a | r | e Summer 2010

PHIL BRACKEN

INDUSTRY VETERAN STEPS UP TO THE PLATE

THE HOPE AWARDS

RECOGNIZING LEADERS IN MINORITY HOMEOWNERSHIP

OBAMA’S

POINT MAN

ON HOUSING FHA COMMISSIONER DAVE STEVENS TALKS HOUSING RECOVERY

SUMMER 2010

home

likes being prepared.

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and your clients can close on time.

• Clarity Commitment™— a one-page loan summary written in plain language so your clients understand what they’re getting.

• Home Loan Guide — located at bankofamerica.com/homeloans, it’s an interactive experience that helps prepare your clients by guiding them through affordability, loan options, and process.

• Affordable Loan Programs — an array of services that help home buyers with down payments and information to make better loan choices, along with mortgage professionals who work with your clients to establish credit qualifications.

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Bank of America, N.A., Member FDIC. Equal Housing Lender. 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. © 2010 Bank of America Corporation. AR91236 | HL-112-AD

SUMMER 2010 VOLUME 2, ISSUE 2 ON THE COVER: FHA Commissioner Dave Stevens, photo by Rodney Choice / Choice Photography

FEATURES 12

Obama’s Point Man on Housing

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Phil Bracken

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HOPE Awards

FHA Commissioner Dave Stevens talks housing recovery and life after the Administration in this exclusive interview

Industry veteran steps up to the plate and offers an insider perspective on crisis intervention

Nearing its 10th anniversary, we look back on the program and how it has recognized leaders in minority homeownership

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CONTENTS 4 6

Letter from the Editor

Preparing for the future with The EDGE and the AREAA Education Foundation

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Multicultural Real Estate and Policy Conference

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Tools to Help Prepare Your Clients to Buy a Home with Confidence

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The Power of AREAA

Advocating for Change to Benefit Nevada’s Owner Occupant Homebuyers

By John Fukuda

Introducing The EDGE

The next wave is coming, the young AREAA professionals are ready to lead the way

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Fair Housing Workshop

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San Diego Home Clinic

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Reception at REOMAC

Raising Your Commercial IQ

Using cap rates to value income properties

By Neil Osborne

New Chapter Profile: AREAA Silicon Valley

A group of young, promising leaders pull off an impressive launch event in San Jose

Six Questions with Kevin Chin, CCIM

Commercial expert gives tips on crossing over from residential

By Glenda Gabriel

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By LuAnn Shikasho

Recap in photos

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AREAA Dragon Profile: Andrew Lee, chapter leader and top producer

Contra Costa Association of REALTORS® promote fair housing with a little help from John Trasviña

By Ellen Osmundson

AREAA San Diego hosts a foreclosure prevention event, serving close to 100 families

By Shonee Henry and Albert Salon

Photos from the event hosted by AREAA Orange County in Palm Desert

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ADVERTISERS AREAA Dragons

Inside Back Cover

Bank of America

www.bankofamerica.com/homeloans

Inside Front Cover

Betty Sun Wong, REALTOR

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The EDGE

32

MongoFAX

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NAHREP/AREAA Real Estate & Marketing Conference

Back Cover

Prudential

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www.AREAADragons.org

www.Prurealty.com/BettySunWong

http://areaa.org/EDGE

http://areaa.org/national/areaamongofax.pdf

http://areaa.org

www.Prudentialrealestate.com

FROM THE EDITOR Calling All Future Leaders In Asian cultures, age is associated with knowledge and wisdom, and it garners well-deserved respect and gratitude. Indeed, age and time gives everyone a meaningful perspective on life, business and family. It helps us separate what is important from what seems important. As I get older, I better understand the wisdom of the past. I guess that’s because every day I have a bigger foot in the past then in the future.

As much as we can learn from the past, we need to look to the future for ideas and solutions. The young professionals in our industry embrace life and work very differently. They see business relationships as an extension of their social networks that help strengthen their personal goals while creating and building business opportunities. They are quicker to move past cultural and ethnic barriers, and embrace the diversity that is fundamentally shifting our communities. They leverage technology and networking tools to reframe how relationships are built and maintained.

I believe the way in which real estate is conducted will change fundamentally because this new generation of leaders will demand more transparent and instantaneous solutions. So, the more I see the young AREAA leaders the more energized I feel about the future. Clearly, these individuals cannot be relegated to picking up where some of us will leave off when we are ready to retire.

After all, Steve Jobs and Steve Wozniak were mere kids when they created Apple computers. Martin Luther King was in his 30’s when he altered the course of history paved by bigotry and hate. Maya Lin was not even 20 when she created the Vietnam War Memorial – one of the most enduring and powerful symbols for a nation gripped by the loss of its sons and daughters.

Youth is powerful and dynamic – and these young leaders will fundamentally change the way we live and work. To ensure that there is this fertile ground within AREAA, we need to be a good example for our future leaders by being professional and trustworthy. We need to do more to directly nurture these individual’s professional development.

AREAA Chairman John Fukuda did something this year that will pay dividends for our organization for generations to come. By helping to build and encourage the growth of The EDGE – a young professionals network within AREAA – John is building a platform for future leaders. While neither John nor I fall within The EDGE age bracket any longer, this group within AREAA keeps us connected to what is coming down the pike and gives us hope about our industry.

To further encourage the development of future leaders, the AREAA Education Foundation will be launched this summer with the support of our past Chairs,

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Allen Chiang and Allen Okamoto. This new and separate non-profit entity will help create leadership and executive training programs for AREAA’s young professionals at some of the top Universities in the nation. These are some of the things AREAA is doing to develop our young professionals and future leaders.

If you look at AREAA today, you will see young professionals taking on leadership positions throughout the organization.

Just look at our chapters, many of them headed by individuals who will be making a difference in our business for the next 20 to 30 years. People like Andrew Lee, Michelle Chang, Max Kim, Christine Kim, Aaron Yu, Ivan Choi, Kara Okamoto, Heather Chong and so many others are making it happen for AREAA today. It is terrific to see the youthful energy helping to shape AREAA as we head into the future.

Whether you are young or just young at heart, there is a place for everyone at AREAA.

Jim Park Editor-in-Chief a | r | e Magazine

SUMMER 2010 VOLUME 2, ISSUE 2

EDITOR-IN-CHIEF Jim J. Park C R E AT I V E D I R E C TO R Praveen K. Sharma EDITOR Dan T. Shanyfelt EDITORIAL BOARD Eva Hom Diana Buonincontro John Lee Fred Underwood

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://areaa.org. Š2010 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. Direct article submissions and advertising inquiries to: Praveen Sharma | psharma@areaa.org Office: Asian Real Estate Association of America 5963 La Place Court, Suite 312 Carlsbad, California 92008 760-918-9162 Phone 760-918-6924 Fax

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Committed, Results Oriented and Accountable BETTY SUN WONG, CRS, PMN DRE # : 00932814

Broker Associate

Serving San Francisco and the Bay Area 2001 CRS Realtor® of the Year - Northern California Chapter 2001 WCR Realtor of the Year – San Francisco Chapter ®

2007 President – Chinese Real Estate Association of America Chairman’s Circle, Top 1% Across Nation – Prudential Real Estate Chairperson for Annual Fund Raising Committee at Lick Wilmerding H.S. – Raised Over $500,000 Since 2005 Trilingual – Speaks Mandarin, Cantonese, & English.

Understands Cultural Differences and Works Well With People

Chairman’s Circle #1 In Sales and Listings San Francisco - Cathedral Hill Office

Multicultural Real Estate and Policy Conference 2010 THE COLOR of the HOUSING RECOVERY Creating a Sustainable Path to Minority Homeownership

The Asian Real Estate Association of America (AREAA), the National Association of Hispanic Real Estate Professionals (NAHREP) and the National Association of Real Estate Brokers (NAREB) convened at the Ritz-Carlton in Washington, D.C. on March 4th and 5th, 2010 for the Multicultural Real Estate and Policy Conference.

