What You Need to Know
Plus: Seattle’s Japanese Cultural and Community Center Summer 2009 5.95 USD
AREAA Member Spotlight on John M. Lee, San Francisco
Help your clients get the home loan they need from the bank they trust. Today, it is more important than ever for your clients to work with a lender they trust. Bank of America is the right choice for your client’s mortgage because: • Last year more people chose Bank of America for their home financing than any other lender in the U.S. • We originate one in every five of our mortgages to low-to-moderate income borrowers. • Our mortgage professionals will keep your clients informed every step of the way so there are no surprises.
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THIS INFORMATION IS INTENDED FOR MORTGAGE, REAL ESTATE AND/OR BUILDER PROFESSIONAL USE ONLY AND IS NOT AUTHORIZED FOR CONSUMER OR PUBLIC DISTRIBUTION. Bank of America, N.A. Member FDIC Equal Housing Lender ©2009 Bank of America Corporation. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. 00-62-0122D 04-2009 AR72218
Knowledge. Experience. Integrity.
Look for the designated difference in residential real estate appraisal and consulting. Uncertainty and doubt about market value. They’re the last things you want when selling or buying a home. So, the first thing you should look for in your real estate appraiser is the Appraisal Institute SRA designation behind the name. An SRA designation represents advanced knowledge. It stands for years of proven, real-life real estate valuation experience. And, it always means a commitment to strict professional ethics and standards.
SRA. Look for the designated difference behind the name.
To learn more about finding an Appraisal Institute designated appraiser, visit: www.appraisalinstitute.org/findappraiser
10 Summer 2009 Volume 1, Issue 4
Advertisers
Contents
Appraisal Institute
01
AREAA/NAHREP Real Estate and Marketing Conference
Inside Back Cover
4 6 8
MBK Homes Wells Fargo Bank of America
Cover: ŠiStockphoto.com/Viorika
2
13 21 Inside Front Cover
10
Letter from the Editor AREAA/NAHREP Real Estate & Policy Conference Recap and Photos
Recent Events
Featuring the 2009 HOPE Awards in Washington, D.C.
AREAA Member Spotlight: John M. Lee A glimpse into the life of a nationwide top producer and his perspective on the Asian American real estate market
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No One Wins with Foreclosure By Glenda Gabriel
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An exceptional effort is underway to remodel and expand Seattle’s Japanese Cultural & Community Center, just in time for its 100 year anniversary
Chase: Reaching Out to Consumers
By Paul Imura & Yangsook Ku A recent citywide marketing event in Atlanta demonstrated how real estate professionals from around the industry can work together to produce mutually beneficial results
How lenders are helping borrowers avoid the loss of a home. Including steps homeowners can take to avoid foreclosure and foreclosure facts borrowers should know
Heritage Remembered: An Exceptional Gift to the Future By Lori Matsukawa
The Power of Local Partnerships
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Foreclosure Prevention
What You Should Know to Help By Robert Barr A call from a former client isn’t always good news. Even if you weren’t involved in the mortgage decisions they made or you’re not the one who ultimately can help them, you’re their real estate professional and you need to be prepared to help
By David Lowman
Chase has implemented a number of initiatives designed to keep people in their homes, such as: the Homeownership Preservation Office, Homeownership Centers and Project Homeowner
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From the Editor The growing numbers of foreclosures are damaging our communities and it is unlikely that those numbers will retreat anytime in the near future. It is clear that the foreclosures are hitting the multicultural communities the hardest. However, for some time policy makers and industry leaders have failed to see that this epidemic is hitting the Asian American community as hard as or even harder, than the general market. For instance, a recent study by the Federal Reserve of San Francisco points clearly to the fact that Asian Americans are 1.3 times more likely to face foreclosures in California. Additionally, foreclosures are disproportionately hitting states with high Asian American populations. With so much of the Asian American’s home equity gains taking place in early 2000, our community has lost much – if not all – of the equity gains during the past three years. With cultural and language barriers facing the Asian American community, a targeted and customized approach to foreclosure prevention is critical in our community. For this reason, AREAA has been working to expand awareness among policy makers and industry experts regarding the plight of Asian American homeowners facing the loss of their homes. It is also for this reason that AREAA has partnered with organizations like Freddie Mac, KCCD and others, to create consumer level workshops and educate on alternatives to foreclosure. Additionally, AREAA has been working with some of our corporate partners such as Chase and Wells Fargo to host “Home Retention” workshops, which provide both homeowners, and our members, with the information and support they need to create sustainable homeownership. Our chapters have been eager to help with these efforts. From our DC Metro chapter to San Diego-Orange CountyGreater Los Angeles Chapters, we have been hard at work in creating these important venues to share information and provide direct assistance to distressed homeowners.
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Summer 2009 Volume 1, Issue 4
Editor-in-Chief In this issue of A|R|E, you will hear from some of the top industry leaders such as: Glenda Gabriel, David Lowman and Robert Barr about what it takes to assist distressed homeowners and help communities to stabilize. Additionally, we will get some insight from John Lee, a past-AREAA Board member and one of the leading real estate professionals in the country, about his secret to success through this tough real estate climate. Finally, you will get a glimpse into the dynamic Japanese Cultural & Community Center in Seattle. In the real estate community, we like to talk about the feeling of pride when we help a first time homeowner move into his or her new home, and rightly so. Home is more than a roof and four walls. It represents financial security, a sense of belonging and self worth. So, think about what it means to that individual when you help them stay in their home. You will truly have a customer and a friend for life.
