t pass compliant legislation, and establish a national database of licensed
including basic advertising (where        brokers. The National Association of Mortgage Brokers stated that the act is
they share the costs), virtual tours of   “a step in the right direction,” but believes that Title V should apply to all
properties, seminars, and open            mortgage originators, not just mortgage brokers.
houses.                                   MBA Announces 2005 Cost Study
     Loan-tracking CRM services are       Last year, mortgage banking production profits dropped to $657 per loan,
proving that one closed loan with         from $1,272 the prior year, according to the Mortgage Bankers Association’s
consistent communication from the         (MBA) annual cost study. The study noted that overall, the average firm
loan originator yields, on average,       posted pre-tax net financial income of $23 million in 2004, a decline from the
eight closed loan referrals within a      previous three years. Net loan production volume dropped, while servicing fi-
36-month period, making the loan          nance income improved. MBA’s 2005 Cost Study is based on 2004 data.
originator a real resource for repeat     NAMB Proposes Changes to GFE Form
business for themselves and their Re-     The National Association of Mortgage Brokers (NAMB) has proposed a re-
altor partners.                           vised Good Faith Estimate form, in response to HUD’s ongoing efforts to
The Power of a Partnership The            revamp the Real Estate Settlement Procedures Act (RESPA). The proposal
bottom line is this—manage your da-       calls for a one-page form that features a paragraph describing the originator’s
tabase, extend your services, include     role and recommends that HUD issue guidelines that allow a consumer “a pri-
your team partners—and everybody          vate legal cause of action against the originator in the event no re-disclosure
wins. We must provide real services,      is made when any change in interest rate or the total sum of settlement costs
in real time, with exceptional exper-     estimated increases by more than 10 percent.”
tise and execution that drives home a
message of unique and authentic care
for those customers who insist on
working with the best.
     Now is the time for today’s LOs
and real estate teams to embrace the
trends and the many benefits of devel-
                                                             President’s Corner
oping strategic alliances to provide a    Congratulations to the Education Committee on a great fall conference in
more comprehensive service model          Nebraska City! The conference was, in my opinion, one of the best I have
that offers the highest levels of high-   attended anywhere. Thank you, Shelley Sullivan and your hard working
tech expertise, care, concern, and        committee.
professional guidance that is critical         I attended the Mortgage Bankers Association National Convention in
to the consumer’s purchase-ability.       Orlando in October. The buzz at the convention was “automation”. It seemed
Only such alliances will be viable in     every time I turned around another software developer was there to introduce
the future.                               me to their new origination, servicing, quality control or accounting software.
     TERRI MURPHY is a pub-               The mood was generally upbeat about business with little hints of caution,
lished author, communications             which we have already seen in rates and the resulting business decline.
specialist, consultant to the loan in-         I am looking forward to the challenges of this next year as your president.
dustry, and CIO for U.S. Learning,        My goals for the year are the Association’s mission statement and being the
Inc., Memphis, Tenn., and she has         voice of the industry, legislative activism, ethical standards and educational
been a licensed Realtor for over 25       opportunities. The committee chairpersons for each of these areas are working
years, Web site: http://                  to make sure our mission is accomplished.
www.TerriMurphy.com or e-mail:                 Merry Christmas and Happy New Year to you and your families.
Terri@TerriMurphy.com                                                                        Marlin Hupka, NMA President
                                                                                          Dec., 2005              Page 7

PFI Notice – Announcing Enhancements to the Origination
                and Underwriting Guides
Pertaining to the Following Subjects:
    • New Appraisal Forms
    • Revised Uniform Residential Loan Application
    • Revised Uniform Underwriting and Transmittal Summary
    • Additional Parcels
    • Seller / Builder Contribution Limits
    • Bridge Loan Financing
    • Appraisal Photographs
    • Secondary Financing Documentation

Enhancements will affect the following Guide Chapters:
    Origination Guide Chapter 26             MPF Bank’s Quality Control Review
    Origination Guide Chapter 27             The Mortgage File
    Origination Guide Chapter 28             PFI’s In-House Quality Control Program
    Origination Guide Forms & Exhibits       Credit Enhancement Request (Form OG3)
    Underwriting Guide Chapter 2             Mortgage Eligibility
    Underwriting Guide Chapter 3             Loan Purpose
    Underwriting Guide Chapter 4             Borrower Eligibility
    Underwriting Guide Chapter 5             Property Valuation and Eligibility

