Article of Mortgage from MBA (Mortgagebankers)

Mortgage Application Volume Down In Latest Survey
The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending May 5. The Market Composite Index, a measure of mortgage loan application volume, was 562.1, a decrease of 5.8 percent on a seasonally adjusted basis from 596.8 one week earlier. On an unadjusted basis, the Index decreased 5.2 percent compared with the previous week and was down 27.1 percent compared with the same week one year earlier.

The seasonally-adjusted Purchase Index decreased by 3.9 percent to 416.5 from 433.3 the previous week whereas the Refinance Index decreased by 8.8 percent to 1427.4 from 1565.6 one week earlier. Other seasonally adjusted index activity includes the Conventional Index, which decreased 5.1 percent to 828.8 from 873.5 the previous week, and the Government Index, which decreased 13.3 percent to 117.5 from 135.5 the previous week.

The four week moving average for the seasonally-adjusted Market Index is down 0.8 percent to 569.3 from 573.6. The four week moving average is down 0.1 percent to 411.7 from 412.0 for the Purchase Index, while this average is down 1.7 percent to 1502.1 from 1528.4 for the Refinance Index.

The refinance share of mortgage activity decreased to 33.8 percent of total applications from 35.2 percent the previous week, which is the lowest share since June 25, 2004. The adjustable-rate mortgage (ARM) share of activity increased to 28.5 percent of total applications from 28.3 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.61 percent from 6.57 percent, with points decreasing to 1.14 from 1.18 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 6.20 percent from 6.19 percent, with points increasing to 1.23 from 1.18 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 6.04 percent from 6.08 percent, with points increasing to 0.86 from 0.85 (including the origination fee) for 80 percent LTV loans.

**SPECIAL NOTES**

The survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100

MBA Calls Passage of FHA Reform Legislation Vital after Final IRS Ruling
The Mortgage Bankers Association (MBA) today called for swift passage of legislation to reform the Federal Housing Administration (FHA) after the issuance of a final rule on downpayment assistance programs by the Internal Revenue Service (IRS). Revenue Ruling 2006-27 was issued May 4 and will rescind the 501(c)(3) status of a large number of nonprofits who receive funding from property sellers in providing downpayment assistance to FHA borrowers.

“The ruling by the IRS significantly hampers FHA’s ability to serve first-time, minority and low- and moderate-income homebuyers by eliminating a source of downpayment for over a third of FHA’s borrowers,” said Steve O’Connor, vice president of government affairs at MBA. “There is now a greater urgency to pass FHA reform legislation that would allow FHA to implement new flexible downpayment programs for borrowers.”

Specifically, the ruling by the IRS states that certain downpayment assistance programs (DAP) no longer qualify as 501(c)(3) organizations as they do not operate exclusively for charitable purposes. FHA regulations clearly state that entities providing gifts to borrowers for downpayments cannot have an interest in the sale of the property. Therefore, funds from these downpayment assistance programs not recognized by the IRS under 501(c)(3) are considered as a inducement to purchase, which will result in a dollar-to-dollar reduction in the sales prices.

Such downpayment assistance programs currently serve FHA’s primary clientele: first-time homebuyers, low- and moderate-income families, and minorities. A recent study indicated that 88 percent of DAP users were first-time homebuyers, exceeding the FHA average of 79 percent. Additionally, DAP programs served minorities at greater rates. For example, the same study found that over 20 percent of DAP users were African-American families, compared with 13 percent of the FHA portfolio in general.

H.R. 5121, the Expanding American Homeownership Act of 2006, is comprehensive legislation aimed at empowering FHA to become a more nimble and effective agency and achieve its mission of providing affordable housing and financing to underserved markets. Among others, H.R. 5121 includes provisions that would provide FHA flexible authority to introduce new products and program changes, such as a flexible downpayment program.

“MBA hopes that Congress will not leave this year without making this critical amendment to FHA’s operating statutes and allowing them to continue to serve the American home buying public,” said O’Connor.

MBA’s Government Housing Finance Conferenc
Mortgage Bankers Association’s (MBA’s) Government Housing
Finance Conference
Dramatic changes have been made to the government’s single-family housing programs this past year and even more dramatic changes are being proposed. MBA’s Government Housing Finance Conference will provide an update on the impact past changes have had and give participants an opportunity to discuss proposed changes with top government policy-makers.

Government housing programs have a long history of expanding homeownership opportunities for American families. Hear directly from the leaders of the government's top three homeownership programs, the Federal Housing Administration (FHA), Veterans Affairs (VA) and the Rural Housing Service, as they discuss plans to adapt their programs for the needs of a 21st century housing market.
WHEN: May 31 – June 1, 2006
WHERE: The Ritz Carlton
1150 22nd Street, NW
Washington, DC 20037
CONTACT:

All conference sessions are open to the media. Press credentials must be obtained in advance. Please contact,
Teresa Schofield
(202) 557-2924
tschofield@mortgagebankers.org

For a complete agenda, please visit: http://events.mortgagebankers.org/fha2006/agenda

MBA’s Government Housing Finance Conference – Featured Speakers
Brian Montgomery – Assistant Secretary for Housing and Commissioner, Federal Housing Administration (FHA), Department of Housing and Urban Development (HUD)

Keith Pedigo - Director, Loan Guaranty Services, U.S. Department of Veterans Affairs (VA)
Russell T. Davis - Administrator, Rural Housing Service, U.S. Department of Agriculture (USDA)
Martha Simmons - National Retail Production Manager, SunTrust Mortgage Corporation and Vice Chair, MBA’s Residential Loan Production Committee

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 500,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 3,000 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s Web site: www.mortgagebankers.org.
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