Jim J. Park
Creative Director Praveen K. Sharma
A|R|E is a publication of the Asian Real
Estate Association of America (AREAA), a national nonprofit trade organization dedicated to increasing sustainable homeownership in the Asian American community. For more information visit: http://www.areaa.org. Š2009 by the Asian Real Estate Association of America. Reproduction in whole or part without permission is prohibited. Opinions expressed by individual authors are not necessarily the opinions held by AREAA.
Please direct article submissions and advertising inquiries to: Praveen Sharma psharma@areaa.org or by phone at 760-918-9162
A|R|E Office:
Asian Real Estate Association of America 5740 Fleet Street, Suite 155 Carlsbad, California 92008 Phone 760-918-9162 Fax 760-918-6924 Jim Park Editor-in-Chief A|R|E Magazine
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RECENT EVENTS
AREAA/NAHREP Real Estate and Policy Conference This year’s national Spring conference was held March 13-14 at the Ritz-Carlton Washington, DC. Real estate practitioners from across the country convened in the nation’s capital to meet with policymakers, top producers, and industry leaders dedicated to serving multi-cultural markets. To learn more about legislative changes and voice their concerns with regards to housing policy, conference goers attended a White House briefing and participated in town hall meetings discussing foreclosure prevention and lending issues facing Asian, Hispanic and immigrant communities. Photos by Rodney Choice/Choice Photography.
Grace Kim, Lieu Nguyen and Jina Kim, Board Members of AREAA DC Metro
Ally Powers of Chase
AREAA Members Carmen Chong & Andrew Lee with AREAA Founding Chair Allen Okamoto
AREAA National Directors Kenneth Li & Kathy Tsao with AREAA member Dawn Tsien
AREAA President Jim Park, Sara Weis of NAR, Eva Hom & John Lee of CREAA, Pablo Wong of Fidelity National Financial and AREAA Founding Chair & CEO, John Wong
FHFA Director Jim Lockhart fields questions from the media following his presentation at the conference
AREAA President Jim Park with economists Eugenio Aleman of Wells Fargo and David Berson of PMI
Brian D. Montgomery, former United States Federal Housing Commissioner, with 2008 NAHREP Chair, Rebecca Gallardo-Serrano, and AREAA Chair, Allen Chiang
Pablo Wong of Fidelity National Financial & Scott Thompson of Mortgage Resolution Services
Fanny Li and Ramona Chang of Asian Real Estate Association of East Bay
AREAA DC Metro Board Members: Lieu Nguyen, Scott Willis, Genie Nguyen and Chair Song Hutchins
AREAA DC Metro President Vinh Nguyen and NAHREP Albuquerque President Victor Raymos
Eun Yang, NBC4 Washington D.C. news anchor and gala dinner MC
AREAA 2008 Chair Emily Moerdomo Fu with AREAA National Directors Mark Kitabayashi and Al Wasserman
RECENT EVENTS
HOPE Awards
AREAA, the Chinese American Real Estate Professionals Association (CAREPA), the Chinese Real Estate Association of America (CREAA), the National Association of Hispanic Real Estate Professionals (NAHREP), the National Association of REALTORS (NAR) and the National Association of Real Estate Brokers/Realtists (NAREB) partnered once again this year to honor five HOPE Award recipients in various categories. The HOPE Awards recognize individuals and organizations for their contributions to minority homeownership. Past winners include 2008 AREAA Chair, Emily Moerdomo Fu, and 2009 AREAA Chair, Allen Chiang.
