President's Message

President's Message

2009-10 IMA President
Kathy Klahn

Hello fellow IMA members:

Can you believe interest rates are still as low as they are? This is fantastic especially for first-time homebuyers now that they can't get that tax credit any longer.

Remember, June is National Homeownership Month and a great time to recognize the important role that homeownership plays in our communities in Iowa and across the nation.

The Quad City Chapter of the IMA is hosting their annual golf outing on Tuesday, July 13th at the Palmer Hills Golf Course. They do a super job of putting this tournament together and I hear it is loads of fun. You can also just attend the social and dinner if you can't break away to golf.

Please be sure and put the IMA Annual Convention on your calendars September 1, 2 and 3. The conference is held at the downtown Marriott in Des Moines. It will be dynamic as the committee has a terrific agenda lined up. The conference is also a golden opportunity to converse with fellow mortgage lenders and you are amazed at the things we learn from each other.

Have a good summer!

Sincerely,

Kathy Klahn

IMA Annual Convention: Leadership and Vision in Mortgage

Leadership and Vision in Mortgage
IMA Annual Convention
September 1-3, 2010 - Downtown Des Moines Marriott

In today's ever-changing market, the mortgage industry depends on leadership and vision. To be successful you need to use your leadership skills to seek out the new opportunities in the mortgage industry - with clients, co-workers and your peers across the industry. For over 50 years, the Iowa Mortgage Association has helped members by providing leadership and vision, promoting the industry and continually striving to meet the needs of our diverse membership.

The Iowa Mortgage Association is proud to present the 57th Annual Convention. Designed to help you become more knowledgeable about the mortgage industry and increase your awareness about pressing issues, the convention is a must for any mortgage professional. This year's event has sessions on business leveraging influence in a high-speed world, credit scoring, marketing with social networking, an economic update and more. Take the opportunity to network with your peers, explore the products and services available in the exhibit hall and gain perspective from the educational speakers.

• September 1 - Golf Outing at Legacy Golf Course in Norwalk
• September 2-3 - Convention at Downtown Des Moines Marriott

New this year - the directory will be on the IMA website available for all mortgage professionals to print. IMA's membership is over 5,000 mortgage professionals strong so this is your opportunity to have your message heard. The directory will be available in September 2010 for download on the IMA website.

IMA Iowa Certified Mortgage Professional Designation

IMA Iowa Certified Mortgage Professional Designation

Ready to achieve a new level of professional growth and recognition? The Iowa Certified Mortgage Professional Designation (ICMP) program is designed to elevate professional standards, enhance individual performance, and designate association professionals who demonstrate the knowledge essential to the mortgage industry.

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. We invite you to learn more about becoming an Iowa Certified Mortgage Professional and take this crucial step that tells others they are working with a recognized expert in the mortgage industry. For more information about the ICMP designation process or to download an application, see the IMA website or call IMA's Darcy Burnett at (800) 800-2343 with questions.

Conference Committee Approves Regulatory Reform Bill

Conference Committee Approves Regulatory Reform Bill

A House-Senate conference committee early this morning gave final approval to sweeping financial services reform legislation, sending the bill back to the House and Senate for a final vote and setting the stage for President Obama to sign the bill into law prior to the July 4 recess. Iowa Senator Tom Harkin and Rep. Leonard Boswell (D-District 3) were named to the conference committee assigned to reconcile the differences between the Senate- and House-passed versions of the financial regulatory reform bill. Today at 5:40 a.m., the conferees approved the conference report of the 2,000-page bill after two weeks of negotiations.

There are a number of provisions in the bill that impact the real estate finance industry. A key provision involving risk retention survived in the bill with language generally favorable to the real estate finance agency, the Mortgage Bankers Association (MBA) reported today. The conference committee approved language from an amendment proposed by Sens. Mary Landrieu (D-La.), Johnny Isakson (R-Ga.) and Kay Hagan (D-N.C.), that creates an exemption from the bill’s 5 percent risk retention requirement for “qualified residential mortgages” that regulators determine through rulemaking are very well underwritten.

The conference committee also approved language from an amendment offered by Sen. Mike Crapo (D-Idaho) that addresses the unique nature of the commercial real estate market by requiring regulators to consider alternative forms of risk retention. The MBA, in support of the Crapo amendment, noted that such flexibility would permit regulators to align interests across transactional parties and help restore the commercial mortgage-backed securities market.

