Has all of the negative mortgage market news gotten to you yet? This is truly a difficult time for our business. Whether you are a mortgage banker, broker, service provider, support staff or manager, the news affects you.

In October 2006, when I attended the National Mortgage Bankers Association the message was clear: be prepared for a rough 2007, the news will be bad, it will go from bad to worse and the lenders will be blamed for everything. Well sure enough, the relaxed credit standards that helped put people in homes has come back to bite us. It just stands to reason that making bad decisions will have consequences. I know that other state associations are having the same challenges that we have. It's hard to maintain the good reputation of many with the injection of the bad reputation of few. I used to keep my thoughts to myself (I know that is hard to believe), but when a Realtor said their customer was approved with an on-line lender I no longer keep silent. I tell them what they can expect, and I encourage them to seek second opinions. Unless we stand up and brag a bit about our good business practices, people won't know where we stand.

I encourage you to contact your local board of Realtor's office and let them know that working with an association member is the fastest way to the closing table for them. Take an ad in their newsletter, do a flyer and let them know that you invest in your business and career by being an active member of the Iowa Mortgage Association. Let them know what classes you have attended this year and offer information from those classes that will help them grow their business. Tell them that you have a standard of ethics through the association and your business to act in the customer's best interest. Let them know that you are a resource for them to do a product comparison. You will win the deal every time.

As my time as your President comes to a close, I owe gratitude to many people. First of all I thank Darcy, Sharon, Bob and the Iowa Bankers Association staff for the continued support of our association. There are many details that are carried out behind the scenes that help make our association a success. Thanks to Dave Horak for covering for me at the Spring Convention as well as his support and friendship this year. Good luck to David in 2008. He will make a great president! To the committee chairs I thank you for being timely with your reports and helping us keep board meetings moving forward and on task. Your support and hard work make this association what it is. I am thankful that so many people volunteer their precious time to help the cause of many. My thanks to Brian Lampe who asked me 4 years ago to consider taking this position with the Board. Little did I know he would eventually become my boss! I've enjoyed my time and I hope I left the association just a little bit better than when I came in.

Becki Rogers-Neese

Getting the ICMP isn't simply a one time thing, but an ongoing commitment to professional growth. Professionals holding the designation pledge to continually advance their knowledge and achieve higher levels of excellence in the industry. The Iowa Mortgage Association encourages you to learn more about becoming an ICMP.

At the end of the course participants will be able to:
* Identify Self-Employed Borrowers
* Know when it is necessary to request Personal Tax Returns
* Recognize Allowable Add-backs to Income
* Understand the Importance of Schedule K-1
* Calculate Qualifying Income for: Commission Borrowers, Schedule C Borrowers and Rental Property Owners

Loan Processor Seminar
December 4, 2007 • Johnston, IA

Present at the check presentation from left to right was: Becki Rogers-Neese, 2007 IMA State President, Christy Allison, Immediate Past President of the Chapter, Greg Cotton, Community Relations committee chair, Deb Sullivan, 2007 Chapter President, Teresa Carley-Brown, Treasurer, and Teri Petersen, Vice President. Absent from photo was Deb Mulvania, Secretary and Dana Goodmiller, Community Relations committee member.

Is it little wonder NFIP errors make every regulator's "Top Ten" list of common compliance violations? In fact, in 2005 and 2006 the Federal Deposit Insurance Corporation (FDIC), Office of Comptroller of the Currency (OCC) and Federal Reserve Board (FRB) assessed more than $1 million in civil money penalties against the banks they supervise; nearly 10 times the amount assessed in 2004.

A flood "hot button" these days is condominium insurance coverage under the NFIP. As more and more baby boomers retire into condos or purchase second home condo units in Florida, Texas and other warm weather spots, more lenders struggle with their compliance obligations under the NFIP.

A condominium, whether part of a high-rise building or a ground-level cluster, is an "insurable structure" under the NFIP. Thus, when a lender makes, increases, renews or extends credit secured by a condo, the lender must follow the same rules it would for a single-family dwelling.

Unlike single-family dwellings, condos are typically covered under an umbrella insurance policy obtained by the condo association. Lenders often believe they can rely on the condo association to take care of the insurance requirements (fire, wind, flood, etc) for the building. This simply is NOT true. The lender must make its own determination of whether or not the policy purchased by the condo association is sufficient to meet the lender's regulatory compliance requirement under the NFIP and if the coverage is enough to avoid FEMA's co-insurance penalty. "What?" you say. "What do you mean 'and'? Lenders need to be cognizant of what co-insurance penalty?" Let me explain...

NFIP Regulatory Requirements
The NFIP requires lenders to ensure that collateral properties located in special flood hazard areas be insured. According to the rules found in the FDIC Rules and Regulations at § 339.3(a):
...The amount of insurance must be at least equal to the lesser of the outstanding principal balance of the designated loan or the maximum limit of coverage available for the particular type of property under the Act. Flood insurance coverage under the Act is limited to the overall value of the property securing the designated loan minus the value of the land on which the property is located.