The event brought together policymakers, industry leaders and real estate professionals serving America’s multicultural real estate markets. Speakers included: FDIC Chair, Sheila Bair; House Financial Services Committee Chairman, Representative Barney Frank (D-MA); Representative Mike Honda (D-CA); FHA Commissioner, Dave Stevens; Assistant Secretary for Fair Housing and Equal Opportunity, John Trasviña; and NAR Chief Economist, Lawrence Yun. During the event, the three trade groups shared their recommendations to address the housing crisis in a joint five-point plan. For more info visit: http://areaa.org/advocacy.php

Prudential California Realty One Daniel Burnham Court Suite #260C San Francisco, CA 94109

1-415-929-5820 ext. 206 Cell : 1-415-298-7373 Fax : 1-415-567-8069 Email : BettySunWong@Yahoo.com Website: www.Prurealty.com/BettySunWong

PHOTOS BY CHOICE PHOTOGRAPHY

1. SHEILA BAIR 2. VINCENT WIMBISH, TINO DIAZ, SHEILA BAIR, JOHN FUKUDA 3. DAVE STEVENS 4. KATHY TSAO 5. EVA HOM 6. WELCOME RECEPTION AT THE HOUSE OF SWEDEN, SPONSORED BY THE NATIONAL ASSOCIATION OF REALTORS速 7. BRIAN MONTGOMERY, FRED UNDERWOOD, VINCENT MALTA 8. SHEN-YI MICHELLE CHANG, GEREMY YAMAMOTO, MAX KIM, KAYIN HO

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1. BARNEY FRANK 2. ALLEN OKAMOTO, ALLEN CHIANG, EMILY MOERDOMO FU, JOHN FUKUDA, MIKE HONDA, KENNETH LI, JOHN WONG, JIM PARK 3. KENNETH LI 4. GLENDA GABRIEL 5. JOHN TRASVIÑA 6. MIKE HONDA 7. JOHN FUKUDA, ALEX CHAPARRO, VINCENT WIMBISH 8. JOHN LEE, KIM TRUEHART, HEATHER CHONG, WINNIE CHOW DAVIS, ADRIANA GUERRERO, JOHN WONG

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Tools to Help Prepare Your Clients to Buy a Home with Confidence

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e’re in the midst of the traditional spring home buying season, when potential home buyers turn to real estate experts to help them in the search for a home that’s right for them. To help you and your client in their search, Bank of America Home Loans recently unveiled an enhanced online Home Loan Guide designed to empower homebuyers by creating more transparency and clarity in the lending process. This website has innovative tools to educate consumers about the home buying process, budgeting, determining affordability and choosing a home loan they can comfortably afford.

Bank of America’s research indicates that customers use the Internet to gather information and evaluate home loan options. The online home loan guide is now accessible at www.bankofamerica.com/myhome and includes interactive tools and calculators, the ability to save worksheets and information for use at a later date and a new local mortgage loan officer finder. The guide is organized into six easy-to-understand steps: Seeing if homeownership is right for you Setting a budget Understanding how your credit score affects you Saving for a home Choosing the right loan Understanding and completing the loan process

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By Glenda Gabriel

The new site complements Bank of America’s home buyer education efforts, which are increasingly important in today’s complex real estate environment. By partnering with more than 550 home buyer education and counseling providers, we’re helping ensure our consumers have the information they need to make informed, confident decisions.

Expanded Clarity Commitment® Home Loan Summary One example of Bank of America's commitment to transparency throughout every step of the home loan process is our Clarity Commitment, an easy-to-understand, one-page summary of key terms of a homebuyer's loan. Since April 2009, more than 1.18 million consumers have received a first mortgage Clarity Commitment.

As a result of suggestions from both Bank of America associates and its customers, the Clarity Commitment summary's format and order has been changed to now complement the newly revised U.S. Department of Housing and Urban Development's Good Faith Estimate. The Clarity Commitment provided after application will now include the interest rate lock expiration date and information about closing costs.

The Clarity Commitment is now available for most Bank of America home loans, including home equity loans, reverse mortgages, and mortgage modifications completed through the federal government's Home Affordable Modification Program.

Helping Distressed Homeowners While many consumers are taking advantage of the home buying season, we recognize many homeowners are experiencing difficulty as they try to stay in their homes.

Providing solutions to distressed homeowners has been and remains a central focus for Bank of America, and we have been at the forefront of industry efforts. From January 2008 through March 2010, we’ve helped more than 800,000 customers with a home loan modification or trial modification under the Home Affordable Modification Program (HAMP) or through our own proprietary programs.

Bank of America, N.A., Member FDIC Equal Housing Lender © 2010 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.

Here are a few important things for your clients to remember if they’re having trouble with their mortgage payments, or think they could be soon.

Call your lender right away if you’re experiencing financial difficulty or anticipate that you could be soon. The sooner you reach out, the sooner they can try to help. Help is available through a number of resources, but the one that’s right for you depends on who your lender is, how much you owe and your current payment status. Contact Bank of America Home Loans at 1.800.669.6607 or visit http://homeloanhelp.bankofamerica.com The more information you collect before you call, the faster your lender can determine your eligibility for assistance and the best available solution for you. Be prepared to provide the following information when you call: Your loan number and property address Bank statements from the past two months, plus your most recent tax returns Recent income documents, such as your pay stubs List of current expenses Brief explanation of your current financial situation

HELPING HOMEOWNERS

Bank of America is also providing credit card customers with tools that respond to their needs for simplicity and transparency.

In December, Bank of America mailed a Credit Card Clarity Commitment – a one-page summary of each customer's card rate, fees and payment information – to 40 million consumer credit card customers.

Glenda Gabriel

Neighborhood Lending Executive Bank of America Home Loans As the Neighborhood Lending Executive, Glenda Gabriel is responsible for identifying opportunities to drive homeownership among low-to-moderate income borrowers, minorities, immigrants and underserved communities across the nation.

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Obama’s Point Man on Housing FHA Commissioner Dave Stevens Photos by Choice Photography

new kids on the block – no doc, stated-income mortgage products.

Then the big crash happened in the real estate market. Without FHA, the crash would have been deeper and more painful.

With about half of the US Department of Housing and Urban Development’s resources and staff, the FHA Commissioner directly controls and oversees lending and housing policy, and has grant-making authority related to housing issues that no other appointed individual has in the Federal Government. This fact is even more significant today. Amid one of the worst housing crises since the Great Depression, the current FHA Commissioner has been at the center of it all.

Not long ago, everyone in the industry was questioning the relevance of FHA. In fact, its market share dropped to about three percent of the total mortgage market by mid-2000. Subprime and other aggressive products grabbed the market share from FHA and everyone became enamored with the

In early 2009, Dave Stevens became the unlikely candidate for the job of FHA Commissioner. He had neither run a government agency nor held a political position in the past. Despite this, Stevens walked into the position with unparalleled knowledge of the real estate and mortgage business. With his years as a top executive at lending institutions, a government sponsored entity, and a large regional real estate firm, Stevens brought more practical, on-the-ground knowledge than any previous commissioner. With FHA’s current market share up to nearly a quarter of all originations in the nation, Stevens’ know-how is not only needed, it is imperative. a | r | e had an opportunity to spend some time with Dave Stevens this Spring while he was working to stabilize the FHA fund and create a federal response to the foreclosure crisis.

There is no doubt -- Stevens is the “Point Man” for the Administration on real estate finance matters. He is one of the architects of the government’s response to the foreclosure crisis. His success in his current role is essential because his efforts will directly impact our business and the people we serve for years to come.

What are your priorities in terms of keeping FHA strong and vibrant?

First and foremost, the capital reserve issues facing the single family residential business clearly stand out and are the most public. When we put policy changes in place to help replenish capital levels as required by law, we need to be diligent to balance capital requirements with the needs of the overall housing market and not overcorrect and blunt FHA’s mission.

FHA has been a dominant product among minorities broadly, however, FHA has traditionally had limited penetration in the Asian community due to loan limits, a high rate of small business ownership and limitations with regards to income documentation.

How can FHA become more relevant to Asian homebuyers?

Stevens speaks at THE COLOR OF THE HOUSING RECOVERY conference, March 4, 2010 in Washington, D.C.

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With your personal successes in the business environment, what inspired you to join the Administration?

knew I would regret the move, looking to help an administration that I admired with a crisis at hand.

I had a long career and great success with a variety of companies at senior levels. I was a big supporter of this President coming into office and, though I didn’t work on the campaign while running Long & Foster, I was a contributor and admirer of the Administration. In early February, I received a call from Secretary Donovan. I thought he wanted my advice as a business leader and opinions on FHA, as we were in the middle of the biggest housing crisis we’d faced in a lifetime. I gave him a lecture on the risks FHA was facing. It was a Friday afternoon and I remember driving home, calling my wife and saying “…he’ll never call me back again.”

And then I got the call the next week.

It was a huge decision, leaving a large company that depended on me during a time of crisis. If I did not accept, I

Your team at HUD has been built with a lot of diversity and private sector backgrounds, what inspired you to go this route?

I was happy to see the incredible knowledge and intellectual backgrounds of the career staff at HUD. The skill sets are pretty deep below the senior team. In the past, HUD had a tendency to bring in political types and friends of the Administration. Given the crisis facing FHA with capital issues, I wanted to ensure we had the best team for the job. I didn’t really look for diversity, I know my strengths and weaknesses and I looked for those that could complement me well. I also demand from those close to me that they challenge me.

Having spent my first 17 years in the industry working for World Savings in the Bay Area, where a large portion of the client population was from the Asian community, I understand it is very much a different business climate than what FHA has served over the past decade. Today, FHA is the most leniently underwritten product in America and while it is all full doc, the rest of the industry has migrated to full doc as well. That’s a challenge, particularly for self-employed borrowers or people who are paid in a non-traditional way from an income standpoint. While some of this may simply be the cycle we’re going through and pendulum swinging in the opposite direction to protect against risk, there are a couple of things that we should be aware of: FHA is the only place to buy a home with no large down payment, and that is critical. With the passing of the Housing and Economic Recovery Act of 2008 (HERA), we can now qualify more borrowers with extended loan limits above $600,000 and temporarily over $700,000, helping high cost markets.