Description of Changes
Underwriting Guide Revisions
     New Appraisal Forms (UG Chapters 2, 3, 4 & 5, OG Chapters 27 & 28 and Form OG3)
     As a result of changes in industry practices, the existing appraisal forms have been revised, and several new appraisal
forms have been added. The new and revised forms feature a single use for each form (for example, property type and interior
or exterior inspections) and a standardized format for all of the forms with expanded comment areas. The forms are designed
to support current mortgage industry and appraisal reporting practices. You may begin using the new forms immediately; but
the new appraisal forms are required for all Appraisals having an effective date on or after January 1, 2006.
     Additional Parcels (Underwriting Guide Chapters 2.7.1 and 5.1.3)
     Occasionally a property may include a lot (or separate parcel of land) that is adjoining the parcel containing the mort-
gaged property. We are adding criteria to clarify when a separate parcel may be part of the security used for a mortgage
delivered under the MPF Program. The additional adjoining parcel must be zoned residential, not contain a residential struc-
ture, and the mortgage must be a valid first lien on all parcels.
     Seller / Builder Contribution Limits (UG Chapter 2.21)
     We have expanded the percentage of funds a property seller or builder may contribute to a transaction. A seller or builder
may now contribute up to 9% of a property’s value for a mortgage secured by a primary residence or second home with an
LTV of 75% or less. PFIs are reminded that seller and builder contributions may be used only for normal and customary clos-
ing costs including prepaid items (such as prepaid interest, prepaid real estate taxes, escrow funds, initial mortgage insurance
premium, hazard or other insurance premiums).
     Bridge Loan Financing (UG Chapters 3.9 and 4.7.14)
     We are adding more options for borrowers using a bridge loan on their prior residence for a source of downpayment on a
new home. A borrower’s previous housing payment and the payments on short-term financing secured by the sale of the
Borrower’s previous residence may be excluded from the monthly debt payment-to-income ratio if the Borrower has:
   • A signed sales contract for the previous residence; and
   • A lender’s commitment to the buyer of the previous residence (if the signed sales contract contains a financing contin-
       gency); and
   • Evidence of reserves of six months based on the payments for the previous residence; or
   • In lieu of the three items above, an executed buyout agreement that is part of an employer relocation plan where the
       employer / relocation company takes responsibility for the outstanding Mortgage(s).

                                                                                                           Continued Page -8-
                                                                                             Dec., 2005               Page 8

PFI Notice Announcing Enhancements to Originations/Underwriting Guides… from Page -8-
Origination Guide Revisions
    Uniform Residential Loan Application (URLA) (OG Chapters 27 and 28)
    Due to changes in industry practices, the Uniform Residential Loan Application (URLA) (FNMA Form 1003 / FHLMC
Form 65) and all of its supplements* have been revised. Changes to the application include:


     *
         The Application supplements are the Statement of Assets and Liabilities (FNMA Form 1003A / FHLMC Form
         65A), the Uniform Residential Loan Application – Spanish Version (Form 1003(S)) and the Statement of Assets
         and Liabilities – Spanish Version (Form 1003A (S)).


  • Requirements for the collection of asset and liability information from all persons, in addition to spouses or persons
    with community property or rights according to applicable state law;
  • A signature line for the borrower and co-borrower indicating their intent to apply for joint credit; and
  • A separate acknowledgement that the owner of the loan, its servicer, successors and assigns may verify or re-verify the
    information in the loan application from any source, including a consumer reporting agency.

    You may begin using the new form immediately; however, the new form is required for loan applications taken on or
after January 1, 2006 and subsequently delivered under the MPF Program.
    The Uniform Underwriting and Transmittal Summary (OG Chapter 27 and UG Chapter 4)
    Because of changes in industry practices, the Uniform Underwriting and Transmittal Summary (FNMA Form 1008 /
FHLMC Form 1077) have been revised. You have the option to begin using the new form immediately; however, the new
form is required for loan applications taken on or after January 1, 2006 and subsequently delivered under the MPF Pro-
gram.

Additional Revisions
PFI Notice 2005-6 incorporates the following revisions:
     Origination Guide Chapter 26 – MPF Bank’s Quality Control Review: In lieu of original photographs of the mort-
gaged property and comparables, copied, digital or electronically imaged photographs may be sent to the MPF Provider when
a loan is requested for MPF quality control review. All copied, digital or electronically imaged photographs must be clear and
detailed.
     Origination Guide Chapter 27 – The Mortgage File: For each Mortgage originated with secondary financing, regard-
less of the Mortgage’s loan purpose or the disbursed / outstanding balance of any HELOC, the Mortgage File must contain
copies of the Note, Security Instrument and HUD-1 Settlement Statement on the secondary financing.
     Underwriting Guide 5 - Property Valuation & Eligibility: Due to changes in industry practices, the appraiser must
conduct research and an analysis on any prior sales or transfers of the property in the past three years, review the sales con-
tract, determine if the property is structurally sound and determine if conditions exist that affect the livability of the property.
     Origination and Underwriting Guide - All published chapters and forms: The chapters and forms of the Origination
and Underwriting Guide published with the Notice contain revised terminology that reflects current MPF Program usage. We
are also adding cross-references to better assist PFI’s in finding critical information.