Hyepin Im accepts the Education Award on behalf of KCCD
This year’s ceremony was held on May 12th at the National Building Museum in Washington, D.C. Among the winners was the Los Angeles based non-profit Korean Churches for Community Development, the recipient of the Education Award. Through their home buyer education and foreclosure prevention programs, KCCD has provided counseling services to more than 5,000 individuals since its inception in 2001. Joining KCCD are four other 2009 honorees: FINANCE AWARD Illinois Assistive Technology Program LEADERSHIP AWARD Chris McCarthy, Nashville Area Habitat for Humanity MEDIA AWARD Community Reinvestment Association of North Carolina PROJECT OF THE YEAR Affordable Homes of South Texas Inc. For more information about the HOPE Awards winners and program, visit www.hopeawards.org Photos by Oscar Einzig
Allen Chiang presents Robert Calvillo with the Project of the Year Award
CAREPA President John Wu presents Chris McCarthy with the Leadership Award
NAHREP and AREAA Cinco de Mayo Celebration in Los Angeles NAHREP Los Angeles President Vanessa Montanez and AREAA Greater Los Angeles President Charlie Suh co-hosted a Cinco de Mayo networking event on the pool deck of high rise condominium project, Evo. Guests enjoyed spectacular views of Downtown along with food, drinks and the festive music of a live Mariachi band. Photos by Praveen Sharma
Foreclosure Prevention Workshop
A workshop was offered to the public in Fair Oaks, California in late April to help homeowners in need of foreclosure prevention information. The workshop was held in an interactive, Q&A format. Community leader, nationwide top producer for RE/MAX and AREAA member, Andrew Lee, hosted the event, which featured a panel of experts: Stephen J. Beede, real estate attorney; Wendy Voo, CPA; Elsa Carvalho, Short Sale Specialist and Certified Distressed Property Expert; and Debra Delgado, Senior Loan Officer at Bank of America. It was one of the first of such workshops targeting homeowners to help them avoid foreclosure in the Sacramento area. The panelists discussed many of the options available to homeowners to save their homes, save their credit, and salvage the tough situations that they are in and give them a chance to start over again. Those options included loan modification, refinancing, short sale, deed in lieu of foreclosure, and bankruptcy. As demonstrated by their questions, of particular in interests to the audience was short sale and its legal and tax implications. Just under two dozen guests attended and most found the event to be educational, informative and helpful. Photos by Justin Zhang
A R E A A
M E M B E R
S P O T L I G H T
JOHN M. LEE REALTOR, SAN FRANCISCO
John M. Lee has been serving San Francisco as a REALTOR since 1987 and consistently places in the top 1% of nationwide REALTORS each and every year. He is a prominent voice in the community, serving as Chair of the Chinese Real Estate Association of America (CREAA), Incoming President of the San Francisco Association of REALTORS, a director of the California Association of REALTORS, and a real estate columnist in local papers. In addition, he is actively engaged in AREAA and has served a term as a National Director for the association. John spoke with Asian Real Estate, sharing some of his personal story and thoughts on real estate today. a|r|e: Flashback to a little over 20 years ago, what motivated a successful young engineer like you to make a career change in favor of the real estate industry? John M. Lee: It is interesting how I got into real estate. I was working for Dow Chemical at the time and just finished construction on an automated manufacturing facility in Miami and Dow wanted me to move there to run the plant. I really did not want to be in Miami, so I declined; Dow then promoted me to a position in headquarters in Midland, Michigan. I really did not want to go there. I also turned down the position and know that my career at Dow was over! So I decided to go back to school for my MBA specializing in real estate and finance because I always had interests in that area. My area of focus was in commercial real estate, but after I completed my masters at UCLA, the economic and political
climate had changed tremendously and I went directly into residential real estate where I have been ever since. What is your biggest challenge in today’s market and how do you overcome it? My biggest challenge today is time management. With only 24-hours in a day, and all the responsibilities that I have, I need to prioritize my time, determine a schedule, and stick to it every minute of the day. After being in business for so long, I know exactly what is required to sell a property, I have to blend that in with the responsibilities of running other organizations. So I have staff, communicate with them in efficient manners, making sure that everything gets done in a timely manner. What challenges do you see specifically in the Asian community in the current real estate environment? I see two major challenges. One is obtaining the loan. Many more Asians are self-employed and have a harder time documenting their income. With the tightening in underwriting standards, getting qualified for a loan becomes a major challenge at times. Also culturally, Asians tend to be negotiators. Even at today’s lower prices and low interest rates, they still want a better deal, and thus either are holding back in making offers or getting beaten out in multiple offer situations! In your view, what will it take to increase the Asian American homeownership rate to that of the nation’s majority? Asian Americans have an affinity to owning homes, so the motivation is there for homeownership. The problem is with how can they purchase a home? Most of them will
Photograph: Oscar Einzig
AREAA MEMBER SPOTLIGHT
John Lee participates on the panel during the 2009 HOPE Awards symposium in Washington, DC
jump at the opportunity if they know how. So I believe educating them on the home purchasing process and providing them with options on how to purchase and the programs available to them are vitally important to increasing Asian American homeownership. You’ve been extremely active in non-profit organizations throughout your career, how has this involvement impacted your business and life outside of real estate? Being involved in non-profit organizations has allowed me to meet many really nice like-minded people who believe in helping others. I have made so many good connections that if I have a problem or question, I know exactly where to get the answers. Also to my clients, I make an impression not as a commission hungry real estate agent, but as someone a| r | e
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AREAA MEMBER SPOTLIGHT who cares to make a difference and willing to donate his time to good causes.
to me because I am more like them and I use that to my advantage when competing for business.
Another advantage is that I learn so much about what’s going on in real estate that I can speak as an expert. It has led to higher positions and opportunities to promote myself on television, radio, and print media; and much more visibility, which ultimately improves my business.
You’ve been a consistent top producer and have achieved leadership roles in real estate on various levels, is there anything else you would like to accomplish before walking away from real estate? Throughout my life, I have had different mentors and observed how they operate. I have also mentored others and it has given me great joy to see people I work with succeed and move their lives to another level. I am a first generation immigrant from Hong Kong and one of my
The use of social networking and online communication sites is growing dramatically among real estate professionals, what’s your take on Facebook and similar sites as marketing tools? I wish that I can tell you that I am on Facebook, LinkedIn, Twitter, and other networking sites, but I am not. I have not explored those networking tools. However, I am actually very active on several internet message boards over the years, and actually by posting on those sites have resulted in some businesses and some very good friendships. What strategies do you deploy in reaching the Asian community? I do not have any strategies in specifically reaching the Asian community. Actually, the majority of my clients are non-Asians. Asians are still in the minority and if you target them exclusively, you will miss a large part of the market. That being said, Asians are attracted CREAA President, Eva Hom, and NAR President, Charles McMillan, with John Lee at the 2009 HOPE Awards ceremony in Washington, DC. Photo by Oscar Einzig
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passions is seeing other Asians succeed and improve themselves. And if I have a hand in that process, it makes it that much sweeter!