From a qualification standpoint, qualifying ratios tend to be more flexible than Freddie Mac or Fannie Mae. This won’t completely replace the low doc and no doc programs that were previously available, though it can help compensate for variability and inconsistencies of income. In addition, unlike Loan Prospector (LP) or Desktop Underwriter (DU), FHA loans can be manually underwritten, allowing for more flexibility.

I would also like to express that the prevalence of trained, experienced lenders in high cost markets where FHA didn’t have high volumes of production was limited, particularly in San Francisco, Los Angeles, New York City and even Washington, D.C. The mortgage professionals didn’t know how to originate FHA business and there’s been a scramble to help them learn. It is critical that AREAA members know how to originate the product and this extends beyond loan officers to real estate professionals as well. Trainings at chapter events are a great way to facilitate the education process.

Is there any FHA assistance for immigrants and non-English speaking consumers in particular?

We believe the new RESPA guidelines have a disproportionate benefit to non-English speaking consumers because they require more disclosures and transparencies for these homebuyers and owners. The same with the SAFE Mortgage Licensing Act, it adds an additional layer of protection for consumers so loan officers cannot prey on those who are not as familiar with financial terms.

We are also rolling forward with an alternative credit program, introducing a new way to score typically non-scorable borrowers. This should benefit many “thin file” borrowers, immigrants and new Americans. A provision to test this program was

Stevens addresses questions from attendees of the AREAA/NAHREP Real Estate and Marketing conference in Las Vegas, October of 2009

passed into law two years ago, however, with no funds appropriated at the time the pilot program was not implemented immediately.

Let’s switch gears to home retention and REO, what kind of progress has been made recently?

There are a lot of initiatives to bring stability back to the market. Regardless of monthly numbers produced, we are still concerned about the large number of loans in foreclosure. The rollout of the Home Affordable Modification Program (HAMP) for FHA has resulted in over 120,000 modifications. Though it is not being promoted, that figure puts us ahead of schedule. We planned to have 2.5 to 3 million modifications by 2012.

Unemployment and negative equity are key points of emphasis. In markets like Arizona, California and Nevada, the vast majority of homeowners have

negative equity. The first time homebuyer tax credit and the Fed purchase of mortgage backed securities have helped the supply side and assisted in getting foreclosures sold.

We can expect to hear more from the Administration in coming weeks and months to address these issues as well.

You mentioned negative equity, whatever the number is, it’s big. Loan modifications alone will not solve all the problems. How will government programs play out in the market?

Depending on the source, anywhere from 11-15 million homeowners are faced with negative equity. HAMP will help some, though not all will need a solution. Those numbers include homeowners that are at 101% loanto-value and greater. Based on market forecasts, homeowners closer to the 100% level will come out of their negative equity position in the next three years. In a reasonable way you

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could say you don’t have to address all 11-15 million homeowners, just the distressed portion that won’t be solved by the economy moving forward.

A decision will be made based on each borrower’s ability and willingness to pay and depending on those factors, alternatives will be considered.

HAMP can be used to modify the homeowner’s payment if their income is stretched. The 2nd Lien Modification Program (2MP) complements HAMP to modify 2nd liens. A reduction of the principal balance might also be an option. If the homeowner is unable to keep their home under any circumstance, then the solution is to look to a short sale.

was basically delaying the inevitable.

Still, the program guidelines are biased towards owner-occupants, who have exclusive rights to bid on HUD REO for the first 30 days.

FHA is such a big part of the market, 25% of originations at the end of last year, how long can that last and what is the future? Where will FHA and Dave Stevens be in five years?

In looking at absorption, unfortunately, the properties are in disrepair.

Potential owner-occupants may not have the ability to complete the necessary repairs so we wanted to enable investors to do the repairs and get the properties ready for a new owner or renter. There is a 20% cap on gains that investors can realize when they sell the property. Foreclosure drags down value and we don’t want to eliminate opportunities for investors.

We’re watching the numbers very closely to ensure we will be able to stay ahead of any coming trends.

FHA plays a unique role and everyone in America realizes that we’d be in a lot of trouble in the housing recovery if FHA didn’t play this role. We will continue to play a large role until we’re clearly in recovery. Eventually, private investors will emerge and FHA will shrink back to a normalized level.

FHA is unhealthy at 30% of market share, and it’s also unhealthy at 3% of market share. A normalized level is in the mid-teens. We’ll end up there and that’ll be the sign that health has come back to the market.

There is a great housing economy to come, so I want to play a part in that in the private sector when this is over.

The Federal Housing Finance Agency program, being piloted in the five states hit hardest by foreclosure, is an opportunity to test another solution.

We’re spending extraordinary amounts of time with the Treasury and other government agencies to make sure we understand the problem and find solutions.

HUD-owned REO has a tremendous impact on community stabilization.

With so much REO inventory hitting the market, what are you doing to make sure it doesn’t just benefit investors or destabilize the markets?

This is an important issue with over 7,000 foreclosures per month with the worst yet to come for REO inventory.

Foreclosure numbers have almost doubled from a year ago. With concern about impending REO, I suspended the anti-flip rule because it

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What we’re learning is that not everyone should have owned a home in the last decade. Some of this property will be repaired and managed by quality landlords to create safe, affordable homes for renters.

The Neighborhood Stabilization Program (NSP), which allows communities to purchase and redevelop abandoned or foreclosed properties, is another way we are promoting revitalization. Also, HUD’s Dollar Home initiative is helping to stabilize neighborhoods impacted by foreclosure by offering local governments an opportunity to purchase and repair vacant properties. Many potential avenues to stable homeownership and working with cities are being explored.

As for me personally, I’m a presidential appointee and I have been clear about wanting to help in the housing recovery. I will return to the private sector once I’m done. In pure demographics, the echo boom will be several million people more than the baby boomer generation and much of that generation is about to enter their peak years for homeownership. There is a great housing economy to come, so I want to play a part in that in the private sector when this is over.

No one works harder in housing than the people in this building. We haven’t had a weekend off in as long as I can remember. This is a great group to be working with.

With that, Dave Stevens ended the interview and went off to his next meeting. A man on a mission to tackle the crisis head on with all the tools and resources FHA has to offer.

That’s the power of AREAA! I first used this phrase at my installation at our National Real Estate and Marketing Conference in Las Vegas last October and I continue to employ it on a daily basis. There are so many aspects and initiatives of AREAA to which these five little words apply, but none more so than in the story that follows.

JOHN FUKUDA AREAA CHAIR

For the past six months, I’ve had the once-in-a-lifetime opportunity to travel the country representing the Asian Real Estate Association of America. I’ve been asked hundreds, if not thousands, of questions about the Association, but one of the most frequently asked questions involves the legislative power or influence that our non-profit organization wields, both locally and nationally.

As an organization with thousands of

member-practitioners nationwide and local chapters in 20+ major metropolitan cities by the end of the year, it’s a question that deserves acknowledgement and an illustrative response.

In February of 2010, as I prepared to travel to Washington, D.C. for AREAA’s joint Legislative and Policy Conference with the National Association of Hispanic Real Estate Professionals (NAHREP) and the National Association of Real Estate Brokers (NAREB), I began to identify the politicians from my state - Nevada - that I would like to meet with in-person while in D.C. With the help of the Las Vegas chapters of AREAA and NAHREP and my good friend, Alex Garza, we were fortunate to get appointments to meet with Senate Majority Leader Harry Reid (D-NV), Senator

John Ensign (R-NV), Congresswoman Shelley Berkley (D-NV), Congressman Dean Heller (R-NV) and Congresswoman Dina Titus (D-NV).

The contingent from Las Vegas included members from AREAA and NAHREP and we met privately ahead of the individual meetings to formulate a game plan. It was critical in our limited time with our elected officials to have a singular purpose and a united voice. Since we are all real estate practitioners doing business primarily in Nevada, we have a distinct perspective on our industry and are passionate about serving our respective communities. We decided to highlight the plight of first-time and owner-occupied homebuyers (FTOHB); specifically the immense difficulty that this demographic is experiencing in getting an offer accepted to purchase a home.

In Las Vegas, as in many markets around the country, FTOHBs are being outbid in their pursuit of suitable properties in which to live.

If the bidding exceeds the appraised value of the subject property, then it’s impossible for that buyer to obtain that home, especially if they are utilizing a government-backed loan product. Investors, especially those paying with cash, have a distinct advantage attributable to their ability to pay whatever they deem appropriate for a given property without restrictions. The net result is FTOHBs are not able to procure and live in a house for which they qualify. And hundreds of families are left to rent their housing.

We met with Senator Reid at his office in the Capitol building and described in great detail the plight of the FTOHB in Nevada, and across the country. We requested that he take focused and directed action on behalf of his constituents in Nevada, specifically the Asian and Hispanic FTOHBs that our group was in Washington, D.C. to represent. We asked that he strongly encourage the GSEs, Fannie Mae and Freddie Mac, to employ a full 30-day First Look program to allow FTOHBs the opportunity to view and present offers on properties offered by Fannie Mae and Freddie Mac-approved listing agents before opening up the bidding to investors or buyers of second homes. This would allow FTOHB to compete solely with other buyers that shared the same predicament as theirs. At the time of our meeting, Fannie Mae employed a 15-day First Look program nationwide.