In layman's terms, in order to comply with the minimum regulatory requirements of the NFIP, the lender must compare three items and then require insurance in an amount equal to the lesser of the following:
* The outstanding principal balance of all the liens against the property;
* The maximum amount of insurance available through the NFIP; or
* The insurable value of the structure.

The maximum amount of insurance available on a condominium building is $250,000 per unit. So a 10 unit complex would be eligible for up to $2,500,000 insurance if the insurable value was at least $2,500,000.

Determining the insurable value of the structure is not always an easy task. The FDIC rules indicate the lender should subtract the land value from the overall property value. Land is not insurable. Therefore, insurable values of buildings do not include land values. Property insurance agents may be able to assist lenders in determining the insurable value of the structure. Appraisals that include a current separate replacement cost calculation (cost to reconstruct) are also an appropriate measure of insurable value of buildings. For the purposes of this article, we will use the unit replacement cost as the insurable value of the property.

To illustrate this point, consider the following the scenario:
Replacement Cost (RC) of Building = $5,000,000
# of Units = 25
Actual Replacement Cost Per Unit = $200,000
(Building RC/# of units)
Total Loan Amount = $275,000
RCBAP Coverage Amount = $3,000,000

Step 1: Determine NFIP requirement

Loan Amount $275,000
Unit Replacement Cost $200,000
Max Insurance Available $250,000

Insurance amount needed: $200,000
(The lowest of the three above)

In the example provided above, the minimum required insurance amount needed to satisfy the lender's NFIP regulatory requirement is $200,000; the lesser amount of the outstanding loan balance, unit replacement cost (insurable value) and maximum amount of insurance available under the NFIP.

Now the lender must move on to Step 2 - determining if the condo association coverage satisfies the lender's regulatory requirement.

RCBAP Coverage
Boards of Directors of condominium associations typically are responsible under their by-laws for maintaining all forms of property insurance necessary to protect the common property of the association against all hazards the property may be exposed to for the insurable value (replacement cost) of those common building elements. This responsibility would typically include providing adequate flood insurance protection for all common property located in Special Flood Hazard Areas (SFHAs). Flood insurance protection for eligible residential buildings and building elements within individual units is most cost efficiently managed by the condominium association under the Residential Condominium Building Association Policy (RCBAP).

The RCBAP provides flood insurance coverage protection for both the individual units and the common elements of the building. The security interests of individual unit owners and mortgagees should be protected, so long as the insurance amounts are adequate. And that is the issue that sinks even the strongest compliance programs: ensuring the RCBAP coverage is adequate to meet the lenders regulatory insurance requirement.

On May 22, 2007, MBA Chairman John Robbins gave the keynote speech at the National Press Club's Newsmaker Luncheon. In that speech, John made an impassioned defense of the mortgage lending industry as a whole. While acknowledging that some lenders had made bad loans that might take a bit of time to work through the system, John's speech also provided important context that defined the scope of the problem and outlined the various causes and solutions for dealing with mortgage delinquencies. The speech received widespread media coverage in print as well as on television and radio, positioning MBA as a credible source of information and commentary on what is happening in the mortgage markets.

MBA built upon the momentum created by John's speech to extend media outreach efforts throughout the country. The Communications Department orchestrated a week-long media tour with MBA Chief Economist Doug Duncan that included visits with consumer, business and trade media in New York City, and three days through the Midwest which featured stops in Detroit, Chicago and Cleveland. Our primary messages were that specific loan products were not to blame for the increase in delinquencies and foreclosures, but rather that the causes were primarily local economic conditions (specifically in Ohio, Michigan and Indiana) and the recent slowing of home price appreciation in real estate areas that had seen a lot of speculators and investors (namely California, Florida, Nevada and Arizona). We have been very pleased with the traction our messages have gained in the media.

MBA has also started a paid media campaign in both print and radio designed to educate opinion leaders inside the beltway to the crucial role that mortgage lending, including subprime lending, has played in helping millions of American families build wealth. MBA has also developed and distributed TV and radio public service announcements reaching out with important information and guidance to borrowers who are having trouble making their mortgage payments. We have created a foreclosure prevention resource center on our consumer education website HomeLoanLearningcenter.com and are partnering with NeighborWorks America and the Homeownership Preservation Foundation to help borrowers in need with a toll free hotline and free credit counseling.

In addition to exhaustive media outreach, John Robbins has been actively working the halls of Congress to make sure elected officials get the whole story, and not base their policy initiatives on media headlines and anecdotal stories. He has met with dozens of members of the House Financial Services Committee and Senate Banking Committee to answer their questions and put the events in the subprime market in their proper context. John has also testified before Congress no less than seven times in the first half of 2007. John's efforts have made a tremendous difference as MBA is widely recognized for its willingness to educate members of Congress on the issues. We are well positioned to contribute to the debate because of our rational and reasonable approach.