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Welcome Home Center Hours: 10 a.m. to 6 p.m. daily, except Wednesday, 2 p.m. to 6 p.m. *Prices effective as of publication date. Subsequent sales may have resulted in unavailability of any or all price levels. A portion of the advertised incentives may have been used as a price reduction. Incentives based on buyer closing with MBK Homes’ preferred lender. **Broker must accompany and register buyer on their first visit to each community in order to receive any broker commission and be eligible for the drawing. No exceptions. Broker commission to be paid only upon close of escrow. The terms of this offer are effective on the date of publication and are subject to change or cancellation at any time without notice. Broker must hold a valid California real estate license as of the date of buyer’s registration and the close of escrow. MBK Homes reserves the right to modify price, plan, features and specifications without prior notice or obligation. Square footage is approximate. Models do not reflect racial preference. Drawing to be held during the week of October 5th, 2009. Winner need not be present to win. Winner will be notified via phone/email with prize details. Models do not reflect racial preference. Contact a MBK New Home Consultant for further details.
BY GLENDA GABRIEL BANK OF AMERICA HOME LOANS
N
o one wins in home foreclosure. Not the homeowner, the neighborhood, the community or the lender. That’s
why it is worth every effort by the mortgage industry to help keep consumers in their homes. While homeownership is clearly not for everyone, it remains a means of building a solid financial foundation. Further, the joys of owning a home and the economic benefits it can create are priceless.
Asian Americans have made great strides in homeownership and represent the community with the fastest growing homeownership rate – 59% – among any minority population. But like many U.S. homeowners today, Asian Americans are not immune from the foreclosure threat. Foreclosure rates exceeded 5% in 33 of the nation’s 3,141 counties in 2008: more than half of those counties are in California (12) and Florida (10), two states with a high concentration of Asian American residents, according to the Pew Research Center. While it is hard to pinpoint specific foreclosure rates for Asian Americans, the economies in coastal states (in addition to Nevada and some Midwest states) have been hard hit. Local economies are a barometer of foreclosure activity. In California alone, housing values dropped 34% in 2008 as reported by MDA Dataquick and unemployment is a very high 11% according to the Bureau of Labor Statistics. Similar results are reported in other states such as Florida (9.6%), Nevada (10.6%) and Michigan (12.9%).
HOMEOWNERSHIP PRESERVATION
Steps Homeowners Can Take to Avoid Foreclosure Foreclosure is by no means inevitable. At Bank of America, we suggest a number of proactive steps to sustain homeownership. Our approach is working; the 7,400 associates on our Home Retention teams have helped to keep more than 130,000 homeowners in their homes so far this year. Helping our customers stay in their homes is a mark of responsible lending to ensure people succeed in homeownership. We also spread the message of foreclosure prevention through our partnership with minority real estate professional groups, including AREAA, the Asian Real Estate Association of America, and with our national network of nonprofit homebuyer education partners. Call 1-800-8462222 for more information from our associates. Here are recommendations we make to homeowners who may feel foreclosure pressures:
Don’t wait.
Early intervention is key. Homeowners should call their lender as soon as they feel the pinch of job loss, a family emergency or other troubles that impact their mortgage.
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Don’t fall prey to scams. Borrowers don’t need to pay hundreds or thousands of dollars to companies who promise to intercede on their behalf with their lender. Lenders don’t charge for loan modification assistance.
Borrowers can call:
1-888-995-HOPE (4673) If borrowers are reluctant to talk to their lender, at least talk to reputable sources. Nonprofit credit counselors or housing-specific agencies can be a good source of information. Borrowers can call 1-888-995-HOPE (4673) to speak to representatives of the Homeowners Preservation Foundation and its partner organizations.
Borrowers Should Know Their Options Homeowners in default have several remedies to bring their mortgage account current:
Be candid about your financial situation. Lenders need to under-
1. Repayment plans. Lenders are very willing to work out short-term repayment plans if the borrower has income and can qualify.
stand the specific needs and circumstances of borrowers in order to prescribe a viable solution.
2. Forbearance. This allows borrowers to make either lower or no payments for a specific period of
HOMEOWNERSHIP PRESERVATION
time (usually three to six months) while they work to get their finances in order. 3. Loan modification. One or more changes to the terms of the loan can bring a defaulted loan current. Examples of modifications include reduced interest rates or a change to the loan product, such as switching an adjustable rate loan to a fixed rate product.
Foreclosure Facts Borrowers Should Know The vast majority of Adjustable Rate Mortgage (ARM) loan delinquencies occur prior to the ARM reset, most often due to “life events” not the change in interest rate.
Glenda Gabriel is the Neighborhood Lending executive for Bank of America Home Loans. She is responsible for identifying opportunities to drive homeownership among lowto-moderate income borrowers, minorities, immigrants and underserved communities across the nation.
The reasons borrowers stop paying “stated income loans” are not typically because of discrepancies between stated income and actual income. The most common reasons relate to a substantial change of income creating an affordability issue. There is no simple answer to avoiding foreclosure. But the lending industry is creating responsible solutions that help keep homeowners in their homes. We want to work with borrowers, because in foreclosure situations, no one wins.
