RISMEDIA, Nov. 14, 2008-The Emergency Economic Stabilization Act of 2008, also known as ‘the bailout bill,’ has real estate leaders talking about its impact on the industry, real estate markets around the country and the overall effect on consumer confidence when it comes to buying and selling.
RISMedia recently interviewed several industry experts on the subject and is presenting their comments in a regularly occurring series called, “The Bailout-Looking Ahead.” Here, Jim Park, president and CEO of New Vista Asset Management and currently serving as president and CEO of the Asian Real Estate Association of America, offers his thoughts about the bailout, what it means to consumers and the government’s new role in real estate.
RISMedia: What will it take to get consumers back to buying and selling?
Jim Park: Financing remains one of the biggest issues for both buyers and sellers. As long as mortgage credit is not widely available, the demand for real estate purchases will remain low.
In addition to facilitating selling of distressed properties and nonperforming loans to buttress the capital base of lenders, government must have an active role in ensuring that mortgage credit is available. FHA, as well as Fannie Mae and Freddie Mac, have jumped in aggressively to fill the void. Still, there are gaps in the product mix in the market and many consumers are being left behind. For instance, many minority and immigrant borrowers lack traditional credit history but can demonstrate payment patterns related to rent, phone, utilities and so on. A new provision within the FHA bill includes the development of an automated underwriting solution for alternative credit borrowers to ensure that individuals with consistent but alternative credit history can get a fair priced loan. This has huge importance to minorities that are otherwise in a position to buy now.
RISMedia: What is happening in your market locally and how is the national discussion about real estate affecting that?
JP: Many parts of the San Diego real estate market’s long decline began to slow this summer, but the overall financial market meltdown and the economic slowdown have triggered additional fallout locally. The implementation of the federal Emergency Economic Stabilization Act will have a far-reaching impact on the recovery. If implemented well, the new law will help to stabilize the market, reduce the number of foreclosures and rebuild confidence in the housing market. We need to keep people in their homes. It is critical that those affected by the crisis are given an opportunity to recover by getting a loan that they can afford and keep.
RISMedia: What should the industry be doing to bolster consumer confidence?
JP: The government has taken an important step by introducing legislation and programs that will tackle this enormous problem, but how quickly and effectively the law is carried out is critical to restoring consumer confidence. Government and private enterprise must work together to return the possibility of hope to ravaged neighborhoods. Foreclosures must be marketed as affordable housing opportunities and made readily available to first-time buyers in favor of investors. When new homeowners move into shuttered neighborhoods and begin renovations, it will bring a positive new energy to the communities.
RISMedia: What are your thoughts on the government’s new rights (within the bailout bill) to purchase foreclosed homes and refinance them at their current value so that homeowners can stay in the home?
JP: The large volume of delinquencies and foreclosure is hurting homeowners and creating tremendous strain on the industry. Any efforts to keep homeowners in place by modifying the terms of the loan, is a win-win for everyone. With the real estate market continuing to decline, foreclosure must be the last option. This is not only the right thing to do, but also the best financial option for lenders.
About Jim Park
Jim Park is president and CEO of New Vista Asset Management http://www.newvistareo.com, a San Diego-based national REO management and marketing company that provides innovative and community-based outsourcing solutions for mortgage bankers, mortgage investors and regulated financial institutions. For nearly 20 years, Park’s work at FHA, Freddie Mac and local community development agencies helped to further minority homeownership and community revitalization efforts throughout the country. Park has been recognized by a number of national consumer advocacy organizations for his work to break down barriers to homeownership.
Park is currently serving as the President and CEO of the Asian Real Estate Association of America (AREAA) and serves on various boards of national nonprofit organizations as well as corporations that are committed to expanding opportunities for underserved communities.