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Senator Reid proceeded to draft a letter outlining our requests to Mike Williams, CEO of Fannie Mae and Charles Halderman, CEO of Freddie Mac:

“I write today to encourage you to help Nevada families trying to buy a home by establishing a grace period before allowing investors to purchase properties repossessed by Fannie Mae and Freddie Mac. Over the past few months, I have heard from a number of Nevada home buyers and housing professionals about their frustrations over losing home auctions to competing investors. As you likely know, these investors often pay cash for these properties, making it difficult for Nevadans who need financing to close the transaction – and who intend to occupy the home – to compete. I believe a grace period would level the playing field for Nevada families seeking affordable homeownership…”

Reid goes onto say: “But the more recent trend of lenders favoring cash offers for foreclosed homes, even those below the listed price, from investors instead of home buyers with financing who intend to live in the home alarms me because it denies families without sufficient cash a fair opportunity to successfully bid…One report said the percentage of all-cash transactions in Las Vegas rose to nearly 46 percent in December 2009, which is up from 33 percent in the prior year. This figure is more than double the national average.”

Reid concludes his letter: “Fannie Mae’s ‘First Look’ program, which allows a 15-day grace period for existing tenants, government agencies, and non-profit organizations to bid on repossessed properties, has been a good first step in leveling the playing field. I believe extending this period to 30 days and including buyers who intend to occupy the home would provide Nevada families with a more realistic timeframe to bid on these properties and foster a fair and more competitive market in my state.”

In essence, Senator Reid not only understood the critical situation facing the Nevada FTOHB, but also communicated a fair and reasonable solution. Each of the in-person meeting participants received a copy of the letter and celebrated this significant step in the right direction, but the best was yet to come…

Less than a month after speaking with Senator Reid, his office forwarded to me a letter dated April 1, 2010 from Michael Williams, CEO of Fannie Mae and addressed to The Honorable Harry Reid.

In this letter, Williams writes:

After the high-fives subsided around my office, there was time to reflect on the events of the previous month.

ties that we serve a fair chance to obtain the housing that they desire and can afford.

First, we would not have been able to secure the exclusive in-person time with Senator Reid without the powerful backing of the AREAA and NAHREP monikers.

“Following our analysis, we have determined that extending the First Look grace period nationwide would cost approximately $60 million. However, given the unique market conditions in Nevada, we found it would be cost-neutral to extend the grace period from 15 to 30 days across the state. Given that Nevada has been hit so hard by the foreclosure crisis, I am pleased to report that we will extend the First Look program across the state as a pilot initiative that could later be replicated across the country. Our staff has been in touch with your office regarding this action.”

Second, we received some extra momentum from our local Las Vegas Reid representatives, who regularly attend our monthly AREAA luncheons and networking mixers.

We are tracking diligently the progress of the buyers that we collectively represent to determine if the changes to the First Look program are having a substantive effect on the housing market in Nevada. We are certain they are and that they will continue to positively impact our industry.

Although the FTOHBs are not getting this type of first look treatment from all institutional sellers, the Fannie Mae 30-day First Look program is one giant step in the right direction to securing an adequate supply chain for creating sustainable and responsible homeownership to the communities that we serve.

“We appreciate that you have brought this issue to our attention and given us the opportunity to extend the First Look initiative in Nevada. Our staff is prepared to help your office coordinate the announcement of this action if you wish”

And lastly, we reached to the highest levels of our legislative process to an elected official who could make a difference. In summary, we were instrumental in giving the communi-

Third, we were committed to championing an issue that affected the communities that we serve, specifically the minority FTOHB. We spoke passionately and directly to this point, leaving no miscommunication to chance. This community service is the foundation of AREAA.

And that is the power of AREAA!

S E N ATO R H A R RY R E I D ( D - N V ) AND AREAA CHAIR JOHN FUKUDA

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Phil Bracken

INDUSTRY VETERAN STEPS UP TO THE PLATE

Interview by Jim Park Photos by Choice Photography Phil walks into the room and declares, “How are you brother?” and gives me a big hug. Phil is passionate about his work and life. When you talk to him, one can feel the intensity in his eyes and hear the depth of his conviction and compassion. Some of that comes from his days as a professional baseball player. Some of that comes from growing up as one of the few white kids in a predominantly minority community. Much of it is just how Phil is built.

Phil Bracken has been in the housing finance business for more than three decades and is currently one of the top executives at Wells Fargo. His understanding of the housing finance system is unmatched as well as his network of friends and colleagues in the real estate community. I joke that anyone and everyone who is anything in the business has worked for Phil at some point in their career.

had an opportunity to visit with Phil Bracken and ask him about how the current policy environment is impacting the real estate business and what the future holds for Asian American homebuyers.

Why should AREAA members focus on the legislative and policy debates that are taking place in Washington?

This economic crisis has put housing and financial services at the center of the public policy and business policy debate.

Whether it’s deliberation in Washington or deliberation in state and local arenas, it is imperative that AREAA chapters and members weigh in on these issues.

So many times, legislation or regulation is considered and even passed without understanding the full consequences.

An example of this is the current debate on bankruptcy “cramdown.”

On the surface, it may appear

beneficial to allow judges the authority to reduce the mortgage balance on a primary residence for a consumer facing bankruptcy. But if that change drives more people to file bankruptcy, it could severely strain an already overburdened court system.

In addition, there’s concern in the industry that this change would cause investors in mortgage securities to raise prices on all loans for future homeowners. As a result, policy makers need to carefully consider the potential impact to the overall future of the housing market and the economy as they consider this issue.

AREAA members, therefore, need to understand the potential impact of any legislation or regulation on mortgage and housing issues and take aggressive personal action to make their voices heard. It’s also a strategic imperative that AREAA members working in unison with other

industry trade groups – act with “one vision and one voice” so there is consistent input on policy issues. This function of making your voice heard is no longer optional. It is a necessity.

When it is all said and done, how will the industry change? And will there be sufficient controls placed on the market to avoid the crisis we are going through?

As we emerge from this crisis, we should all be hopeful that actions taken by federal, state, or local entities will help prevent a similar crisis from occurring in the future. But we must also hope that any reforms that are enacted will provide a balance for consumers and industry participants alike.

Reform efforts should be measured and undertaken with a full understanding of the problems we are trying to fix or prevent. In late 2009,

Congress created the Financial Crisis Inquiry Commission (FCIC), and essentially charged it with the task of determining how we got here; how we get out of here; and how do we prevent coming back here again. The commission is due to report back to Congress in December and hopefully its report will be considered fully before broad, sweeping changes are considered.

We know certain things were broken and should not wait to be fixed.

Without fixing some of these glaring inequities, we will not repair trust in the housing finance system. As an example, we know there were market participants allowed to compete with little if any supervision. To that, we must ensure that there is a level playing field where all market participants are appropriately regulated, examined and supervised.

Taking action to ensure that should not have to wait on the findings of the FCIC. In addition, Wells Fargo has advocated for years that the industry be required to operate with principles that center on fair and responsible lending. One thing is certain; the free market fundamentals on which our country and our economy were founded created the best country in the world with opportunity galore.

But the free market system, in order to operate through all economic cycles, requires appropriate business capital standards and Investors ultimately leverage restrictions that want to know the help prevent radical or loans they’re buying unscrupulous behavior. That are sustainable to means when we emerge from the customer. this crisis, we must have “free market” entities that are well capitalized and operate in a safe and sound manner, providing fair and responsible services to consumers.

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One final point: housing has been the key to generational wealth in America, and we must ensure there remains a passion for homeownership. That’s going to require much work from all of the industry

participants, because the economic and cultural value of homeownership is – for the first time in more than 50 years – being called into question as a result of this crisis.

Is the heavy involvement of the federal government in housing a good thing?

There has always been and should always be a role for government with regards to housing policy. The function of FHA, as it was constituted in 1934, is as important today - if not more so - than the day it was created.

The FHA and other government initiatives have played a vital role in extending credit to certain Americans who otherwise might not have been served by the private sector. Government involvement in housing through FHA has paid huge dividends to our communities. Similarly, the first mortgage interest tax deduction proved to be an incentive to encourage homeownership.

But government intervention in other areas of housing has produced results not otherwise intended. The current status of Fannie Mae and Freddie Mac and the costs incurred by the taxpayers to support these enterprises serve as an example of how government involvement can be problematic.

Modest government involvement – focusing on fair and responsible ways for low- to moderate-income and ethnically diverse consumers to obtain and sustain homeownership – can be a good thing for lender, agent and consumer alike.

What will it take to bring the private secondary market back?

Trust and transparency.