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Heritage Remembered: An Exceptional Gift to the Future
Seattle’s Japanese Cultural & Community Center by Lori M atsukawa
Y
oung voices reciting the
Japanese alphabet; judo students going through their paces; young mothers and studious elders thumbing through books and magazines written in Japanese. These are just some of the activities filling the rooms at Seattle’s Japanese Cultural and Community Center. The Center is located in three buildings that are nearly a hundred years old and designated historic landmarks by the City of Seattle. A tremendous effort is underway to remodel the structures and build a new Great Hall to be enjoyed by future generations. “This will be one single location where all people who love Japanese and Japanese American culture can come to learn, share and celebrate together,” says Dee Goto, a board member of the Nikkei Heritage Association of Washington and a longtime supporter. The first building was built by first generation Issei pioneers and opened as a Japanese language school in 1913. This was a remarkable feat because at the time, Japanese immigrants weren’t allowed to own land in the State of Washington. At its zenith, approximately 1500 students attended Nihon Gakko ( Japanese School) every afternoon after English school. The school also served as a community center for meetings and celebrations. During World War II, Seattle’s Japanese American families were sent to internment camps. The U.S. government confiscated the buildings, but did allow Opposite: the Cultural Center in 1912 (Photo courtesy of the Nikkei Heritage Association of Washington)
1935
Present Day
The Cultural Center today The Cultural Center in 1935 (historical photo) some families to store some items in some of the school. After the war, many returning families couldn’t find work or housing due to persistent discrimination. So the school became a residence for more than 20 families. They called it the “Hunt Hotel” after Hunt, Idaho where the Minidoka Internment Camp was located. Families slept in classrooms and shared a kitchen and showers. “We had a great time living there as kids. We didn’t think it was anything to be embarrassed about,” recalls Shox Tokita, whose family lived in the school for several years. “We felt like we had a lot of aunts and uncles watching over us.” Today, an energetic Board of Directors, Community Advisory Council, Corporate Cabinet and scores of community volunteers both American and from Japan are working on a $15 million
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remodeling and building campaign to celebrate the school’s centennial. “I think about my daughters and all the things I want to share with them,” says Board Member Kip Tokuda. “New Years festivals, language, kendo! And what better place than a building handed down through the generations?”
Lori Matsukawa is Board
President of Nikkei Heritage Association of Washington. For more information, visit NHAW at: www.jcccw.org
Taiko, traditional Japanese drums, performed during the NHAW Cultural Festival Trying on a kimono at the NHAW Cultural Festival
COST SAVING REAL ESTATE STRATEGIES FOR YOUR BUSINESS EXCLUSIVE WEBCAST PRESENTED BY WELLS FARGO Given the global recession, real estate presents new challenges and opportunities for business owners. Businesses especially are affected by the pressures of reduced demand and tighter lending criteria. Business owners are challenged to do more with less. This program will discuss how real estate can be a tool for reducing expenses and generating revenue. It will also shed light on the new rules of the road. Hear exclusive advice from our panelists on: • Lowering monthly payments by refinancing or renegotiating • Mitigating commercial property tenant vacancies
Featuring: AREAA National Director EMILY MOERDOMO FU
• Reducing overall operating expenses and discovering true cost savings for your business
• Adapting to the current residential and commercial property markets
PANELISTS BRAD BLACKWELL
JAGDEEP DAYAL
EMILY MOERDOMO FU
NINA KAUFMAN
Executive Vice President, Retail National Sales Manager Wells Fargo Home Mortgage
Immediate Past Chair, AREAA Director and Owner, RE/MAX of Greater Atlanta
Senior Vice President, Head of Business Real Estate Financing Wells Fargo Business Direct
MODERATOR RICH SLOAN Founder and CEO, StartupNation
Founder and President Ask The Business Lawyer
Visit this link to register and view the webcast:
https://wellsfargo.imaginationdigitalmedia.com/mediaplayer/
Reaching Out to Consumers
By David Lowman
CEO, Chase Home Lending
After being deployed overseas, the soldier returned to the United States and bought a home with his wife for their two young children. Soon, however, the slowing economy significantly cut his construction-job paycheck. At the same time, his wife’s real estate work dwindled. Together, they no longer can afford the house they bought only recently. Or, there is the man who got divorced and then laid off. Unable to find work in his field, he works a number of parttime positions and struggles to afford his $3,000 mortgage. Unfortunately, these stories are all too common following several years of rapidly rising home prices and some consumers buying “more house� than they could afford over the long term. With housing prices dropping and the economy in recession, home foreclosures are increasing dramatically. According to the foreclosure-listing service Foreclosures.com, completed U.S. foreclosures jumped 44 percent to a total of 175,199 in March.
