Standardized Contract Terms and Wartime Sales

I read with interest Marie Reilly’s post on Vindication for the Contract of Adhesion, as I’ve been thinking about the issues related to standardized terms in my work on wartime contracts. Through the Federal Acquisition Regulations and the Defense Federal Acquisition Regulation Supplement (DFARS), the federal government has made government contracting a field dominated by standard contract clauses. For instance, the DFARS mandate inclusion of a contract clause whereby contractors accept much of the risk associated with contract performance in a warzone. Applying Judge Easterbrook's analysis in IFC Credit Corp. v. United Business & Industrial Federal Credit Union, it would seem that onerous terms mandated by the government buyer for wartime contracts will lead to higher prices imposed by the wartime sellers in return. No wonder the war in Iraq is costing the taxpayers so much.

Joes S.’ comment observed that “[j]udicial intervention into contracts does no good” in specific types of cases. With respect to wartime sales, perhaps some judicial intervention will ultimately do some good. Using Joe S.’ categories, I would argue that perhaps none of them absolutely satisfied for wartime sales in Iraq. Moreover, determining what particular risks are actually assumed by sellers under the government's standardized terms is not without debate. Lack of clear understanding of the obligations allocated to each party under the DFARS paves the way for needed judicial resolution at some later date. Wartime sales have presented unique challenges to contracting parties that test the ability of the government’s default rules to manage a wide array of sales under changing circumstances. As such, I agree that concepts of “fairness” survive, particularly when both parties may have “fail[ed] to consider the full consequences of [their] legal decisions.” Original Great American Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd., (Posner, J. 1992).

Vindication for the Contract of Adhesion

This past week my Contracts class examined mass market transactions, the contract of adhesion and the doctrine of unconscionability. Yesterday, Overlawyered featured a post on Judge Easterbrook's opinion in IFC Credit Corp. v. United Business & Industrial Federal Credit Union. The case is jammed with scintillating issues of commercial law-- a veritable bag of chips with no diminishing marginal returns. Of note for Contracts students is this excerpt on the enforceability of non-negotiated terms in a standard form agreement (citation omitted):

Ever since Carnival Cruise Lines, Inc. v. Shute enforced a forum-selection clause printed in tiny type on the back of a cruise-ship ticket, it has been hard to find decisions holding terms invalid on the ground that something is wrong with non-negotiable terms in form contracts. As long as the market is competitive, sellers must adopt terms that buyers find acceptable; onerous terms just lead to lower prices. If buyers prefer juries, then an agreement waiving a jury comes with a lower price to compensate buyers for the loss-though if bench trials reduce the cost of litigation, then sellers may be better off even at the lower price, for they may save more in legal expenses than they forego in receipts from customers.

There is no difference in principle between the content of a seller's form contract and the content of that seller's products. The judiciary does not monitor the content of the products, demanding that a telecom switch provide 50 circuits even though the seller promised (and delivered) 40 circuits. It does not matter that the seller's offer was non-negotiable (if, say, it offered 40-circuit boxes and 100-circuit boxes, but nothing in between); just so with procedural clauses, such as jury waivers. As long as the price is negotiable and the customer may shop elsewhere, consumer protection comes from competition rather than judicial intervention. Making the institution of contract unreliable by trying to adjust matters ex post in favor of the weaker party will just make weaker parties worse off in the long run.

For the last statement, Judge Easterbrook cites to the court's opinion in Original Great American Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd., (Posner, J. 1992):

The idea that favoring one side or the other in a class of contract disputes can redistribute wealth is one of the most persistent illusions of judicial power. It comes from failing to consider the full consequences of legal decisions. Courts deciding contract cases cannot durably shift the balance of advantages to the weaker side of the market; they can only make contracts more costly to that side in the future, because [the other side] will demand compensation for bearing onerous terms.

All true. Yet, I doubt that the next edition of Farnsworth, et al, Contracts will omit the section on contract "fairness."

Cross posted at Red Lion Reports.

Of belts and suspenders

I am happy to announce that we have mail already:

Dear Department of Incidental and Consequential Information:

I am a teacher at a perfectly respectable law school in the New York City Area. In teaching Commercial Law subjects -- and in particular in Secured Transactions -- I always introduce my students to the concept of the "belt and suspenders" approach when practicing in the Commercial Law area. While my female students do not seem to have any difficultly picking up on the concept once explained, I have not been able to come up with a gender-neutral phrase that conveys the same idea. In this era when more than half of all law students are women, shouldn't we be able to come up with a phrase that has the same connotation but which isn't reflective of the time, not so long ago, when being a lawyer was only a man's job?

