Peter Fugiel of John Nuveen & Co. was elected to the first team by a wide margin once again in 1991.

Second team honors went to Thomas Keays of Morgan Stanley & Co., Thomas Buckmeyer of Smith Barney, Harris Upham & Co., and Robin Huntley of Massachusetts Financial.

Fugiel described 1991 as "the year of disclosure" in the housing revenue bond sector. During 1991, the Council of State Housing Agencies and the Association of Local Housing Agencies came out with disclosure guidelines. "It was a stunning breakthrough," Fugiel said.

The significance of the implementation of disclosure guidelines is highlighted by the huge number of housing bond issues that the market has not been able to keep abreast of in the secondary markets.

The problems with inadequate disclosure were particularly troublesome in the single-loan multifamuly bond and the single-series single-family bond sectors.

"For example, rental buildings where the underlying loan has defaulted and mortgage pools where the no-current interest maturities may not pay," Fugiel explained.

The problems with these types of bonds created a scare in the secondary market, Fugiel said, which raised the whole housing sector's awareness of the importance of better information.

"Whether the weak issuers ever come across with the information is another question," Fugiel said.

Overall, Fugiel said the housing sector has enjoyed steady growth.

Fugiel noted the federal government's sunset on the issuance of tax-exempt single-family housing bonds needs some legislative vehicle to gain an extension.

"Political and policy support for the single-family extension remains very strong, with something like an 80% congressional approval rate," Fugiel said.

Moreover, he feels support for the municipal housing revenue bond sector is growing.

"The municipal bond market was responsible for jump starting the nation's moribund housing market this past spring," he said.

"Specifically, it was the first-tier homebuyers that started the unusually strong rally in housing starts," he said. "Everyone had muni money this spring and it was a clear example of how important municipal bonds are to the supply of affordable housing in America." He added that affordable housing remains a stubborn problem in many regions.

He recently produced that reveals the prepayment levels for a 100 mortgage pools in the municipal market.

What he found was a prepayment rate of 4.5% of special calls, which compares quite favorably to the Public Securities Association's taxable prepayment rate of 6%.

Fugiel explained that the slow prepayment speed of municipals is due to the fact they serve more moderate income households. Additionally, the mortgage rates in the municipal sector generally are more favorable than those in the taxable market.

He cautions that unlike in the taxable mortgage markets, municipal issuers have a public service to perform, which causes them to manage cashflows, including prepaids, to meet their public purpose.

That means that some mortgage pools may prepay faster or slower than their coupon would indicate.

He noted that Nuveen has done some basic research which found that some subsidized multifamily issues will not be refunded at par.

He explained that issuers may need to keep the subsidies for buildings. The subsidies may last as long as 30 to 40 years. "Investors will not understand the issuers' reluctance to refund premium bonds, if they do not consider the need for subsidies," he added.

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