Important! GAMB Legislative Alert!

Please read the press release (dropped in at the end of this message) issued by Standard and Poor concerning loans originated in Georgia under GAFLA. This is a major announcement that not only affects you as a mortgage broker but every person buying or financing a home. In essence this decision by Standard and Poor will cause a mass exiting of investors from this state. Lenders will continue to withdraw from Georgia for fear of the liability created by GAFLA. Among GAFLA's many areas of concern is the ASSIGNEE clause, which simply states that anyone purchasing that loan during the life of the loan has the same GAFLA liabilities and penalties as the originating company. This assignee clause is, in part, the reason for Standard and Poor¹s decision.

Because S&P is ceasing to provide bond securitization on Georgia Home Loans defined by the Georgia Fair Lending Act, few, if any, investors are going to make loans in Georgia. The reality is that all other bond securitizers will fall in line and take the same interpretation. This means that all Mortgage Loans in the State whether or not they are High Cost, Covered, or even not covered by the Act whatsoever, will cease to exist because of the difficulty in discerning what is and what is not a Covered loan. It does not matter whether you are a mortgage broker, mortgage banker or a banker - if immediate and drastic changes aren't made to GAFLA, you WILL NOT be making mortgage loans in Georgia. If you are a Realtor, builder or consumer, you will not be able to sell or buy a home in Georgia.

There has never been a more important time and reason to contact your legislator. You MUST do so immediately.  If you do not know the names of your Representative or Senator, go to  http://www.vote-smart.org/index.phtml and enter your 9-digit zip code and it will identify them for you. When you do know the names, go to http://www.georgia.gov and select "State Legislative" under "At Your Service" and go to the appropriate links.

PLEASE CONTACT YOU LEGISLATORS!

Bob Long
GAMB Legislative Chairman
realex@mindspring.com

Standard & Poor Announcement to be Discussed at GAMB January 23 Hot! Lunch

Standard & Poor Discussion: Due to concern about the impact of Standard & Poor¹s January 17th announcement regarding the rating of home loans in Georgia (loans covered by GAFLA can no longer be made), Bob Long, GAMB Legislative Chair, will address the issue at our January 23rd Lunch before the regularly scheduled luncheon speaker goes on. We have added additional space for the luncheon so seats are still available. If you haven¹t made reservations and want to attend, send an e-mail to gamboffice@gamb.org giving your name and company name, or fax your request, name and company name to The GAMB Office at 770-379-0740 today. Note: Standard & Poor's announcement has been dropped in at the end of this e-mail message.

Our Guest Speaker: Join us as Dennis Whitfield of the National Federation of Independent Businesses (NFIB) enlightens us on the political activities of his group. Originally from Georgia, Dennis now works in Washington, D.C. as the National Political Director for NFIB. Among other positions, he was formerly the Deputy Secretary of Labor and the National Political Director for RNC. The National Association of Mortgage Brokers (NAMB) has recently established a relationship with NFIB that allows NAMB Members to join NFIB at the very discounted annual rate of $25. NFIB Members have the ability to vote the NFIB State and Federal member ballot to let politicians know where they stand on issues, have the buying power of a big business with potential savings of 10-40% on various products and services, receive MyBusiness magazine and other exclusive publications, and enjoy the opportunity to participate in grassroots activities that further the cause of free enterprise. Note: All GAMB Members are NAMB Members. If you'd like to join NFIB, go to the "Members Only" section of www.namb.org and click on "Products and Services." You'll need your NAMB Member Number to get into the "Members Only" section. If you do not have your member number, call Amal Eido of NAMB Member Services at 703-610-0237 and she can provide it to you.

LUNCHEON DETAILS

GAMB JANUARY HOT! LUNCH

THURSDAY, JANUARY 23, 2003

11:30am - Registration & Socializing
12:30pm - Luncheon

COBB GALLERIA CENTRE
BALLROOMS C/D
2 GALLERIA PARKWAY IN ATLANTA
For Directions, Call 770-955-8000

$25 PER GAMB MEMBER & MEMBER-SPONSORED GUEST
$35 PER GAMB NONMEMBER

TO MAKE A RESERVATION

TO MAKE A RESERVATION, E-MAIL YOUR REQUEST, NAME, AND COMPANY NAME TO gamboffice@gamb.org, OR FAX YOUR REQUEST TO 770-379-0740.

Please Note: Because of the situation that has developed from Standard & Poor's announcement, GAMB has reserved additional seats at the luncheon for late-registering attendees. Please register as early as possible. Also, please note that you will not be able to register with the GAMB Office on Thursday, January 23, as the staff will be out of the office attending GAMB's Board Meeting. We will accept walk-ins at the luncheon registration table outside Ballrooms C/D prior to the luncheon for as long as space permits, but it will be best for you to preregister.