Signed,
Politically Correct in Manhattan

Dear Politically Correct in Manhattan:

I have to admit that being female, I, too, had to pause and think this one through. Must be the never having been faced with the decision of the belts and suspenders. I typically wear neither. But upon reflection, I laughed to myself and thought "girdle and pantyhose." That would likely not resonate with most of your male audience as it also fails in gender neutrality. I also came up with "seat belt and airbag," but that may fail in its lack to amuse in the way that belt and suspenders does. Perhaps the blog readership will have some suggestions on this one?

Of course, the other lurking open question is why anyone in their right mind would choose to wear both? Is a belt and suspenders approach to commercial law the best regulatory choice? I might suggest that preservation of party autonomy and having a identifiable set of default rules is a compelling justification. After all, wouldn't it be tragic if one wore neither the belt nor the suspenders? Parties who fail to plan are at least forced into a default system when they forget to wear their belt. But then again, perhaps this is just a trust issue. Neither the belt nor the suspenders are trusted to do their job properly, so one wears them both.

Signed,

The DICI

The Market is Waking Up In Ventura County For Home Buyers

I spoke with Bob Curtiss the Regional Sales Director for Property I.D. today. This company provides natural hazard property disclosures to home buyers. Without getting too deep, this company researches a home to see if it is in a flood hazard, fire hazard, or earthquake hazard area and discloses this and much more information to buyers and sellers so they can be aware of what environment the home is in. They are the best at what they do in my experience. They are always in demand by realtors for their excellent service to our home buying clients.

Bob gets around, and I enjoy speaking with him because he is the harbinger of news in real estate for a large area in Southern California. He had just returned from a business trip to Lompoc, Santa Maria and the Solvang, Santa Ynez area. The word from Bob is that business in home sales is booming in those areas. That has not always been the case, but especially in Lompoc this is a big change.

Yesterday I was helping some folks who were in the process of finishing up their escrow and were signing their loan documents at one of our local Title and Escrow companies. As you may already know, these folks represent a neutral third party provider of escrow services. They manage the money and paperwork flowing between the home buyer and the home seller. When nobody is buying a home, they aren't working. When the industry is busy, they put in some very long hours.

In this case I was discussing our local market with Margaret Kelly of LandAmerica Lawyers Title. Margaret is a beautiful lady and an awesome talent with a 20 year track record of success in our local market. By the time Margaret becomes involved in a transaction, it means that a realtor has been working with prospective home buyers to determine their needs, locate their dream home and negotiate a purchase agreement with the home sellers. This process can last a few weeks or it can last upwards of a year or more. My point is, by the time Margaret sits down with my clients, the market shift has already matured a month or so.

Margaret says the last 3 or 4 weeks - most of the month of February - have been markedly busier than previous months. She is busy once again. People are making up their minds to get off the fence and make their home choice now. The conditions are wonderful for some awesome home opportunities and buyers have seen it, made their decision and are now a month into the process with Margaret.

I wrote of this market change several weeks ago. Now many service providing professionals like Bob and Margaret are confirming these observations. I can't wait to see what all the newspapers say about our market when next month's reports on this month's sales show the increase. All the rhetoric about our market continuing to wither for another 2 years we hear from "economic experts" will be difficult to reconcile with the facts.

Is our market healed now? I don't think so, but I think it is beginning to heal. I think we must define our market first. Let's say our market is made up of home buyers and home sellers.

The home buyers are now beginning to come out in force. They are taking advantage of current high inventories, low prices and falling interest rates. They are dialing in the new changes to FHA, Fannie Mae and Freddie Mac programs and seeing huge opportunity for themselves and their families.

Home sellers continue to suffer. They are seeing more buyers at open houses, but the buyers are fussy. As prices continue to fall and foreclosures continue to scue neighborhood prices, sellers continue to suffer long listing periods and declining equity. Much of this is driven by the continued foreclosure problem, but some of this is also due to more restrictive lender requirements as well as generally negative news coverage of our market.

I think all of these negative market forces are slowly beginning to correct themselves.

Mortgage programs requirements are more restrictive than a year ago, but there are new, higher lending limits from all the federal lenders. Combining these programs with CAL-HFA programs from the state, gives some well qualified first time home buyers real hope again for finding affordable housing. I think lender programs will continue to improve and become more user friendly in coming months. Don't look for stated income loans to make a strong come back any time soon though!