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HOMEOWNERSHIP PRESERVATION
All challenging financial situations, however, do not have to end in foreclosure. The divorced man talked to an advisor at his local nonprofit, Neighborhood Housing Services of Orange County, who put him in touch with Jim Nguyen, a counselor at the Chase Homeownership Center in Santa Ana, California. Nguyen and Chase were able to reduce the borrower’s monthly mortgage payment dramatically. And Chase is still reviewing how it might modify the soldier’s loan. “Since 2007, Chase has helped avoid 400,000 foreclosures, reflecting our continuing commitment to help families sustain homeownership for the long term,” said David Schneider, who leads Mortgage Servicing for Chase. Chase ramped up its foreclosure prevention efforts in late 2008 when it promised to expand its already significant mortgage modification program by hiring more than 300 loan advisors to help struggling homeowners. It met that goal and hired another 650 in the first three months of 2009. Today, the company is spearheading a number of different initiatives to keep people in their homes.
Chase Homeownership Preservation Office
Created in 2004 as part of Chase's $800 billion, 10-year public commitment to help people attain and sustain homeownership, the Homeownership Preservation Office works with nonprofit agencies that are assisting borrowers having difficulty making payments and provides foreclosure prevention training sessions to these agencies. Since March 2005, Chase’s Homeownership Preservation Office has facilitated more than 115 foreclosure prevention training sessions for nonprofit counselors, housing advocates and public officials and has trained more than 4,155 individual participants. Neighborhood-based nonprofits are a crucial link in helping homeowners because consumers often turn to a nonprofit organization first when they realize they can’t pay their mortgage. Also, working with nonprofit agencies allows Chase to reach many more consumers than it could on its own. “As a foreclosure prevention counselor, I work on about 20 new consumer cases per day,” said Helen Tran, a counselor with Neighborhood Housing Services of Orange County. “I tell my clients, if your loan is with Chase, you can sleep at night. I work with counselors at Chase’s Homeownership Preservation Office and Homeownership Centers – they are very responsive and easy to work with.” Donna Miller, a home lending executive at Chase, welcomes homeowners to Project Homeowner. In the background are Jeff Davi, California real estate commissioner (first on left) and Maria Giuriato, real estate industry and consumer liaison for DRE. (third from left)
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HOMEOWNERSHIP PRESERVATION
Chase Homeownership Centers
Project Homeowner
The centers are located in the 12 states hardest hit by the foreclosure crisis, including Arizona, California, Florida and Nevada. Advisors have met with more than 13,000 customers.
Project Homeowner brings together industry experts and regulatory agencies -- including the California Department of Real Estate (DRE), the California Hispanic Chambers of Commerce (CHCC) along with numerous other nonprofits -to help borrowers understand their current financial situation, identify solutions and, where appropriate, begin the loan modification process.
By early June 2009, Chase had opened 27 Homeownership Centers across the country, where Chase, WaMu and EMC mortgage customers sit down with a trained advisor to evaluate their finances, review possible workout options and answer questions.
“It’s heartbreaking” said Nguyen. “Approximately 75 to 80 percent of the people I see bought their home within the last five years and now, due to some hardship such as a lost job or reduced wages, can no longer afford it. The rest of the customers we are seeing either had adjustable-rate mortgages or used the property as an investment property, but lost their renters. People are so grateful to be able to meet face-to-face, explain their situation and work on a solution together.” For all customers who are struggling with their monthly mortgage payment, Chase also has established a dedicated toll-free number -- 866-550-5705 -- and a Web site -www.chase.com/myhome.
Focusing on one of the states with a high level of foreclosures, Chase has organized community outreach events in five California cities so struggling homeowners can talk to counselors.
"Project Homeowner's commitment to providing multicultural, bilingual and educational information that assists our consumers is a top priority for all participants" states Maria Giuriato, real estate industry and consumer liaison for DRE. Ally Powers, Project Homeowner project manager, reported that at the first three events, in Stockton, Riverside and San Diego, more than 1,300 families talked with counselors about their mortgages and some received on-the-spot initial approval of their loan modification.
People gather outside Project Homeowner's event in Stockton, California
HOMEOWNERSHIP PRESERVATION
“It has been a gratifying experience working together with hundreds of volunteers and more than 100 loan counselors to help distressed families in these impacted communities” said Powers.
Implementing the Homeowner Affordability and Stability Plan
When President Obama announced his administration’s Homeowner Affordability and Stability Plan, which aims to help borrowers refinance to lower rates or modify their loans in other ways to avoid foreclosure, JPMorgan Chase CEO Jamie Dimon immediately voiced his support: "This builds on the efforts we have already implemented and extends them to more struggling homeowners and Project Homeowner at the San Diego Concourse provides us and other servicers more way to begin to solve these problems. These mortgage modioptions to keep families in their homes," said Dimon. "The fications are economically and morally the right thing to do plan appropriately balances the interest of homeowners, mortfor individual customers. It is the respectful way in which we gage servicers and investors. As a result, more families will be all would want to be treated. We will work hard to incorpohelped with long-term and sustainable solutions through a rate the new criteria into our own loan modification process consistent process, including a verification of income." to quickly help customers, and we urge all to participate in “There is no silver bullet," Dimon continued. "The thoughtful this plan as soon as possible." and rapid roll-out of various programs is the only intelligent
Homeowner Affordability and Stability Plan, two key components:
Refinance
Refinance helps borrowers who are current on their monthly mortgage, but don’t qualify for a standard refinance because they owe up to 105 percent of their home’s value. The program allows borrowers with Fannie and Freddie loans to take advantage of today’s low mortgage rates and refinance into a more stable mortgage at a lower rate. Chase began accepting applications April 6.