Standard & Poor¹s to Disallow Georgia Fair Lending Act Loans

NEW YORK (Standard & Poor¹s) Jan. 16, 2003 ‹ Standard & Poor¹s announced today that beginning February 1, 2003 conforming-balance mortgage loans and manufactured housing loans governed by the Georgia Fair Lending Act (GFLA) will not be allowed in Standard & Poor¹s rated structured finance transactions. This determination is based on Standard & Poor¹s assessment that investors cannot be insulated from the potential liability resulting from violation of the GFLA either through credit enhancement or legal structure.

Loans governed by the GFLA are categorized as ³Home Loans², ³Covered Home Loans², or ³High Cost Home Loans², with each category having its own requirements and, in the case of Covered Home Loans and High Cost Home Loans, fees, points, and annual percentage rate tests.  According to Standard & Poor¹s, violations of the statute will subject non-complying parties to potentially severe liability.  Most importantly, however, the GFLA subjects assignees of Home Loans that violate the Act to potential liability.  Thus, transaction parties in securitizations, including depositors, issuers and servicers, might all be subject to penalties for violations under the GFLA.

Since it is not feasible to ensure that all GFLA-governed loans have been originated in compliance with the Act ‹ and given that the liability associated with non-compliance may subject depositors and trusts to liability exceeding a loan¹s principal balance ‹ these loans are being disallowed and a representation that no mortgage loans meeting the definition of Home Loans will be required in transactions.

Mortgage loans on properties located in Georgia that are not governed by the GFLA may be included in Standard & Poor¹s rated transactions. These loans include: i) loans with an unpaid principal balance exceeding the current conforming loan size limit for single family dwellings established by the Federal National Mortgage Association of $322,700; ii) reverse mortgages; iii) bridge loans that finance the initial construction of the borrower¹s primary residence; iv) agricultural loans; and v) loans for commercial purposes.

In addition to excluding Georgia loans governed by the GFLA from Standard & Poor¹s rated transactions, Standard & Poor¹s revised criteria will require that a new special purpose entity (SPE) be created for each transaction if an issuer chooses to utilize a two-tier structure with a pledge from the intermediate SPE to a trust (as opposed to utilizing a double true sale structure). This requirement follows from the fact that legal structures utilizing a pledge (rather than a sale) expose the depositor (pledgor) to liability since the assets are not sold but rather are held by the depositor. Therefore, if any of the loans the depositor pledges to any trust (whether or not the transaction is rated by Standard & Poor¹s) include Georgia Home Loans, all cashflow to other trusts, which may not have any Georgia Home Loans, will potentially be exposed should the depositor be subject to liability.  Standard & Poor¹s may allow the same SPE to be used for multiple transactions where a representation has been made that the SPE has not transacted and will not transact in loans covered by the GFLA.  This will not be necessary for transactions utilizing a double true sale structure (where Standard & Poor¹s receives a true sale opinion from the seller to the depositor and from the depositor to the trust) since the loans are actually sold and subsequent cashflows are not intertwined with other issuances.

Finally, the GFLA requires that servicers follow certain procedures in servicing loans governed by the GFLA.  Should the applicable procedures not be followed, the servicer may be subject to liability and an interruption of cashflow in securitizations may result.  Given this, Standard & Poor¹s will now require all servicers who service GFLA-governed loans (even though such loans are not included in Standard & Poor¹s rated transactions) to maintain individual accounts for the deposit and remittance of payments pertaining to an issuance.  No commingling of cash will be permitted for servicers who service loans subject to the GFLA.

Standard & Poor¹s will continue to monitor this and other pending predatory lending legislation and will update its criteria accordingly.

Standard & Poor¹s, a division of The McGraw-Hill Companies, provides widely recognized financial data, analytical research and investment and credit opinions to the global capital markets. With more than 5,000 employees located in 18 countries, Standard & Poor¹s is an integral part of the global financial infrastructure. Additional information is available at www.standardandpoors.com 

CONTACTS: Natalie Abrams, +1-212-438-6607; Susan Barnes, +1-212-438-2394; Maureen Coleman, +1-212-438-6626

Standard & Poor¹s is a leader in providing highly valued financial data, analytical research and investment and credit opinions to the global capital markets.  With more than 5,000 employees located in 18 countries, Standard & Poor¹s is an integral part of the world¹s financial architecture. Additional information is available at www.standardandpoors.com.