July 2012

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THE LATEST ORIGINATION San Francisco districts noted "growth in the technology sector was prompting the absorption of commercial space," while "energy activity was helping boost de- mand for space in Richmond and Dallas." According to the report, Boston's "relatively strong com- mercial market continued to generate robust investor interest, although commercial property sales in the New York district remained slow." The Richmond district said New York district noted "stronger mortgage lending, although growth in refinancing eased." The Cleveland district indi- that "expansion in manufacturing led to a pickup in construction, and reports from the Cleveland and Chicago districts suggested an increase in hotels and higher- education projects, and a New ing Cleveland, Atlanta, Chicago, Dallas, and San Francisco—said loan pricing "remained quite com- petitive." The New York district cated strong mortgage demand and a shift from home refinanc- ing to new purchases, while the Richmond district cited "contin- ued improvement in mortgage de- mand," although refinancing still dominated much of the mortgage lending. The Atlanta district said "more applicants had ample cash for down payments or enough equity in their homes to meet refinancing requirements." A number of districts—includ- The Beige Book is often cloaked in secrecy. The district reports are sent to one of the banks to prepare the national summary. The identity of the district bank that prepares the summary is closely guarded. mented on lending, but most of those that did "noted steady or slightly stronger loan demand," the Beige Book said. Small and medium-sized banks in the New York district "reported the most broad-based increase in loan demand since the mid-1990s," the Federal Reserve report said. Reports on mortgage lending York contact noted that interest in luxury hotel development in- creased." While the report stated that "outlooks were positive overall," it also noted that "there were a few reports of increased uncertainty from still unknown U.S. fiscal changes and Europe's debt situation." Not all of the districts com- noted a "decrease in spreads of loan rates over the cost of funds, particularly for commercial mortgages." Lending standards were relatively unchanged to slightly easier across districts and loan types, though the Federal Reserve's quarterly Senior Loan Officer Opinion Survey through April, published in early May, indicated precisely the opposite. Bankers cited in the Beige Book said that "credit quality remained solid, and there were several reports of improved loan quality." Most district banks said loan de- linquencies continued to decline. Hiring, according to the Beige generally indicated "slow improve- ment, " according to the report. The Book, was "steady or showed a modest increase." Reports of hiring were "most prevalent" in the manufacturing, construction, information technology, and pro- fessional services sectors. Staffing firms in the Cleveland and Dallas districts noted a pickup in orders, and contacts in the Boston and Philadelphia districts reported steady growth in orders, while demand for temporary workers rose in the Richmond district. Though often seen as an omen of future hiring, an increase in temporary workers can also be interpreted as a lack of confidence by employers that a pickup in orders or demand will continue. Atlanta's report pointed to positive employment growth in the district, but hiring "remained limited" in the Chicago dis- trict, and modest employment increases were noted in the San Francisco district report. There were, however, "wide- spread reports that firms continued to face difficulty finding highly trained or skilled workers—especially in informa- tion technology, engineering, and manufacturing fields—and manufacturers in the Chicago district said they were easing job requirements or using interns to fill open positions." There were reports of slight GFI Moves to Dismiss DOJ Fair Lending Suit FIGHTING BACK AGAINST ALLEGATIONS OF DISCRIMINATION, THE MORTGAGE LENDER FILES FOR DISMISSAL OF A SUIT BROUGHT AGAINST GFI BY THE JUSTICE DEPARTMENT. G FI Mortgage Bankers has filed a motion to dismiss a suit from the Justice Depart- ment that alleged discrimination in GFI's lending practices. GFI's motion asserts that the disparate impact discrimination statutes cited by the Justice Department in its suit—the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA)—do not contain language that permits anti- discrimination claims. The company also argues that the practice of allowing employees discretion when pric- ing loans is standard policy and widely accepted in the industry. The federal suit, filed in wage increases for skilled work- ers in the Boston, Cleveland, Minneapolis, Dallas, and San Francisco districts. Contacts in the Philadelphia and Chicago districts noted increases in health- care costs. The Beige Book is often cloaked in secrecy. The district reports are sent to one of the banks to prepare the national summary. The identity of the district bank that prepares the summary is closely guarded. This report was prepared by April, alleges that GFI has violat- ed fair lending laws by charging African-American and Hispanic borrowers higher interest rates and fees on home mortgage loans because of race or national origin. In an April statement, the Justice Department alleged that white borrowers in similar credit situations paid thousands of dollars less. Furthermore, the release the Dallas Federal Reserve Bank, which last wrote the summary in October 2010 when it reported "on balance, national economic activity continued to rise, albeit at a modest pace, during the report- ing period from September to early October [2010]." September 2010 was the last month to show a decline in payroll jobs. The Federal Open Market Committee was scheduled to meet late last month to review monetary policy. alleged that GFI loan officers received a percentage of the profits generated on each loan, creating incentive for employees to charge fees in a way that was unrelated to credit risk or loan characteristics. GFI also ne- glected to train or supervise its loan officers to ensure that loan pricing was fair, the agency said. "Charging people more for home loans simply because of their race or national origin—as we have alleged in our com- plaint against GFI—is illegal. The Justice Department will act aggressively to ensure that all people have equal access to credit and a level playing field," said Thomas E. Perez, assistant attorney general for the Justice Department's civil rights divi- sion. "For that reason, vigorous enforcement of fair lending laws remains a top priority." THE M REPORT | 41 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET

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