We must restore trust to the entire housing finance system. It won’t be an easy task, especially when you consider the numerous players involved. It’s not just the mortgage lenders or banks, it’s also the ratings agencies, mortgage insurance companies, appraisers and appraisal companies, title companies, credit reporting agencies, credit default insurance companies, just to name a few.

To build that trust, we need greater transparency in the lending and underwriting process. While there

are hints that some private investors may be returning, they won’t be back in numbers until there’s a greater level of certainty and comfort with the structure of loan product offerings, underwriting practices, and capital standards and leverage restriction in the system.

Investors ultimately want to know the loans they’re buying are sustainable to the customer. That means it’s imperative for all of us to ensure consumers are educated and informed by REALTORS, homebuilders, counseling agencies, and mortgage lenders in a trusted, fair and responsible manner.

What will be the impact of the tightening of underwriting and credit standards?

My primary observation is that the government and the government instrumentalities have not made a clear distinction between what actions are necessary to help the country emerge from this crisis and what are the necessary “go-forward policies” for the future.

Economists estimate we’ve lost $7 trillion of single family real estate value in America since this crisis began and $15 trillion of aggregate economic value. The government has taken steps with modest success (such as the HAMP and HARP programs and the homebuyer tax credits) that have had a limited effect while other policies are holding back recovery efforts. As an example, the loan-level price adjustments in place at Fannie Mae and Freddie Mac increase the costs of mortgages to consumers, making buying homes and refinancing to lower monthly payments more expensive. Similarly, recent credit constrictions announced by FHA can make it more difficult for some consumers to obtain financing.

Estimates suggest we have roughly 2.8 million foreclosed and vacant properties for sale in America. Short term policies that make it more costly or difficult for consumers to obtain credit (such as those mentioned above) do not support the accelerated absorption of existing inventory that’s needed and will slow down the move toward house price stabilization. To a certain extent, therefore, these actions

Unquestionably, we must look at housing differently in the future than we have in the past. It might be best to even use a different phrase – potentially “shelter” instead of “housing.” are at odds with what the government is doing in other areas. We need to have a coordinated policy in place across the sphere of government influence if we’re going to help speed the country on the road to recovery.

How will the changing demographics of future homebuyers change the politics and the business of housing issues?

Unquestionably, we must look at housing differently in the future than we have in the past. It might be best to even use a different phrase – potentially “shelter” instead of “housing.” I say this because I think it’s imperative that we examine the full spectrum of “shelter” for America...not just “housing.”

If we learn nothing more from this crisis, we should take away the fact that many people need to progress into homeownership through teaching, training, and coaching related to financial education and homeownership. That will not only put more pressure on us to develop solutions for “shelter” that provide the appropriate “incentives” for homeownership, but also provide for decent and fair rental housing. That full spectrum might include categories such as subsidized rental - to non-subsidized rental – to lease/purchase – to private sustainable homeownership – to aging in place for seniors. We must find ways to meet the needs of the growing diverse population. After all, it won’t be long until the diverse population is no longer the minority. The legacy of what we leave this industry will not be measured in how many houses we sold or how many loans we made. It

will be measured in how well we meet the needs of the growing diverse population of America in a fair and responsible manner.

Mortgage defaults and foreclosures continue to hit the market hard. What can the industry do to turn this situation around?

There are three things that must happen to stem the tide of foreclosures. The most important is an economic rebound that materially impacts unemployment. The next most important is meaningful improvements to the modification and refinance programs to help keep people in their homes. And last – we must find a way to stabilize house prices so that homeowners in trouble can sell their home without economic catastrophe.

What advice do you have for our members as they continue to face challenges in their business and effectively serve the diverse Asian American market?

earn the trust of the community every day through an unwavering commitment to provide advice and counsel for their customers on nights, weekends and holidays.

But serving customers simply might not be enough from here forward.

AREAA members should take an active role to make their voices heard on public and business policy in America. And I encourage you to do that with “one vision and one voice” so that the message is consistent and profound.

I am so impressed with the cultural pride of AREAA members. I have found every AREAA member I’ve encountered to be intelligent, hard working, fun, professional, humble and very upbeat! What a combination! Most of all, you are noble ambassadors for AREAA, your businesses and homeownership in general.

Many people still consider homeownership as the pinnacle of the “American Dream.” Responsible real estate and mortgage professionals who provide valuable and trusted service will continue to be in very strong demand. AREAA members have unique attributes to help their customers fulfill that “Dream.” They

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Photo: Fred Donham

AREAA Dragon Profile

ANDREW LEE

By LUANN SHIKASHO

“You can’t be afraid of networking!”

is something that Andrew Lee says with conviction. Lee is the president and founder of the Greater Sacramento mantra, guiding his career, as his entire life journey has been one of getting to know and help people; and using that knowledge and his connections to “You can’t be cheap and you can’t be scared. Agents aren’t receiving the assets from banks because they aren’t making lack of minority agents networking was illustrated at an REO event in 2005 where Lee encountered only two Asian agents in a group of at least 400 in attendance.

Andrew Lee is all about change, growth, and fearless leadership. He looks the part

of the proverbial clean-cut, serious Asian tailored suit. Although a bit intimidating personality quickly disarms people. Lee smiles frequently as he relates his story.

“I know my dad worked hard at ‘American Presidential Line’ in Hong Kong to support our family and sent my oldest brother to UC-Berkeley for a college education,” says Lee “My second brother was also accepted to UC-Berkeley, but wanted to wait until the whole family could go with him to the U.S.” It was a time of great change and for the Lee family. “I remember it being very hard for my mom because she had to leave her mother and brother behind in Hong Kong,” lamented Lee.

His mom, at least, had the final say as to where they would live once they arrived in San Francisco. Lee’s father wanted to live in San Francisco’s Chinatown to save money, but his mom prevailed with the purchase of their new beach-front home in 1975.

“Wow, in San Francisco, everyone must be rich!” Lee remembers thinking.

Compared to the 600 square foot condominium in Hong Kong where he, his parents, five siblings and grandmother all lived together, San Francisco homes seemed palatial.

Lee is the youngest of six and his memories of childhood play were either of mah jong or blackjack with the older kids and adults. Every member of the Lee family pitched in and worked together towards the common goal of making the most of the opportunities they now had, opportunities they would not have had if they had stayed in Hong Kong.

“Kids laughed at me. I couldn’t understand English at all, not even my own name,” recalls Lee. Lee started the fourth grade in a San Francisco public school. Strongspirited and extremely confident, Lee went from knowing no one other than his family in a foreign land to building many new friend-

Lee’s graduation from George Washington High School in San Francisco

The Lee family in Hong Kong, 1969

ships. Amazingly, within one year, Lee successfully adapted to his new home, the English language, and the American culture.

As Lee continued with his story, his demeanor became more contemplative as memories from his freshman and sophomore years in high school surfaced. Lee began to reflect on the social and peer pressures for his group of friends.

“We weren’t bad kids, but we were definitely headed in the wrong direction. We wanted to be cool and fit in, so we cut class and...” The still youthful Andrew begins to chuckle and declines to continue that particular story further. He continues thinking about that time in his life and speaks with sadness as he recounts that none of his friends finished high school. Some got into such serious trouble that they ended up in jail. He feels very fortunate that during

his high school years, another friend introduced him to church and put him back on the “right” path. He finished high school, attended City College of San Francisco, and then earned his Bachelor’s degree in Business Marketing from San Francisco State University.

Lee first became interested in real estate in the late 1980’s. His brother and some friends at church were part-time REALTORS. What Lee saw was a hot market and a great opportunity. Real estate looked fun, exciting, and profitable. He did not want to sell traditional real estate, so Lee began his career by selling 100 units of a condo development in the Bay Area. He even bought a unit himself and set up his first home with his new wife, Susan.

After completing the sales at that development, Lee continued his success at another 100-unit development.

After the real estate market dropped in 1991, his life path turned corporate and he took a job at the largest title insurance company in San Francisco in

1992. Lee states, “It’s all about being passionate, adjusting to change, and moving forward.”

His first job as a sales rep for a branch in San Francisco gave him the opportunity of a lifetime as his county manager recognized his leadership potential and his ability to gain business from within the Asian market.

Though his career was expedited in an unconventional way, Lee says, “It was because there were no other male, bilingual escrow officers around. After two years as an escrow officer, I became branch manager and, along with my staff, we transformed our poorly performing branch to a top-level branch within a year. I managed that branch for seven years.”

Lee attributes the turnaround and success of the branch to teamwork, networking and his leadership style.

“It’s amazing, but I can tell within minutes of meeting someone if they will be good for the job for which he is being considered.

One of the things I learned was

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AREAA Dragon Profile ANDREW LEE to trust the people that I hire and not to micromanage.”

Following his tenure as a branch manager, Lee went to work at the parent company for two years as a corporate trainer. The energetic Lee covered the Western region until corporate politics and the sense of a glass ceiling for Asian employees caused him to become disenchanted with his job.

At that time, he moved to El Dorado Hills to escape the hustle and bustle of the city while pursuing a better quality of life for his family. Shortly thereafter, he and Susan adopted a baby girl, Bria, from China.

