FAMB Government Affairs Update
October 25, 2005

FAMB President Steve Schneider Asks You to Contribute to FAMB’s Federal PAC

In a special mailing, FAMB President Steve Schneider asked for contributions to FAMB’s Federal PAC. President Schneider said:

· “FAMB is concerned about your livelihood and, as a professional business association, we’re taking steps to ensure that initiatives, like HUD RESPA Reform, don’t harm our business, our industry or our customers.”

· “When HUD issues a final rule, we will have to take action, including lobbying Congress in Washington As you well know, activities like this take time, effort and, of course, money.”

· “Please join me in contributing to our federal PAC and be as generous as you can. Again, these funds are used to promote and protect our industry.”

· “The maximum personal contribution to a federal PAC is $5,000. Please remember personal checks only…corporate checks are not permissible for a federal PAC donation.”

To join our effort, make your personal check payable to FAMB Federal PAC and mail it to The Florida Association of Mortgage Brokers, P.O. Box 6477, Tallahassee, FL 32314-6477.

President G.W. Bush appoints Ben Bernanke to succeed Alan Greenspan

White House economic adviser Ben Bernanke will replace Alan Greenspan as chairman of the Federal Reserve Board, President Bush announced yesterday.

Bernanke, currently serving as chairman of the president’s Council of Economic Advisers and a former Fed governor, said his first priority would be to maintain continuity with the policy and policy strategies under the Greenspan era.

His term as Fed chairman will begin Feb. 1.

Jury Finds Jacksonville, FL Real Estate Investor Guilty
(Excerpts / summary from a story in The Florida Times-Union)

J.R. Parker could spend the rest of his life in prison for marketing houses from distressed owners to novice investors at much higher prices.

Parker's indictment in September 2004 was the first major case brought in an ongoing federal investigation of mortgage fraud in Northeast Florida. Parker said afterward he still didn't think he'd broken the law. Assistant U.S. Attorney Mark Devereaux said similar real estate schemes are still being investigated.

During the trial, three women who bought property from Parker said they discovered after the fact that the homes were overpriced and that some were in poor condition -- plumbing and wiring missing in some, others needing structural repairs. The women either lost homes in foreclosure or have begun discussions with mortgage companies about voiding their loans because of fraud.

During a two-week trial, witnesses described how Parker signed contracts to buy almost 250 houses during a three-year period, and then recruited other people to actually buy the properties. The person selling the home might be paid $39,000, for example, while the buyer would take a $60,000 mortgage to acquire it.

Parker held investment seminars twice a month. Parker told people at the seminars he would pay their down payments and closing costs to buy four rental houses apiece, and he directed them to a St. Nicholas mortgage broker, Monarch Mortgage Funding, to get financing.

Brokers at Monarch filed loan applications that told mortgage companies the buyers had $20,000 to $40,000 in the bank for down payments, when they did not.

In his closing argument, Stone played tapes of employees at one mortgage company telling Monarch employees it was all right to falsify applications.

A real estate attorney, Dale Beardsley, handled closings on the deals. Beardsley told the jury his office produced two sets of paperwork on each sale -- one showing a low sales price for the seller and one with a high price for the buyer.

Beardsley and Monarch owners Heidi Weppelman and Tamera Kinsman had already entered guilty pleas to related charges. They're scheduled for sentencing in January.

Upcoming Events of Interest

Home Mortgage Disclosure Act

Data from mortgage lenders’ Home Mortgage Disclosure Act reports for 2004 show continued disparities in loan denial rates across racial and ethnic groups, though denial rates may decline when the collected data are analyzed according to different borrower and lender factors.

The Federal Reserve Board announced that the Consumer Advisory Council will hold its next meeting on Thursday, October 27. The session will begin at 9:00 a.m. and is open to the public.

The Council's function is to advise the Board on the exercise of its responsibilities under various consumer financial services laws and on other matters on which the Board seeks its advice. The Council plans discuss the following along with other topics.