Origination and Underwriting Guide Revisions:
The following Origination and Underwriting Guide changes can be found on the AllRegs and eMPF® websites. Links to these
sites are on fhlbmpf.com and fhlb-mpf.com or may be accessed directly at http://www.allregs.com/fhlbmpf/.
     • Origination Guide
             • Chapters 26, 27 and 28 – changed text is highlighted in AllRegs
             • Form OG3
     • Underwriting Guide
             • Chapters 2 through 5 – changed text is highlighted in AllRegs

     Note: The new appraisal, application and underwriting transmittal forms are available on AllRegs®, or you may con-
tact your current forms vendor to obtain copies.
     If you have any questions about these changes, please contact your MPF Bank Representative or call the MPF
Customer Support Desk at 877-INFO-MPF (877-463-6673).
                                                                                            Dec., 2005               Page 9

                             Revised Refinance Transactions
The Federal Housing Administration                the refinanced mortgage must                   real estate tax deposits needed
(FHA) has revised a number of under-              be a 1- or 2-unit dwelling.                    to establish the escrow account
writing instructions regarding                • Subordinate financing may re-                    regardless whether the mort-
refinance transactions. These changes             main in place, but subordinate to              gagee refinancing the existing
are designed to provide expanded al-              the FHA insured first mortgage,                loan is also the servicing lender
ternatives for homeowners wishing to              regardless of the total indebted-              for that mortgage.
refinance their mortgages, and offer              ness or combined loan-to-value          Shortening the Term: Previous instruc-
greater flexibility to mortgagees in              ratio, provided the homeowner           tions provided for an allowance of $50
processing and underwriting certain               qualifies for making scheduled          before triggering a credit review when
refinance transactions. These guide-              payments on all liens.                  a borrower shortens the term of the
lines, which are effective for                • Any co-borrower or co-signer              mortgage. However, in light of the in-
mortgages endorsed on or after the                being added to the note must be         crease in mortgage amounts over the
date of this Mortgagee Letter, are                an occupant of the property.            past several years, this has become an
summarized below and will appear as               Non-occupant owners may not             unrealistic threshold. Therefore, a
revised pages to handbook HUD-                    be added in order to meet               mortgage on a principal residence may
4155.1 REV-5 when revised in 2006.                FHA’s credit underwriting               be refinanced to a shorter-term mort-
                                                  guidelines for the mortgage.            gage, provided the monthly principal
Summary of Changes                         “No Cash Out” (Rate and Term) Refi-            and interest increases no more than 20
Cash-Out Refinances: Under the             nances and Streamline Refinances:              percent. This additional latitude will al-
terms and conditions described below,      These instructions remain in effect            low more borrowers to shorten the term
FHA will insure a cash-out refinance       except for the following modifica-             of the mortgage without the need for
of up to 95% of the appraiser’s esti-      tions and additions:                           full underwriting.
mate of value. The eligibility                • The mortgage being refinanced             Refinancing a FHA-Hybrid Adjust-
conditions that must be met include:              must be current for the month due.      able Rate Mortgage to a Fixed Rate: A
   • The subject property must have           • In determining the existing debt          Hybrid ARM, (3-, 5, 7-, or 10-year
      been owned by the borrower as               as part of the mortgage amount          mortgage) may be streamline refi-
      his or her principal residence              calculation, the mortgagee may          nanced to a fixed rate mortgage, with
      for at least 12 months preceding            include accrued late charges            or without an appraisal, provided that
      the date of the loan application.           and escrow shortages.                   the payment will not increase by more
   • If said property is encumbered           • At closing, the borrower may              than 20 percent and all mortgage pay-
      by a mortgage, the borrower                 not receive cash back in excess         ments must have been made within
      must have made all of his/her               of $500.                                the month due for the past 12 months
      mortgage payments within the            • Prepaid expenses may include              or the period the mortgage has been in
      month due for the previous 12               the per diem interest to the end        force, if shorter.
      months, i.e., no payment may                of the month on the new loan,                If you have any questions regard-
      have been more than 30 days late            hazard insurance premium de-            ing this Mortgagee Letter, please contact
      and is current for the month due.           posits, monthly mortgage                your local Homeownership Center
   • The property that is security for            insurance premiums, and any             (HOC) in Denver @ (800-543-9378).