As home sales continue to increase and lending practices standardize over the coming months, I think we will begin to see a gradual shrinking of our home inventories. Developers are slow to build when prices are soft, so our inventory of homes will tend to build very slowly. As demand continues to build, the relatively fixed number of homes available will slowly drive prices back to stable market values.

I think this process will accelerate once the foreclosure problem eases.

Unfortunately, we don't appear to have a good solution on how best to ease the foreclosure crisis. Foreclosures will have a continued dampening effect on our market until that problem can be effectively addressed or has time to work it's way out. Sort of like trying to fight a large forest fire. Eventually it will burn itself out, but we all would like to minimize it's damage and find a good way to fight it.

News media coverage will begin to shift back closer to reality as sales numbers increase once again. No thanks to them.

The article I have included in this blog comes from the Ventura County Star and illustrates my point. I expect we'll see more of these articles in the coming months as newspapers and other media finally pull their heads out of the sand and look around at the real world again.

Mark Thorngren
http://www.markthorngren.com/




Good news on the real estate, mortgage front
Jim Woodard, ColumnistSunday, November 11, 2007

Despite discouraging news on the financial front, the sluggish home sales market should bottom out by the end of the first quarter of this coming year, it was noted in a recent study and report from the National Association of Home Builders.

The housing market will start to turn around next year for a number of reasons: the overall economy and job growth will continue to move ahead at a decent pace, core inflation is under control, the credit crunch in mortgage markets is showing signs of easing, the supply-demand equation will be better balanced as builders begin to whittle down their excess inventories, and another Federal Reserve interest rate reduction of a quarter-point on Oct. 31 will help keep mortgage rates low.

That's the prediction of David Seiders, chief economist for the NAHB.

"With the housing sector facing a large backlog of unsold inventory, new construction starts and permits won't begin to move forward until sales firm up. Home sales should bottom out by the end of the first quarter of next year, and housing starts will be up in the third quarter, assuming the inventory overhang stabilizes," he said.

The tightening standards for home mortgages will not derail a national recovery in the housing market, according to the NAHB. However, it will complicate the system for a while.
The negative impact of the new standards on housing markets comes in two forms. First, tightening lending standards have reduced the availability of some loans and raised the price to riskier borrowers. Second, it creates the potential for a cycle of defaults and price declines, depending on the local home price environment and strength of the local economy, the NAHB study report noted.

NAHB's short-term forecast is based on several assumptions: skillful management of monetary policy by the Federal Reserve, maintenance of solid growth in personal income and employment, a manageable wave of home mortgage foreclosures and better performance of mortgage markets going forward.

The report observed that the long-term potential for housing activity is very good. "By the end of 2009, we may be at a pace of 1.5 million units of new housing production (including manufactured homes). Once we are out of the woods, we should see good growth in front of us — maybe 2 million units per year," it stated.

While there is much press coverage about today's troubled real estate markets, there are many markets throughout the country that have minimal subprime mortgage exposure and are now experiencing a stable market.

These markets experienced modest and sustainable home price appreciation during the boom years and have relatively strong local economies. The markets are positioned to outperform the national trends with earlier and stronger recoveries than the more troubled markets, according to NAHB's chief economist.

These little-publicized markets are primarily located in the Pacific Northwest, mountain states and in the Southeast. The areas are now recording single-family home construction permits at or above pre-boom levels.

"The contrast between the strongest and weakest markets across the country points out substantial regional variation and suggests that steep nationwide home price declines and mortgage defaults are unlikely," Seiders said.

There's more good news on the mortgage front. More people are managing to keep up with payments on mortgage loans made in recent months, according to data from First American Loan Performance, a research firm.

The trend reflects more conservative lending policies adopted by mortgage companies this year in the wake of a surge in defaults and foreclosures, said Mark Carrington with First American. "Even so, defaults continue to rise in proportion to the overall number of home loans outstanding nationwide, mostly those made between 2003 and 2006 when lending standards were growing more lax," he said.

An increasing number of parents of college-bound offspring are purchasing a condo or small house in the area of the college for their student's residence while attending the college or university. In some cases, it appears to be more cost-effective than paying for a room in a dorm.
The student will often rent out a portion of the purchased unit to another student to minimize the investment. When the student's attendance at the college is completed, the unit will be sold, hopefully at a profit.