Photo: Fred Donham

“Though we wanted another child, we also wanted to give someone else a chance to live in America. When we went to China, I was so amazed. I couldn’t believe the amount of pollution and how many orphanages there were of mainly abandoned baby girls,” explained Lee. ”All abandoned by families that had to adhere to the ‘one child law,’ which meant giving up their daughters so they could have a son who would carry on the family name and eventually take care of them in their old age.”

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Lee stresses that family is important. Being a loving father of two wonderful girls and an adoring husband to Susan, are undoubtedly his top priorities. “The most valuable thing in life isn’t how much you have or what you own, it’s the love and respect from the eyes of those in your family,” says a very serious Lee. In 2003, Lee ventured from the corporate world back into real estate once again. Choosing to work in a small brokerage, Lee

immersed himself in the Greater Sacramento marketplace, focusing on 1031 exchanges and commercial real estate. By 2005, he moved to his present brokerage, RE/MAX Gold.

“At the time, people thought I was crazy because I was spending so much time networking with asset management companies, obtaining referrals in the foreclosure departments and attending REO conferences,” explained Lee “I received my first REO assignment in August of 2006 in Citrus Heights. I’ve closed approximately 700 REO properties since that time,” he says proudly. His production earned him industry awards and recognition in 2008 as the #1 agent for RE/MAX Gold in the Sacramento area and the #16 agent for RE/MAX worldwide.

About his success, Lee explains, “I’ve learned not to make decisions when emotional-none when sad or mad--and to try to be level-headed at all times.”

It’s no wonder that this levelheaded leader of the Sacramento Chapter has seen membership grow to more than 120 people since its inception in October of 2009. A man of vision and goals, Lee aims for his AREAA chapter to be recognized as one of the best in the nation and grow the membership to at least 200 by year’s end.

The idea to start the Sacramento Chapter took root at the March 2009 AREAA Legislative Conference in Washington D.C. Three months later, the recruiting of directors had begun; and before anyone knew it, a powerful and committed board

was formed. Since the Sacramento chapter’s first meeting in October 2009, monthly activities have been faithfully scheduled covering everything from leadership meetings to foreclosure prevention classes and short sale panels.

The largest event of the year will be the inaugural golf tournament to be held on Saturday, May 28th at Empire Ranch Golf Course. “We expect a big turnout as we have confirmed attendance of four VIP players: three asset managers and AREAA’s National Chairman, John Fukuda. We would like to budget some of our profits from this golf tournament to help some deserving Asian homeowners repair or rehab their properties,” says Lee “With our vast network of contractors and members that speak many different Asian languages, we can make a difference in the community.”

Indeed, this Sacramento AREAA Chapter, with the ever-passionate Andrew Lee as its leader, is on the path to change and is destined to go places and do things that others would find impossible by following his model of courage, motivation, and determination.

Photo: Fred Donham

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TH EE D AR G PR EA O A E FE Y SS O IO UN NA G LS

E

arly on in his term, AREAA Chairman John Fukuda saw the need for the association to reach a younger demographic and develop the next generation of leaders. At the 2009 AREAA national convention in Las Vegas, there was a discussion regarding the makeup of the national board and the realization that a strong group of committed young professionals, who could contribute to the future of AREAA, was needed. So in January 2010, under the leadership of Kara Okamoto, a group of eight AREAA members met in Las Vegas with Chair Fukuda.

The result of these talks was the formation of The EDGE, a new group for young AREAA professionals who could learn from the established members and develop into future leaders for the organization.

THE MISSION

THE MEMBERS

To inspire, empower, educate and connect the young AREAA real estate professional community by combining leading industry practices with innovative technology and social media in order to develop the next generation of AREAA leaders and to better serve the Asian home buying community.

The EDGE will accomplish this by: Hosting cutting-edge professional development events for young AREAA real estate professionals Connecting The EDGE community through digital media and targeted marketing to build a solid, enduring business referral network

Kara Okamoto REALTOR San Francisco

Rachel Turner REALTOR Lake Tahoe

Kai Ito REALTOR Los Angeles

Geremy Yamamoto REALTOR Los Angeles

Ryan Asao REALTOR Los Angeles

Caron Ling REALTOR Honolulu

Cindy Lui VP, Marketing Wells Fargo Home Mortgage

Allyson Powers VP, Multi-Cultural & Affordable Lending Chase

Creating a forum for The EDGE community where dedicated new practitioners are welcome Giving back to the established AREAA community and preparing the next generation of Asian real estate leaders

THE NAME

As AREAA’s young professionals, the group was given the freedom to build this new network within AREAA and to come up with an effective name. Since the goal of the new organization was to be at the forefront of all that is new, fresh, and innovative as well as be defined by terms like energetic and ambitious, a name was needed that could describe all of these qualities. Since this new group envisioned themselves to be on the “cutting edge,” the name, The EDGE was unanimously agreed upon.

WHO SHOULD JOIN The goal of The EDGE is to bridge the generations within AREAA and to encourage more interest and involvement in AREAA by newcomers. The EDGE welcomes young people, but it is open to all who are interested in new ideas and ways of doing business, especially those who are tech savvy.

Individuals who are either Asian or work with the Asian community, business people in the general real estate industry or have an interest in real estate, are all welcome to become members of The EDGE!

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THE ADVANTAGES “As an Asian Young Professional, I feel this new group will give me a platform to learn from the success of other peers, and a way to give back to people like me on professional or career development.”

- Cindy Lui “It’s very easy to get caught up in the day to day grind of our careers but whenever we meet, I’m reminded of the meaning and importance of what we do. United, this group will have a voice to share education, experience and awareness about this industry we are all so passionate about. Everyone has something to bring to the table and we will all reap the benefits. The EDGE will bridge the gap. We do not yet have 30 years experience under our belt but what we do have is a drive to succeed in our profession and be the best we can possibly be... and amazing mentors within the greater AREAA group.”

- Rachel Turner “When I think of The EDGE, I think of courage - the courage to try new things, to meet amazing, talented people, to build on our strengths and to challenge one another to become better in everything that we do.”

- Allyson Powers “I joined The EDGE because of the successful and inspiring people I’ve met in AREAA. With well respected leaders in AREAA who take the time to mentor and help us develop, we have amazing role models that give us inspiration to reach the top of our game. The EDGE gives us an opportunity to relate to people in our generation. Our positive energy motivates us to be proactive and to think outside the box. The networking is amazing and the seminars are extremely informing.”

- Kai Ito

“We can learn from each other and grow at the same time. Taking a new concept and growing it into something that you have a vision about is an amazing feeling. Being given the opportunity to create a group that drives such curiosity is a chance of a lifetime.”

- Kara Okamoto “I joined The EDGE because I really believe the future of real estate is in our hands and we have a unique opportunity to shape that future. If we could build an organization that comes together as one to really be on the leading ‘edge’ of real estate and incorporate all our random ideas into one cohesive, inspiring, and empowered unit, I feel we could be unstoppable!”

- Caron Ling

We do not yet have 30 years experience under our belt but what we do have is a drive to succeed in our profession and be the best we can possibly be.

“The reason I decided to get involved with The EDGE is to help mentor the next generation of REALTORS to understand the importance of networking and education. I always try to educate our members about the Realtor Action Fund and other important issues that effect our industry. Groups like The EDGE are a great way to identify the future leaders of AREAA and to bring new and exciting ideas to our organization.”

- Ryan Asao

“I have a tremendous amount of respect for all members on our committee and enjoy working hand in hand with each of these individuals. Joining The EDGE has brought me closer to the AREAA organization and allowed me to see the benefits of having a powerful support group.”

- Geremy Yamamoto

GET INVOLVED Find The EDGE on Facebook: www.facebook.com/areaaEDGE Follow The EDGE on Twitter: www.twitter.com/areaaEDGE

Contact The EDGE by email: areaaEDGE@gmail.com

www

Visit The EDGE online: www.areaa.org/EDGE

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GET CONNECTED SATURDAY THE OFFICIAL AREAA LEADERSHIP SUMMIT AFTERPARTY

Y: B ED T S HO

JUNE 12TH 7:30pm-10pm

Live DJ Cocktails Hor D’oeuvres Win an IPad

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Questions

with

Kevin Chin,CCIM

Commercial Real Estate Expert & Chairman of the CCIM Cultural Diversity Advisory Board

How and why did you choose to get into commercial real estate?

My father had been in the real estate business since 1950. He had an office in San Francisco’s Chinatown called Ricksha Realty. In the mid 1960s he moved his office to Post Street in Japantown and helped with the leasing of the Japan Center when it was completed in 1968. In the 1970s my father renamed the company to Real Estate Investments Unlimited because he felt that Ricksha Realty was too much of a stereotype of an Asian-owned

business. He was kind of a Jack-ofAll-Trades in real estate. He did residential, commercial, leasing, business opportunities and development.

say that having done some of the other practices of real estate earlier in my career has given me a greater perspective in commercial transactions.