                                           FHA Loan Limits
   2006 FHA loan limits are indexed on the 2006 conforming loan limits, with the base and high-cost limits as follows:

                                                         Base                          High-cost
            Single Family                              $200,160                        $362,790
            Two-Family                                 $256,248                        $464,449
            Three-Family                               $309,744                        $561,411
            Four-Family                                $384,936                        $697,696

   FHA loan limits for individual counties may vary between the base and the high-cost depending on the medium housing
   price for that county or MSA. FHA typically announces it county-by-county mortgage limits through a mortgagee letter
   at the end of December.
                                                                                      Dec., 2005           Page 10

    Revised Uniform Residential Loan                                                   Call to Action:
          Application (URLA)                                                           I wanted to ensure that you
                                                                                       received the recent Call to
The Uniform Residential Loan Application (URLA), shared by Fannie Mae,                 Action that MBA sent to
Freddie Mac, the Department of Veterans Affairs, Rural Housing Services, and           members regarding the recent
the Federal Housing Administration (FHA) has been revised. Mortgagees may be-          news surrounding the mortgage
gin using the revised form immediately but must use the new URLA for all loan          interest deduction. As I’m sure
applications taken on or after July 1, 2006. There are no data changes to the form.    you are aware President Bush’s
     Mortgagees may adjust the URLA formatting as necessary to make the docu-          tax reform panel recently
ment easier to read and complete, or to reduce the number of pages. Additional         recommended eliminating the
blocks, lines or spaces may be added to allow all relevant information to be in-       mortgage interest deduction and
cluded, but sections, blocks, lines or spaces may not be removed.                      replacing it with a smaller tax
     Lenders may obtain the revised form at any of these websites:                     credit. Additionally, the panel
       http://www.hudclips.org/                                                        proposed eliminating the
       http://www.freddiemac.com/sell/forms/docs/65_010106.doc                         deductions for home equity
       http://www.efanniemae.com/sf/formsdocs/forms/pdf/sellingtrans/1003.pdf          loans and state and local taxes.
     The information collection requirements contained in this document have           The Call to Action requests that
been approved by the Office of Management and Budget (OMB) under the Paper-            members email their legislators
work Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control              in opposition to the panel’s
number 2502-0059. In accordance with the Paperwork Reduction Act, HUD may              proposals. You can find the
not conduct or sponsor, and a person is not required to respond to, a collection of    Call to Action by clicking on
information unless the collection displays a currently valid OMB control number.       this link: http://
     If you have any questions regarding this Mortgagee Letter, please contact         events.mortgagebankers.org/
your local Homeownership Center (HOC), using the toll-free number, in Denver           email/34252.html.
(800-543-9387).                                                                             If you have a moment, I
                                                                                       encourage you to send letters to
                                                                                       your legislators. If you can
                                                                                       forward the Call to Action to
                                                                                       your members so that they can
    Terrorism Risk Insurance Renewal                                                   contact their legislators, it
                                                                                       would be very much
               Legislation                                                             appreciated. We hope to get as
                                                                                       many real estate finance
  On December 7, 2005, the Mortgage Bankers Association (MBA) commended                professionals communicating
  the U.S. House of Representatives for passing terrorism risk insurance (TRIA)        with Members of Congress in
  renewal legislation. Now that both the House and Senate (passed on November          opposition to President Bush’s
  18th) have addressed TRIA’s expiration, MBA encourages Congress to move              tax panel’s recommendations.
  forward, without delay, and bring a conference agreement back to each chamber                Marlin Hupka, President
  for a final vote next week. The current TRIA authorization expires on Decem-         Nebraska Mortgage Association
  ber 31, 2005, so Congress must complete work on new TRIA legislation prior
  to adjourning for the year.
       “At a time when the nation is at war and acts of terrorism within our bor-

                                                                                      
  ders remain a real threat, the renewal of TRIA is crucial to maintaining the
  smooth operation of the commercial real estate finance market. MBA strongly
  supports legislative action to extend TRIA,” said Kurt Pfotenhauer, MBA’s se-
  nior vice president of government affairs. “We look forward to continuing our
  work with Congress so that final TRIA legislation can be presented to the Presi-
  dent for signature before the end of the year.”
                                                                                      Happy Holidays
       TRIA is an essential part of the nation’s economic preparedness against ter-     from Nebraska Mortgage
  rorism. As part of the multi-industry group - the Coalition to Insure Against               Association
  Terrorism (CIAT) - MBA shares CIAT’s goal of working toward a solution for
  this very pressing issue.
                                                                                      

				
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