MBA Senior Vice President of Government Affairs Steve O’Connor noted that while many MBA members opposed risk retention requirements of any type, the language in the approved bill represented a “big win” for the industry. Getting the Landrieu and Crapo amendment language into the bill, he said, addressed several key concerns. For example, many lawmakers wanted the risk retention requirement to have no exemptions for residential or commercial mortgages, and as recently as last night House leaders still argued for an amendment that would delete risk retention proposals from the bill’s base text and would have only exempted government loans (FHA, VA and USDA) from risk retention requirements.

The bill also approved revisions sought by MBA under predatory lending language that creates a workable safe harbor from ability to repay requirements to facilitate well-underwritten loans. The legislation:

• excludes affiliate fees and up-front and monthly private mortgage insurance premiums from the calculation of the 3 percent limit on points and fees;
• gives FHA, VA and the Rural Housing Service flexibility to determine which mortgages are qualified for purposes of the safe harbor; and
• directs regulators to consider modifications to the safe harbor requirements for low balance loans.

MBA reports that the battle will then shift to the regulatory arena for the next several years as regulators move forward with rulemaking.

Senate proposal would extend tax credit

Senate proposal would extend tax credit

The U.S. Senate has included an extension in the time period lenders would have to close a loan with a homebuyer tax credit in its so-called "tax extenders bill". To qualify for the credit, buyers had to be under contract for a purchase by April 30. But under current law they have until June 30 to close on the sale.

Under the Senate proposal, the credit would be extended through Sept. 30 of this year. The bill only extends the time for closing a loan, it does not allow for new tax credits.

In order for the extension to become law, it still has to be passed by the full Senate and the House. With the deadline fast approaching, it is difficult to predict if it in fact will become law.

The next vote on the "extenders bill" could take place by the end of this week.

House approves another extension to flood insurance program

House approves another extension to flood insurance program

The House, by a voice vote yesterday, approved another temporary extension authorizing the National Flood Insurance Program, through Sept. 30.

The action came following an intense lobbying campaign by the Mortgage Bankers Association and other industry trade groups, which had expressed frustration that Congress had allowed the NFIP to expire three times this year, most recently in May. These expirations resulted in suspension of the NFIP, placing thousands of homeowners in limbo.

Disruption of the NFIP has had significant implications for the housing and commercial property industries. In a June 16 letter to Congress, the Mortgage Bankers Association and other trade groups noted that 5.5 million taxpayers depend on the NFIP as their main source of protection against flooding, the most common natural disaster in the United States. Without flood insurance, no federally related mortgage loans can be made in nearly 20,000 communities nationwide.

"The frequent lapses in the NFIP program are undermining homeowner and commercial property owner confidence in this vital program," the letter said. "Given the fragile state of residential and commercial real estate markets, Congress should take immediate action to restore confidence in the NFIP through a long-term, stand-alone extension."

The House vote fell short of an industry request for a longer-term solution; however, the extension intends that the program will continue through the end of the government's fiscal year.

Interest Rates Hit Record Lows, Freddie Mac reports

Interest Rates Hit Record Lows, Freddie Mac reports

Mortgage rates for all but traditional 1-year ARMs hit all-time record lows this week, according to data released by Freddie Mac on Thursday. Freddie Mac released the results of its Primary Mortgage Market Survey in which the 30-year fixed-rate mortgage (FRM) averaged 4.69 percent with an average 0.7 point for the week ending June 24, 2010, down from last week when it averaged 4.75 percent. Last year at this time, the 30-year FRM averaged 5.42 percent.

The 15-year FRM this week averaged 4.13 percent with an average 0.6 point, down from last week when it averaged 4.20 percent. A year ago at this time, the 15-year FRM averaged 4.87 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.84 percent this week, with an average 0.7 point, down from last week when it averaged 3.89 percent. A year ago, the 5-year ARM averaged 4.99 percent.

The 1-year Treasury-indexed ARM averaged 3.77 percent this week with an average 0.7 point, down from last week when it averaged 3.82 percent. At this time last year, the 1-year ARM averaged 4.93 percent. This is the lowest the 1-year ARM has been since the week ending May 6, 2004 when it averaged 3.76 percent.

Read the full report from Freddie Mac.

Existing-home sales decline 2.2 percent in May

Existing-home sales decline 2.2 percent in May

This week the National Association of Realtors (NAR) reported a 2.2 percent decline in sales of existing single-family homes, townhouses, condominimums and cooperatives in May to a seasonally-adjusted rate of 5.66 million units in May, compared to 5.79 million units in April. May sales were, however, up 19.2 percent compared to one year earlier.