He encouraged me to enter the field and I also did a little of everything when I first started in 1979. After he passed away in 1996 I decided to focus on commercial real estate since I liked to analyze a property’s financial potential. I figured if you specialized and became an expert in one area you could become a greater resource for people. Though I must

What do you think are some of the differences between residential and commercial real estate agents / brokers?

I think in residential there is a greater need for personal interaction and having the client develop a comfort level with the agent.

Though it is not always the case, we have completed assignments where

Profile

Managing Director, Sperry Van Ness

Another difference between residential and commercial agents is most residential agent’s work is done within their local market, whereas we often are given assignments by clients to handle a disposition of property outside our market area.

We do this by partnering with one of the local market specialists within Sperry Van Ness. Sperry Van Ness has office locations in 150 markets across the country.

Specializes in nationwide retail and San Francisco Bay Area apartments

How is the market and where do you think it’s going?

Kevin Chin,CCIM

Over 25 years of industry experience Transaction volume over $200 million Formerly the founder/senior broker for Terra Pacific Company CCIM designee Serves on the CCIM Institute’s Board of Directors Current Chair of the Cultural Diversity Advisory Board for CCIM Member of the International Council of Shopping Centers, National Association of REALTORS®, California Association of REALTORS®, San Francisco Association of REALTORS® and the Income Property Marketing Group Attended City College of San Francisco, majored in real estate, and hotel and restaurant management

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we haven’t met the buyer or seller in person or even seen the property.

Where a residential agent will focus on meeting the needs of each person in a family, a commercial agent will focus on return on investment and a client’s overall financial goals.

2010 can’t be as bad as 2009 where we saw transaction volume dip to a level of less than 20% of 2007 transactions. There is plenty of capital waiting for distressed opportunities. These types of opportunities have been limited as lenders try to keep the current project sponsors viable with loan modifications. As banks firm up their balance sheets the deal flow should increase.

Also, commercial lenders are beginning to reenter the market but with much more stringent underwriting standards. Transaction volume will be up this year but until the employment picture improves, we won’t see any dramatic upward movement.

Where are some of the opportunities in the upcoming years?

For well-capitalized investors, there are opportunities to enter high

barrier of entry markets at values well below replacement costs. These markets are generally major coastal cities. Look to markets that will add jobs first.

Multifamily leads the way because of the availability of financing.

Distressed assets in other product types will offer investors with the proper skill sets to stabilize or reposition assets for big gains as the recovery takes hold. Purchasing distressed debt from lenders is another way to control the underlying assets.

The business plan for our office is to focus on owners and lenders with distressed assets. Sperry Van Ness has a dedicated group of specialists called the SVN Asset Recovery Team (www.svnart.com) that provides a single point of contact for special asset managers to access all the services needed to manage special assets.

If someone is thinking about making the switch from the residential to commercial field, what advice would you give him / her?

The first thing to do is get training and education about commercial real estate. The easiest way to do this is to join your local CCIM chapter and take the designation courses.

The chapter provides networking opportunities, sharing of best practices and mentoring from seasoned professionals on a monthly basis. The courses will teach you financial, market and user analysis skills needed to serve your clients.

The CCIM Institute confers the Certified Commercial Investment Member (CCIM) designation and is an affiliate of the National Association of REALTORS® (NAR).

COMMERCIAL FOCUS

CCIM is actively seeking to assist minorities interested in a career in commercial real estate by offering course scholarships through the Cultural Diversity Education Program (CDEP).

To learn more about the CDEP go to: http://www.ccim.com/content/cultu ral-diversity. To learn more about CCIM go to: http://www.ccim.com.

My personal story about CCIM is the day after taking the Comprehensive Exam to get my CCIM designation in Indian Wells, California--which I thankfully passed--I joined a group of CCIMs from other states for dinner. During dinner a broker from Dallas mentioned that he was working on the sale of a shopping center located in New Mexico but thought it might fall apart. He told me who the anchor tenant was and I told him that I had a client that loves that tenant. A week later the Dallas broker called me and said that his deal was terminated and wondered if my client would be interested. I presented it to my client and he closed it in about 30 days.

When thinking about switching to commercial, try to find a product type you would like to specialize in

and become an expert. Each product type usually has a national and local association that promotes its industry and causes. Since I work on quite a bit of retail properties, I am a member of the International Council of Shopping Centers. Join and be active in the association of your product type. I have also benefited from being associated with a larger company that provides networking and education opportunities, as well as research tools.

What are some of the characteristics people should look for in a commercial agent?

I think experience is the most important characteristic; we get most of our work from referrals from previous clients. This could be a challenge to agents switching from residential to commercial. My advice is to team up with someone with a good track record until you get a few transactions under your belt.

Always put your client’s interests first. If you live by this rule you will be successful. You also have to be a grinder; a lot of commercial transactions take longer to complete than residential transactions, so every day you have to grind away at obstacles until you reach your goal.

Top: Ricksha Realty, the original name of Chin’s father’s business Bottom: Chin and AREAA Executive Board Member, Eva Hom, in San Francisco

CCIM Cultural Diversity Program Designed to develop a critical mass of minority CCIM designees who can positively impact their respective communities and the commercial real estate industry in general.

To find out more, visit:

http://www.ccim.com/content/cultural-diversity

35

Raising Your Commercial IQ Using Cap Rates to Value Income Properties

BY NEIL OSBORNE

This article is a continuation of the “Introduction to the Valuation of Income Properties” article in the Spring 2010 issue of a | r | e The most common way to value an income property is to use the Cap Rate. The objective of the article is to: 1. Explain two important assumptions that are made when using the Cap Rate to estimate the value of an income property

This raises a very interesting question: Why would you buy at a 5.00% Cap Rate and finance with a 6.00% mortgage?

2. Increase your understanding and application of Cap Rates

The answer is because of the potential for Capital Appreciation.

3. Examine the challenges in finding and using Cap Rates

The Cap Rate is a very simple calculation that ignores the fact that revenues and expenses change over time and that the property may appreciate or depreciate in value and will be sold some time in the future at a price hopefully higher than the purchase price.

...and answer the questions: 1. “Neil, from a buyer’s perspective isn’t a high Cap Rate better than a low Cap Rate?”

2. “Do buyers really use Cap Rates to value income properties?”

CALCULATING THE CAP RATE Cap Rate =

Net Operating Income (NOI) x 100

Sale Price =

Net Operating Income (NOI) x 100

Sale Price

Cap Rate

As an example, if the Net Operating Income for the building is $120,000 and the Cap Rate from comparables is 8%, the value is:

Sale Price =

$120,000 x 100 8.00

= $1,500,000

TWO VERY IMPORTANT ASSUMPTIONS When the cap rate is used to calculate the value of an income property, the following important assumptions are made:

1. The Cap Rate is based on the assumption that the Net Operating Income (NOI) is constant and goes on forever. As an example:

NOI

UNDERSTANDING CAP RATES Relationship Between the Cap Rate and Sale Price The higher the Cap Rate the lower the property value The lower the Cap Rate the higher the property value This often causes confusion for inexperienced buyers who think that the higher the Cap Rate the higher the value. It’s the opposite. The higher the Cap Rate the lower the property value. The following examples illustrate the relationship between the Cap Rate and the Sale Price using a 5% and a 10% Cap Rate to calculate the Sale Price using an NOI of $100,000: Sale Price =

Note: The Cap Rate comes from comparables

Year 1

Year 2

Year 3

>>>

$120,000

$120,000

$120,000

Forever

This doesn’t reflect reality. Revenues and expenses change every year.

36

2. The Cap Rate calculation assumes that the building is never sold.

$100,000 5.00%

If the Cap Rate is 5%, the

= $2,000,000 sale price is $2,000,000. If

the Cap Rate is changed from 5% to 10%, the price Sale Price = = $1,000,000 drops from $2,000,000 to 10.00% $1,000,000.

$100,000

Caps Rates Reflect Risk and Uncertainties The higher the risk the higher the Cap Rate and the less an investor will be willing to pay for a property The lower the risk the lower the Cap Rate and the higher the price As an example, if an investor is considering buying an apartment building either in Toledo, Ohio or Santa Monica, California they will require a much higher return, or Cap Rate, for the Toledo apartment building compared to the Santa Monica investment because of the higher risk.

Toledo has been severely impacted by the decline in the automobile industry, has high unemployment and prospects of a future economic recovery are poor. Apartment buildings are

Raising Your Commercial IQ

experiencing high vacancies and high turnover and there is little chance of capital appreciation.

income for one unit for a month, which is insignificant. The vacancy risk is low.

In contrast, an apartment building in Santa Monica will have a low vacancy rate, quality tenants and high rents. It is a relatively safe investment with excellent long term capital appreciation potential because of the limited supply of land compared to an apartment building in Toledo, Ohio.

In contrast, if we own a three tenant warehouse and each tenant occupies 1/3 of the space and we have vacancy we will lose approximately 1/3 of the rental income. In addition, it could take three months or more to find the right tenant, negotiate the lease, provide free rent and other inducements resulting in a large loss in income for the year.

Buyer and Seller Perception of Long Term Capital Appreciation The higher the anticipated capital appreciation the lower the Cap Rate and the higher the price.