· Home Mortgage Disclosure Act

· Nontraditional Mortgage Loans

The Board invites comments from the public on any of these matters.

Workshop on Competition Policy and the Real Estate Industry

The Federal Trade Commission and the Department of Justice’s (DOJ) Antitrust Division announced that they will host a joint workshop entitled “Competition Policy and the Real Estate Industry.” Prompted by the substantial changes in the real estate brokerage marketplace and consumers’ interest in a competitive real estate brokerage industry, the workshop will cover such topics as new and innovative brokerage business models, multiple listing services, and the implications of state-imposed minimum-service requirements.

The event, which is open to the public and the press, will be held on October 25, 2005, at the FTC’s Satellite Building Conference Center in Washington, D.C.

Other Legislative and Regulatory Issues

These issues include: RESPA Reform, Fannie Mae and Freddie Mac Reform, Small Business Health Fairness Act, Predatory Lending Legislation, Affiliated Business Arrangements and Fair Labor Standards.

1. RESPA Reform Proposals from HUD – After simmering for a little over a year, HUD has turned up the heat on RESPA Reform.

· Since the conclusion of HUD’s RESPA Reform Roundtables held this summer, there has been no definitive word from HUD on the timing or content of their HUD RESPA Reform proposals.

2. Reform of Fannie Mae and Freddie Mac, also known as GSE Reform – H.R. 1461 and S. 190 Legislation may limit access by Mortgage Brokers to Fannie Mae and Freddie Mac automated underwriting systems. Mortgage Brokers rely on these systems to quickly assess a mortgage application and provide consumers with mortgage credit.

· The House is expected to vote on this bill Wednesday, 10/26. The GSE reform bill would create an independent regulator for Fannie Mae, Freddie Mac and the Federal Home Loan Banks and require that Fannie and Freddie place 5 percent of their profits in an affordable housing fund. The bill is also expected to contain a provision that bars non-profit organizations from receiving grants from that fund if they are involved with any “Get Out the Vote” activity.

· U.S. Senator Mel Martinez, a Florida Republican said he does not expect Congress to pass a bill to stiffen oversight of Fannie Mae and Freddie Mac before the end of the year.

Martinez, speaking at the America's Community Bankers conference in Orlando, said efforts to place limits on the mortgage finance companies' portfolios remain highly controversial.

Legislation that has cleared a Senate committee would cut those portfolios by limiting the types of investments Fannie and Freddie may purchase. But a bill in the House of Representatives does not include such limits.

Martinez said he expects significant compromise between House and Senate negotiators over what are now distinct bills to overhaul the companies' oversight.

3. Small Business Health Fairness Act – (S. 406 and H.R. 525) - The Small Business Health Fairness Act is Federal Legislation that has passed the U.S. House of Representatives and is awaiting action in the U.S. Senate. This legislation will allow small businesses and the self-employed obtain group insurance through their trade associations. If passed, this legislation will give Mortgage Brokers and other small businesses access to another source for Health Insurance.

The Small Business Health Fairness Act is stalled in the U.S. Senate. Contact your U.S. Senators and ask them to vote on The Small Business Health Fairness Act.

4. Responsible Lending Act – (H.R. 1295) This legislation was introduced by Reps., Bob Ney, R- Ohio, and Paul Kanjorski, D-Pa., to protect consumers against predatory lending practices through revisions to federal statutes affecting lenders, brokers and appraisers.

This legislation includes provisions that will increase the number of loans considered as section 32 (High-Cost Loans) and provides for a Federal Registry for Mortgage Brokers. That’s right, not all mortgage originators, Just Mortgage Brokers.

5. Affiliated Business Arrangements, ABAs and One Stop Shops – This issue involves the legality of homebuilders requiring or inducing homebuyers to use mortgage companies affiliated with the builder.

6. The U.S. Department of Labor Administers the Fair Labor Standards Act – and its affect on compensation to commissioned mortgage employees.