There are now about 3 million campus houses and condos that have been purchased by students or their parents, according to a report from the National Association of Realtors. That represents about 8 percent of the nation's 37.4 million investment properties, but excludes 6.8 million vacation homes.

In addition to the possible financial advantage, owning such a residence gives the student more freedom, and a choice of roommates. For parents, it offers a chance to recoup some of the rising costs of higher education, assuming it turns out to be a good investment.

Many parents are spooked by the unknowns in such an arrangement. Can the extra space be rented at the projected rental amount? Will the student handle his extra freedom responsibly? Will the property later sell at a profit? These and other concerns tend to keep the dorms fully occupied.

(Jim Woodard, a Ventura resident, writes a nationally syndicated column and freelance features in addition to his Star columns. He also is a storyteller with a Web site at: www.jimwoodard.net. E-mail: Storyjim@aol.com.)

The Morality of Trade

I can think of nothing truer to Commercial Law than to offer as my first post a rejoinder to Paul who added this comment to An Ode to Mercury: "Merchants were considered little better than thieves for much of the history of western civilization. . . . Until modern economic thinking, and general liberalization of religion, emerged during the enlightenment, gains from trade were commonly viewed with skepticism at best."

If merchants "were [ever] considered" no better than thieves, I say, consider who's doing the considering. The possibility of gains from trade in the hands of "merchants" was and is the key driver for social and economic mobility and the political instability that comes with it. Feudal lords had much to fear and loathe at the possibility that by trading among themselves serfs might drag themselves out of hunger and ignorance. And so too the Church. Trade is possible only when people assert property rights. Assertion and exploitation of property rights by political subordinates is the beginning of the end of a social order based on birthright and violence.

On the same day I read Paul's comment, I saw that the California Court of Appeals had confronted and laid to rest an argument based on the skepticism about commerce that Paul observed,--that gains from trading property are morally inferior and, in this case, unworthy of protection by specific relief. In Real Estate Analytics LLC v. Vallas, a seller agreed to sell 14 acres of coastal California real proeprty to Real Estate Analytics, a developer, who planned to develop and resell it. The seller backed out and Analytics sued for specific performance. The seller wheeled out a steaming stack of equitable maxims before the trial court as to why the equities against specific performance tipped in his favor. The trial court agreed. The buyer was unworthy of an extraordinary remedy because to it the contract for the property "was nothing more than a vehicle to make money." (Analytics got a check for $.5 million instead). The court of appeals reversed. The buyer's purpose in entering the contract — to sell the property for a profit (gasp!) rather than holding it for the pleasure and privilege of the estate was as noble and deserving of equity as any other purpose.

Pardon my ardor. Commerce is not a cuss word.

UCC Revised Article 1 Enactment Status

As of January 1, 2008, Revised UCC Article 1 was in effect in 28 states -- Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Indiana, Iowa, Kentucky, Louisiana, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Rhode Island, Texas, Utah, Virginia, and West Virginia. Kansas's version of Revised Article 1, enacted last year, will take effect on July 1. Of the 29 state enactments to date, 0 of 29 include the uniform Revised 1-301 choice of law provision -- each of the 29 enacting state legislatures having opted instead for some variation of its state's pre-revised 1-105 -- and only 20 of 29 include the uniform 1-201(b)(20) definition of "good faith" -- 9 state legislatures opting to retain the pre-revised "honesty in fact" definition in Article 1 and reserve "the observance of reasonable commercial standards of fair dealing" requirement for parties and transactions subject to that standard under another Article.

As of February 28, 2008, bills proposing to enact Revised Article 1 were pending in five states: Massachusetts, Pennsylvania, South Dakota, Tennessee, and Vermont. Massachusetts HB 4302, which succeeds the previously unsuccessful HB 3731, is currently awaiting a third reading in the Massachusetts House. Pennsylvania HB 1152, which was tabled last fall after passing the Pennsylvania House, was removed from the table on February 12 and awaits a third reading in the Pennsylvania Senate. South Dakota SB 93 unanimously passed the South Dakota Senate on January 29, unanimously passed the South Dakota House yesterday, and now awaits Governor Mike Rounds's approval (or lack of disapproval, as the case may be). Tennessee HB 3949 and SB 3993 were both introduced on January 31 and are currently before their first committees in their respective introducing chambers. Vermont HB 563 passed the Vermont House on January 24 and is now before the Vermont Senate Economic Development, Housing & General Affairs Committee. All five currently-pending bills reject the uniform Revised 1-301 choice of law provision (opting instead for some variation of pre-revised 1-105) and embrace the unitary good faith standard of uniform Revised 1-201(b)(20).