Modification
Modification helps borrowers who are behind on their payments or at risk of falling behind. The modification process seeks to lower their monthly payments and options include reducing the interest rate, extending the loan term or providing principal forbearance. Chase launched a new Web-based tool on April 1 to help loan advisors quickly determine if a customer is eligible for a modification under the plan.
LOCAL PARTNERSHIPS
The Power of Local Partnerships BY PAUL IMURA, GENWORTH FINANCIAL AND YANGSOOK KU, REALTY CENTRAL, INC
F
Georgia’s Asian Population Source: U.S. Census Bureau, 2005-2007 American Community Survey Asian Indian 30.3%
Chinese 14.8%
Filipino 6.0%
Japanese 3.1%
Korean 16.8%
Vietnamese 17.4%
Other Asian 11.6%
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or the past two years, we have all become well aware of the housing challenges facing almost every market in the country. In order to solve the national housing problem, it’s imperative that we come together to address the challenges on a local level. Genworth Mortgage Insurance, the AREAA Greater Atlanta Chapter and Regions Bank recently joined forces to do just that. On April 14, Genworth Mortgage Insurance, AREAA Greater Atlanta and Regions Bank hosted a citywide marketing event in Duluth, Georgia. More than 30 Asian Realtors, from 11 different firms, registered for the event. Attendees participated in sessions to discuss latest market trends, home preservation programs and product opportunities. They also
Key Facilitators from Genworth, Regions Bank, and the AREAA Greater Atlanta Chapter
received a formal introduction to Regions Bank as a lending partner for their local market.
making it a viable channel for our lending partners. Other locations are being considered for future events.
The morning session was spent on educating the group on the latest housing recovery programs from Home Affordable Stability Plans, including both the Refinance and Modification programs. Regions Bank concluded the event by sharing their product menu for the Atlanta market and introducing attendees to Luke Yu, a 20-year veteran mortgage professional dedicated to serving the Atlanta regional market.
“The event was a successful launch for us to better serve this important and growing market,” said Debra Douglas, Regions Bank senior vice president. “We are grateful to both Genworth and AREAA for making this happen.”
Atlanta was chosen as the host city for the first event since it has one of the fastest growing Asian-segments in the United States. Close to 100,000 Koreans live in the greater Atlanta area,
Yangsook Ku is President of the AREAA Greater Atlanta Chapter. Paul Imura is the Product Innovation Leader for Genworth Mortgage Insurance as well as a board member of AREAA National.
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FORECLOSURE PREVENTION what you Should know to help By Robert D. Barr
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Y
ou’re pleased to hear from former clients. You see their name flash up on your caller ID and you think, great -- perhaps new business with them, or maybe they’re passing on a referral. You quickly recall the excitement at their closing – their hope and sense of accomplishment in making the investment of a lifetime. That excitement at closing – it’s why you got into the business…
1. Recognize
But you snap out of those memories as soon as you hear the tone of your client’s voice. This isn’t new business – it’s bad news – very bad news. Your clients are struggling with their mortgage, possibly facing foreclosure on the home you sold them. And now they’re reaching out for help.
Too often it’s the case that borrowers avoid correspondence with their lenders. Many foreclosures go forth with ignored voice mail messages and unopened letters from servicers.
The odds are that you have former clients who are struggling with their mortgage. And in fact statistics from California homebuyers show that Asian American borrowers are 1.3 times more likely than non-Hispanic white borrowers to be in foreclosure.1 What can you do now? Here are three basic points to keep in mind:
that calling you was probably difficult for them Just picking up the phone and asking for help is a huge step for your clients. Acknowledging that there is a problem and that help is needed is often very difficult. Borrowers in trouble are often slow to recognize the problem and even slower to act.
So any movement on their part to reach out to the real estate community is healthy and needs to be supported. You’re to be congratulated that the borrower has reached out to you, even if you weren’t involved in the mortgage decisions they made or you’re not the one who ultimately can help them. You’re their real estate professional, so to continue serving your clients well, you need to be prepared to help. Listening to them, preparing them to continue the process, and letting them know what they can expect are ways you can help.
Elizabeth Laderman and Carolina Reid, CRA Lending During the Subprime Meltdown, Federal Reserve Bank of San Francisco, Working Paper Series, www.frbsf.org/publications/community/wpapers/2008/wp08-05.pdf., Table 2. 1
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2. urge them to contact their loan
Servicer as soon as possible Your clients need to speak to their lender. Or, more specifically, to the servicer of their loan. Calling their loan officer won’t be enough, of course, but the loan officer should be able to give them the servicer’s phone number. Or you may advise your borrower to skip that step and call the servicer directly. The phone number they’ll need should be on their mortgage statements. Let your clients know that the more time the lender has to work out a solution, the more viable options remain. Your borrowers may naturally be resistant to calling the lender or servicer directly. You should recognize that, but advise your clients that lenders are very willing to explore options. Lenders want borrowers to stay in their homes. Foreclosure is very costly to lenders and mortgage investors, and they view it as a last resort. The solution won’t likely come in just one or two phone calls. Lenders will have to assess the circumstances and confer with other parties who may be involved in the loan – for example, the investors who own the loan, the mortgage insurer, and any other lenders who may be holding a lien on the home. And, of course, given the current financial environment, the inbox for the lender’s workout specialists is pretty full. Help set the correct expectations by letting your clients know that it’s likely going to take some time.