MBA has also initiated a major project to identify ways to improve financial literacy for youngsters in this country. We are currently examining state and federal education programs and looking for ways in which we can make financial literacy a compulsory part of the high school curriculum. In addition, Homeloanlearningcenter.com has been completely updated, expanded and translated into Spanish.

MBA's Economics and Research team has been hard at work providing data and studies that allow MBA to be one of the most credible sources in the country for information on the real estate and mortgage markets. Without this crucial information, MBA would not be nearly as effective in combating the negative media and political attention the industry has faced over the last year.

And finally, and perhaps most importantly, MBA has just completed development of "The Simple FactsTM" an eight-page information booklet to educate consumers and help them easily identify the potential advantages and disadvantages of each type of mortgage, and choose the mortgage that is right for them. The Simple Facts also includes a glossary of loan terms and a list of questions that every borrower ought to ask their lender. The Simple Facts will also be available in Spanish, and MBA is launching a full-blown communications strategy to reach out to the Hispanic community.

We would like to encourage all MBA members to look at The Simple Facts and try to find a way to incorporate it into your loan processes. MBA has put a lot of hard work into this document, and tested it extensively with consumers, and we are convinced it can be a vital resource for all your customers.

In the coming days and weeks you will be hearing a lot more. MBA will host The Simple Facts on the HomeLoanLearningCenter.com website and will promote the booklet through paid advertising, public service announcements and an aggressive media relations campaign. We are reaching out to legislators and regulators, opinion leaders and policymakers, consumer advocates and civil rights groups. All this in an effort to get this document into the hands of as many prospective borrowers as possible.

We have just told you about a few of the initiatives that MBA is undertaking to help tell the complete story about who we are and what we do as an industry. If you have any questions, comments or suggestions, please don't hesitate to give MBA Chairman John Robbins or me a call.

Name:

Prime Times: What is your current position?
Response: Home Loan Consultant Sales Manager

Prime Times: How did you get started in the mortgage business?
Response: In 1986 I was working for a small, local credit union. That credit union wanted to get into the mortgage business. I had been promoted thru all departments at the credit union and was chosen to head up the new mortgage department.

Prime Times: Were you an immediate success?
Response: I would love to say, "Yes", but that first file to the investors underwriting department was a complete disaster. Who knew it was supposed to include other information than the loan application? I think that file must have given the underwriting department a good laugh, but it was a great "trial by fire" learning experience. From that point forward I originated, processed, closed, funded and shipped each and every file we closed. Although this is not possible today, all originators should have to work this way once in their life to know what your support staff does on a daily basis.

Prime Times: When did you begin to realize that you were successful?
Response: When my past customers started referring their friends and family on a regular basis. I am proud to say that my highest referral source is now my past customers.

Prime Times: What mistakes do you think new loan originators typically make?
Response: Communication is the key! Keep honest communication open with your support staff, business partners and most importantly your loyal customers. Returning phone calls is so simple!

Prime Times: How about the veteran loan originators? What mistakes do they make?
Response: Do we make them? Just kidding, of course we do! It is easy to get complacent in this business and we have to keep in mind that this may be just another transaction for us, but for our customers it may be a once in a lifetime EVENT and we need to remain enthused and excited for them. Keep the process fun!

Prime Times: What differentiates you and your company from other originators and companies?
Response: At Countrywide, we make a concerted effort to hire originators that have many years of experience in the mortgage industry. When a customer works with our team, they can feel confident in the level of experience we offer to make their loan experience a smooth, seamless and successful event.

Prime Times: What is your most successful sales tool?
Response: I have a Customer Retention Plan in place. My Marketing Coordinator manages the plan and we communicate with my past, current and prospective customers at least six times each year. I do not want them to forget my name!

Prime Times: Who or what was the biggest contributor to your success?
Response: The people on my team! My Loan Processor, Cathy Paytash, has been with me for over seven years now and I would not be where I am without her by my side. Recently I teamed with another experienced originator by the name of Mike Ducey. Along with Mike and Cathy, the team has grown to include Kiely Allison, our Marketing Coordinator and Eddie Dunham, our Transaction Coordinator.

Prime Times: What is your current mix of business and business sources?
Response: 100% of my business is by referral. 65% of that comes from past customers. The remaining business comes from referrals from Realtor and other business partners. The majority of my business mix is "A" paper using an equal combination of conventional, FHA and VA loans.

Prime Times: If you could change one thing about the mortgage business, what would that be?
Response: I would like to see originators licensed in all states. This should be required for all mortgage professionals at banks, credit unions, mortgage bankers, mortgage brokers, insurance companies and anyone else that has the opportunity to work with a consumer.

Prime Times: What other goals in your career would you like to accomplish?
Response: I would like to find a way to work smarter, not harder, so that I can retire when I am 55!

Prime Times: What words of wisdom would you offer other mortgage originators?
Response: Use the golden rule at all times. Treat external and internal customers how you would like to be treated.

Prime Times: Any final thoughts?
Response: If you are not an IMA member, you should be! There are many benefits to being part of this great organization and you have the opportunity to network with many other quality people in our profession.