Starbucks' "perfect" coffee pledge

Well, I was thinking about this one as soon as I saw it on the news. But, it now seems to be getting even better from a sales point of view. For those of you who haven't heard, Starbucks has been concerned with dropping sales for its designer coffees. So, it shut down the stores yesterday for three hours to retrain 135,000 coffee sellers to uphold "the uncompromising standards and quality that have made Starbucks the world's coffee leader." This made me wonder initially if companies like Starbucks that recognize publicly a failing in quality are potentially setting themselves up for claims of breach of warranty of quality on previously sold coffees. After all, folks are spending quite a bit of money on the Starbucks label and arguably have a right to expect the quality to be high. Closing the stores to retrain seems to me to open Starbucks up to claims that it has not been providing the coffee as "warranted."

This initial mind-teaser was not quite enough. Now, apparently Starbucks (reopened after training) has pledged: "Your drink should be perfect, every time. If not, let us know and we'll make it right." What if the drink is not "perfect?" What if the barristas do not "make it right." The Starbucks press release also promises the "best" customer experience. Express warranty under U.C.C. section 2-313 or puffery?

Having just read a new case Hoyte v. Yum! Brands, Inc., 489 F. Supp 2d 24 (D.D.C. 2007), I had to give this some thought. Hoyte involved a physician's claims that KFC's statements that its restaurants served the "best" food was a breach of warranty. The Hoyte court concluded that it was only puffery. Perfect would seem to be different from best, at least to me perfect implied subjective perfection whereas best might be judged on an objective basis for purposes of warranties. The second part of the Starbucks obligation here is a bit easier as they pledge to "make it right." Again, this might be tricky for Starbucks in some cases when faced by the consumer with particularly high expectations. But that seems to be exactly what Starbucks might be bargaining for here. How do you like your coffee?

An ode to Mercury . . . or at least a mention

For my first blog entry, a little history about commerce might just be great. So, at this moment of the launching of the commercial law blog, a mention of Mercury, the Roman god of commerce. Mercury . . . to whom commercial law professors (though not necessarily our students) are thankful for words such as market, merchandise, and merchant. Apparently, Mercury, was the patron of travelers and merchants (he was the deity of commerce after all), but also to rogues and thieves. The tie-in between merchants and rogues and thieves brings to mind a recent case involving Big Lots Stores, Inc. and one of its distributors, Luv N’ Care. For those who want to read the case see, Big Lots Stores, Inc. v. Luv N' Care, 62 U.C.C. Rep. Serv. 2d (CBC) 522 (S.D. Ohio 2007). The case involves a less litigated provision of the U.C.C. Article 2, 2-312(3) requiring merchants to warrant that goods sold are free of claims regarding infringement. Of course, the basic idea here is that a buyer should receive a good, clean title to goods.

Luv N’ Care sold Big Lots Beatrix Potter products after the expiration of its license from Frederick Warne & Co., Inc. Beatrice Potter as many will remember created the world of Peter Rabbit and his friends and family (Flopsy, Mopsy and Cottontail among them). Big Lots brought suit for breach of warranty and Luv N’ Care counterclaimed to recover on unpaid invoices. While there is a much made in the case about when a contract arose and the like in an effort by Luv N’ Care to try to cast the sale as within the license period, the court grants summary judgment to Big Lots on the issue of infringement and is required to indemnify Big Lots on any damages from the sale of the infringed Beatrice Potter products. The seller Luv N’ Care, though, does in the end receive payment on its invoices (after the damages from infringement are subtracted, of course). Big Lots in the end becomes a good case about both merchants and rogues (if I might not be too harsh here, perhaps a thief as well)? It would seem that Mercury would be the patron of both.

FHA Changes To Shake-Up Home Mortgage Industry

This article was sent to me today by one of our local government loan program experts - Wendy Mueller - an awesome Mortgage Broker with Platinum Home Mortgage (Formerly Pinnacle Financial). She is probably the most knowledgeable person I've met concerning government home loan programs. The fact that she is still busy helping people while 1/3 of her competitors have gone out of business this last year says something about her abilities also. By the way, Wendy is one of my company's competitors - I still listen to her.