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Lenders are adding staff to handle the volume, but it takes time to put in the qualified specialists. Your borrower should be advised that, if they can, they should keep their mortgage payment current. The further behind a borrower gets, the fewer options are available. The corrections will usually take some time and will be painful. Even if your clients don’t lose their house to a foreclosure, it may only be because they sold the house through a short sale. The lender will want to assess whether your borrowers’ payment difficulty is temporary or permanent. A temporary problem – for example due to a short-term loss of income, or a temporary medical condition – calls for one set of solutions, such as a partial payment plan or special forbearance. A lasting problem, on the other hand, calls for other, more far-reaching remedies. A permanent job loss, divorce, or a mortgage payment that’s reset to a much higher monthly payment level may call for more permanent solutions, and in some cases it can mean the owner has to give up the house. Even if the borrower owes more on the house than it’s worth in today’s market, there are ways to handle the situation that leave all parties to the loan better off than a foreclosure. That’s the place you want to help your client get to. The borrowers will likely have some paperwork to fill out and documents to provide. Of course they help their own cause by handling the paperwork requests expeditiously, completely, and honestly.
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3. Talk to them about some of The options they have The decision of how to handle the situation will be something the borrower will work out with the lender, and you may not have a specific role. But, given that your clients have reached out to you, you can help them understand what sort of options their lender may outline. Loan modifications, loan assumptions, deed-inlieu transactions, and short sales are options that may be available to your client that will avoid foreclosure.
LOAN MODIFICATION
A loan modification, in which the lender restructures the debt, keeps your clients in their home. Of course, the borrower will have to demonstrate the ability to make the restructured loan payments. If there’s serious doubt that the borrower could keep up with the new monthly payment, the lender may not offer a loan modification.
LOAN ASSUMPTION
A loan assumption means that a qualified buyer takes over the loan payments at the loan’s current terms. The original borrowers will have to move, but without the serious consequences of a foreclosure. A deed-in lieu means that the borrower voluntarily turns over the title to the home to the lender in turn for getting released from the debt. This approach needs to be worked out between the borrower and the lender – just unilaterally “sending in the keys” won’t necessarily keep the lender from pursuing the borrower for making up any deficiencies.
SHORT SALES
Short sales have become a popular solution, but few borrowers are aware of how a short sale works. In a short sale, the owner owes more on the house than it’s worth, and so selling the property leaves the borrower short of the funds necessary to pay off the outstanding mortgage balance. But, instead of going through the uncertainty and cost of a foreclosure, the lender accepts the proceeds as payment and writes down the shortage as a loss. And you, as a real estate agent, have a role to play in finding a qualified buyer for the property.
A homeowner who finds himself owing more to the bank than the house is currently worth doesn’t automatically qualify for a short sale. Moreover, a short sale may require a borrower to provide cash at closing or to sign a promissory note to pay back some money as part of transaction. These conditions are made at the discretion of the lender. Avoiding a “financial penalty” generally means that the borrower will have to prove financial hardship, such as the loss of a job, a divorce, or adverse medical conditions. A borrower who can’t prove financial hardship – for example, if he has significant income or other assets – will find the lender less likely to accept a short sale. The chances that the lender will agree to a short sale also get much lower if the property is a second home or an investment property. Your client should also recognize that other lien holders in the property have a stake in the sale and may not release their lien on the property until the sellers sign a promissory note agreeing to pay back a portion of the loan. For example, if there’s a second mortgage on the property, the holder of that lien will need to agree to the settlement conditions. Others liens on the property may also preclude a short sale – construction liens, child support liens and federal tax liens may block a short sale and, not surprisingly, continue as obligations to the borrower after foreclosure.
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CONCLUSION
With sound financing, homeownership has proven itself to be a source of long-term financial security for generations. And that’s true, even in today’s financial environment. But the adjustment to lower home prices and the recession has turned many borrowers’ mortgages to millstones. Helping these borrowers make the necessary arrangements through a loan modification or a short sale before they’re forced to go through foreclosure will greatly ease their burden and aid our communities. Robert D. Barr is an industry economist and a vice president in the Sales & Services Systems Office of Wells Fargo Home Mortgage.
Additional Resources for Borrowers Wells Fargo offers assistance for homeowners at www.wellsfargo.com/homeassist The federal government provides information about foreclosure at www.HUD.gov/foreclosure The Mortgage Bankers Association’s Foreclosure Prevention Resource Center is available at www.homeloanlearningcenter.com/YourFinances /ForeclosurePreventionResourceCenter.htm The MBA also offers Twelve Things to Know When You Call Your Lender at www.homeloanlearningcenter.com/12things.htm The names of local HUD-approved credit counseling agencies are available at (800) 569-4287 Homeowner's HOPE™, a free counseling service provided by the Homeownership Preservation Foundation, is available 24/7 at 888-995-HOPE or at www.995hope.org
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NETWOR KING OPPORTUNITIES EX T ENS I V E R EO/S H O RT SA LE PRO GR A M INDUSTRY LEADERS AND POLICYMAKERS F O R E C L O S U R E P R E V E N T I O N I N F O R M AT I O N
R EG I S T R AT I O N N O W O P E N w w w.areaa.org/convention
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