Federal tax credits of as much as $8,000 for home buyers spurred sales in recent months. To qualify for those credits, buyers had to sign purchase contracts by April 30. The NAR data for May reflect completions of sales, most of which were based on contracts signed in March or April. NAR chief economist Lawrence Yun said he expects one more month of elevated home sales.

“We are witnessing the ongoing effects of the home buyer tax credit, which we’ll also see in June real estate closings,” he said. “However, approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June due to delays in the mortgage process, particularly for short sales.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.89 percent in May from 5.10 percent in April; the rate was 4.86 percent in May 2009.

The national median existing-home price2 for all housing types was $179,600 in May, up 2.7 percent from May 2009. Distressed homes slipped to 31 percent of sales last month, compared with 33 percent in April; it was also 33 percent in May 2009.

Pending home sales are expected to decline notably in May and June from the spring surge, but Yun added that job growth and a manageable level of foreclosures are keys to sales and price performance during the second half of the year.

Read the full press release from NAR.

Government agencies weigh in on the future of Fannie Mae and Freddie Mac

Government agencies weigh in on the future of Fannie Mae and Freddie Mac

In remarks on June 18, Federal Deposit Insurance Corp. Sheila Bair said Congress should address the government's role in the functions of Fannie Mae and Freddie Mac after financial regulatory reform is finished.

"After the financial reform package becomes law, GSE reform should rise to the top of the agenda," Bair said. "The goal must be to clarify once and for all which functions should be governmental, and which are strictly subject to the discipline of the marketplace."

Bair's remarks came just two days after the Federal Housing Finance Agency directed Fannie and Freddie to delist their common and preferred stock on the New York Stock Exchange (NYSE) and any other national securities exchange. The FHFA made the announcement in a statement on June 16.

"FHFA’s determination to direct each company to delist does not constitute any reflection on either Enterprise’s current performance or future direction, nor does delisting imply any other findings or determination on the part of FHFA as regulator or conservator," said FHFA Acting Director Edward J. DeMarco. “The determination to direct delisting is related to stock exchange requirements for maintaining price levels and curing deficiencies,” DeMarco said in the statement.

Each Enterprise’s common stock price has hovered near the NYSE minimum average closing price requirement of $1 over 30 trading days for most months since the conservatorships were established in September 2008. Most recently, Fannie Mae’s closing stock price has been below the required $1 average price for the past 30 trading days. Per NYSE rules, a company in that condition must either drop from the exchange or undertake a "cure" to restore the stock price above the $1 mark if it does not meet the NYSE’s minimum price requirements. The alternatives for putting in place such a cure do not assure maintaining the minimum price level or avoiding loss of shareholder value.

In view of Freddie Mac’s share price being close to the $1 mark and the common situation of both companies operating in conservatorship with support from the Treasury Department through the Senior Preferred Stock Purchase Agreements, FHFA has determined that Freddie Mac should also initiate an orderly delisting process.

Each Enterprise’s stock will continue to trade, but through a different trading mechanism, FHFA said.

USDA: Protecting the American Dream for Rural Homeowners

USDA: Protecting the American Dream for Rural Homeowners

By Tom Vilsack, Secretary of Agriculture and former governor of Iowa

June is National Homeownership Month. Throughout the month, USDA will reach out to local residents to talk about how our programs can help them repair their homes, making them more energy efficient, buy an affordable residence or find safe and sanitary housing in one of the many apartment buildings we have helped to fund. A strong nation is made up of strong families, and safe, quality housing contributes greatly to rural Americans' quality of life. The Obama Administration is committed to bringing the necessary resources to rural America to provide decent, affordable housing to those who need it.

Tom Vilsack U.S. Secretary of Agriculture

The theme for homeownership month this year is "Protecting the American Dream."

In the past year, more than 2,800 rural Iowa families purchased homes through USDA Rural Development's two low-interest, no-down-payment loan programs. This is double the number of families the agency typically assists in Iowa thanks to funds made available through the American Recovery and Reinvestment Act (ARRA), and federal dollars that assisted rural Iowans in recovering from the natural disasters and floods of 2008.

President Obama and I understand how important homeownership is to the nation's continued prosperity. Homeownership is an essential component of the American economy and a key to vibrant rural communities. We work closely with the Department of Housing and Urban Development, state housing authorities, tribes, local organizations and a host of lenders everyday to assist income-eligible residents obtain safe, sanitary, affordable housing.

At USDA, we are proud to celebrate our accomplishments and the spirit of homeownership this month, and throughout the year.

For more information about any of USDA Rural Development's housing programs, please call (515) 284-4666 or visit www.rurdev.usda.gov/ia.

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