Mark Thorngren
http://www.markthorngren.com


Hello, please read below, with all the great changes that are coming we need to be prepared as this is not only going to help buyers become home owners it will also ease up some of the jumbo market. Don’t forget that FHA can be combined with CALHFA for an extra down payment assistance benefit.

I. Stimulus Bill: FHA and GSE Mortgage Limit Increases

We are increasingly confident that the Senate will pass the stimulus package this week. The timing of the President’s signing of the bill will depend on whether the Senate passes any amendments to the stimulus bill. There are no amendments expected on the mortgage limits. If the Senate passes amendments to the tax incentive portion of the bill, it will require the House and Senate to have a conference before the final bill can then be passed by Houses of Congress and be sent to the President for signature.

A. Timing of the legislation

We expect the stimulus bill to be passed by the Presidents’ Day recess on February 15th. It could happen sooner if the Senate passes the stimulus bill without any amendments this week. We would expect the President to sign the bill almost immediately after passage (within a couple of days after passage by the Congress if not sooner).

B. Content of the legislation

The mortgage limit provisions should remain intact. An amendment might be proposed to lower the FHA maximum amount but we would be very surprised if it passed. See our email from last week for additional details about the provisions.

As we have discussed, the legislation proposes four temporary changes for FHA:

· Raises the base loan limit (“floor”) to 65% of the current GSE limit ($417,000) = $271,050

· Raises the maximum FHA loan limit from $362,750 to $729,750 (175% of the GSE base limit - $417,000

· Increases the calculation factor from 95% to 125% of area median sales price for determining “high cost” areas

Attached is a chart demonstrating the impact of this change in a portion of the metro areas around the country. As a reminder for any area w/ a current FHA limit above $206,000, the area will benefit from this change.

Calculation Process

Take the current mortgage limit and 1) divide the limit by .95 to determine the median sales price and then multiply the median sales price by 1.25 to determine the new FHA limit.

· Implements Fannie Mae/Freddie Mac ratios for calculating maximum loan amounts for two-, three- and four-family units in all of the above categories

Fannie Mae and Freddie Mac two-,three- and four family unit properties increase the same percentage that the single family limit increases. In 2006. the GSE single family limit increased 15.95% and the mortgage limits for multiple units increased 15.95%.

This change should result in a significant increase in FHA limits for multi-unit properties. In the past, FHA used fixed percentages of the single family limit (i.e. 107% of single family for two family unit, 130% for three-family unit and 150% for four-family units). For example, under the new provision, if the single family limit increases slightly over 100% in a “high cost area” (from $362,790 to $729,750), we would assume the multiple unit amounts would increase the same percentage (slightly over 100%).

C. Implementation schedule

The bill requires HUD to publish the new mortgage limits and data on area median sales prices in 30 days from enactment. However, since Mortgagee Letter 2008-2 was published on January 18, 2008, FHA should be ready to publish limits the day the President signs the bill. Regardless, the new “floor” and areas w/ mortgage limits below the current FHA maximum limit ($362,750) can be determined from available data as we did in the attached document.

We believe it is appropriate to start preparing for the mortgage limit increases as we have outlined above (i.e. training, materials, etc.)

Fannie Mae & Freddie Mac

The bill states that the GSE limits should follow the HUD process. Accordingly, the major difference is Fannie Mae and Freddie Mac will have a higher “floor” ($417,000). While the statute appears clear and unambiguous that the GSEs should use HUD data for this process, it is important to remember that the GSEs have a regulator (OFHEO) that could play a role in the implementation process that could delay usage. However, because of the significance of the issue, we expect implementation will occur expeditiously barring some unforeseen issue.

II. FHA Modernization Bill

We now expect the FHA bill will be enacted in February and possibly by February 15th. We understand that negotiations are underway on the contested items. We are uncertain as to how the issues will be resolved. It is expected that the Senate requirement for minimum cash investment of 1.5% will be adopted.
Thank You

You’re First Time Home Buyer Expert

Wendy Mueller
Platinum Home Mortgage
(Formerly Pinnacle Financial)
(805) 907-3136 Cell



Platinum Home Mortgage Corporation and its affiliates do not represent, warrant or guarantee that the integrity of this communication has been maintained or that the communication is free of errors, viruses or interference. Platinum Home Mortgage Corporation. C 2007 All rights reserved. Equal Housing Lender.Platinum Home Mortgage Corporation 2200 Hicks Rd, Suite 101 Rolling Meadows IL 60008