The lower the anticipated capital appreciation the higher the Cap Rate and the lower the price Prime locations such as Manhattan, South Beach Miami, Santa Monica and Beverly Hills generally have a high demand for rental accommodations, a very limited supply, and strong capital appreciation over the long run, resulting in lower Cap Rates and higher property values.

In contrast, locations such as Toledo, Ohio; Lake Charles, Louisiana or most small inland cities have uncertain economies. There is plenty of land and it is relatively easy to build rental units and increase the supply, resulting in limited capital appreciation over the long run, higher Cap Rates, and lower property values.

Investors recognize the vacancy risk associated with different types of properties and adjust the Cap Rate accordingly.

Because of the lower vacancy risk, the Cap rates for rental apartments will generally be lower than industrial, office and retail properties.

Location The location will also impact the Cap Rate. As an example, retail stores with high foot traffic are in demand, attract quality tenants, and will sell for a lower Cap Rate and a higher price than a poorly located store with marginal tenants.

The Economy Has a Large Impact on the Cap Rate A large influence on the Cap Rate is the economy. Cap Rates have risen dramatically and property values have declined recently due to the economic downturn. Factors like unemployment, company layoffs, deterioration in corporate profits and other economic uncertainties all affect the economy and the Cap Rate.

SALE PRICE RISK LOCATION HOUSE PRICES CAPITAL APPRECIATION VACANCY ECONOMY Cap Rates and House Prices House prices can be used as a guide for Cap Rates for rental apartment buildings. Where house prices are high--such as Santa Monica, Beverly Hills, or Manhattan--the Cap Rate for rental apartment buildings will be much lower than areas where the house prices are much lower--such as Toledo, Lake Charles, or any small inland town.

Vacancy Risk In any city, the lowest Cap Rates are generally prime rental apartment buildings located in highly desirable neighborhoods, due to the “Vacancy Risk.�

As an example, if we own a 79 unit apartment building in a nice area of town with low vacancy and there is one unit vacant it will likely rent it up quickly. At the worst we may lose the

CAP RATES

Some general observations about Cap Rates: Large cities generally have lower Cap Rates than small towns as they have large, diverse economies.

Small towns are more vulnerable to economic shifts and are usually dependent on a few local industries such as logging, mining, oil and gas, tourism or fishing.

Large seaport cities generally have lower Cap Rates than large inland cities. As an example, Santa Monica or Los Angeles, California will have a lower Cap Rate for apartment buildings compared to large inland cities such as Denver, Colorado or Phoenix, Arizona. Sea Port cities have economies that are supported by shipping, large international airports and the available land is often limited.

37

Raising Your Commercial IQ

CHALLENGES IN FINDING AND USING CAP RATES

Extreme care has to be taken when calculating Cap Rates from comparable sales. Serious mistakes can be made by calculating the Cap Rate based on the Sale Price and the Net Operating Income if there are hidden factors that influenced the sale price. The Sale Price, Net Operating Income and the resultant Cap Rate is just the tip of the iceberg.

Information relating to a sale of a commercial property is often confidential. While the sale price can usually be determined, the Income and Expense Statement, Net Operating Income, and other data are often not available, making it difficult to calculate the Cap Rate.

The Cap Rate is a simple return that has been derived from the purchase price, income and expenses, reflecting the attitudes and the negotiations between the buyer and the seller, the economic conditions, etc. In some instances, the purchasers may be strongly motivated by income tax considerations or favorable seller financing. Other times the motivation may be to move money into the United States by overseas investors.

Apparent Cap Rate =

$130,000 x 100 $1,200,00

= 10.83%

Adjusted Purchase Price = $1,200,000 + $250,000 for repairs = $1,450,000 True Cap Rate =

$130,000 x 100 $1,450,000

= 8.97%

This example illustrates that you can incorrectly calculate the Cap Rate using the Sale Price and the Net Operating Income if there are underlying factors, which caused the seller and the purchaser to accept a lower or higher price.

In this case, the "Apparent" Cap Rate based on the sales information is 10.83%, but the True Cap Rate is 8.97% when you take into account the $250,000 that the purchaser deducted from the sale price to pay for the urgent repairs.

Purchasers often make adjustments to compensate for particular circumstances relating to the particular property. As an example, if a purchaser estimates that there is to be $250,000 to be spent immediately on major repairs, then the $250,000 will be deducted from the purchase price. If the building has an assumable first mortgage, which is well below the current interest rate, the purchaser may pay more for the property than for a comparable, which requires financing at the current interest rate.

The Impact of Favorable or Unfavorable Seller Financing The sale price and the Cap Rate can be affected by favorable or unfavorable seller financing.

If you are unaware of special buying or selling motives, or that the purchaser has made adjustments to the price because of special circumstances, such as the requirement for major repairs, or because of favorable or unfavorable existing financing, then the calculation of the Cap Rate will be incorrect. This may lead to misleading estimates of market value for the subject property.

Impact of the timing of lease renewal on cash flows and value One of the problems with a Cap Rate is that it assumes that the Net Operating Income is constant and goes on forever which is not the case.

The “Apparent” and “True” Cap Rates The “Apparent Cap Rate” is the Cap Rate that is calculated from the Sale Price and the Net Operating Income. Often there are underlying factors that influence the negotiations between the buyer and the seller that affect the sale price and the Cap Rate. The “True Cap Rate” reflects the adjustments made to the price that were negotiated between the buyer and the seller.

APPARENT vs TRUE CAP RATE

The diagram at right illustrates the relationship between the Apparent and True Cap Rates.

Following are some examples that illustrate the “Apparent” and “True” Cap Rate Adjusting the Sale Price for immediate repairs Often the purchaser will lower the price if immediate repairs are needed which can result in an incorrect estimate of the Cap Rates.

As an example, you have found a comparable property that sold for $1,200,000, and the Net Operating Income is $130,000. On further investigation, you discover that the purchaser estimated that

38

$250,000 was needed for immediate repairs to the roof and elevator and to update the fire safety system to satisfy an order from the City.

As an example, the seller provides a $1,200,000 second mortgage for 5.00% while the market rate for a comparable second mortgage is 7.50%. The favorable seller financing might entice the buyer to pay a higher price than normal and distort the Cap Rate

An investor is looking at buying a one tenant 5,000 square foot commercial building and is considering either property A or B.

APPARENT CAP RATE Hidden factors that have influenced the purchase price

TRUE CAP RATE

Sale Price & Net Operating Income

The projected rents based on the lease for each property are:

$2 9

$2 6

The more appropriate technique for valuing these types of properties is called “Long Term Real Estate Investment Analysis” or “Discounted Cash Flow Analysis,” which takes into account changing cash flows and the time value of money and uses the financial measures “Internal Rate of Return” (IRR) and “Net Present Value” (NPV).

$2 3 5 yrs

5 yrs

Property B

5 yrs

$3 2

1 yr 5 yrs

$2 0

Lease Rate / Foot2 / Year

$2 0

$3 2

Property A

16 yrs

Using a Cap Rate to value these properties is far too simplistic and a naïve approach because the Cap Rate approach does not recognize the difference in cash flows between Property A and B. Furthermore, it does not take into account the time value of money.

5 yrs

In the case of Property A the rent increases at the end of year one from $20 to $23 per square foot per year and goes through further increases every five years to reach $32 per square foot per year in 16 years time. In the case of Property B the rent in Year 1 of $20 per square foot per year cannot be increased to $32 per square foot per year for 16 years.

It is obvious that Property A is much more valuable than Property B and will sell for a lower Cap Rate and higher price than property B.

Very Low Cap Rates An unusually low Cap Rate may indicate that the purchaser is buying a property for the development potential. As an example, a site that is ripe for a condominium project may have an old apartment building on the property. If you calculate the Cap Rate based on the Sale Price and the Net Operating Income, it will be very low.

The value of the property is based on the development potential rather than the present income. The “Land Residual” or “Backdoor Approach” determines the land value. One way of testing whether the property has development potential is to ask "If the building burned down, would we replace it with a similar property?" If the answer is "No," then the value of the site will likely be determined by the development potential rather than the income. This can often be confirmed by looking at the tax assessor’s estimate of value. Does it tend to support the high selling price? If so, the value is in the land and development potential, not the income.

As an example, downtown parking garages would be valued based on the development potential or land value rather than on the income from the parking fees.

QUESTIONS From a buyer’s perspective isn’t a high Cap Rate better than a low Cap Rate?

Do buyers really use Cap Rates to value income properties?

Wouldn’t I rather get a 10% return compared to a 6.00% return? The answer is “It all depends.”

If I’m comparing apples with apples I would prefer the higher cap rates. If I’m comparing apples with lemons the answer is probably no and I would prefer the lower cap rate.

The Cap Rate is a quick and simple approach to screen and quickly value relatively straight forward investments, such as rental apartment buildings. It is a far too simple and naïve approach to value complex commercial properties. It’s just one of many approaches that are used to value income properties.

Which is better?

1. Buying a run down apartment building, with high vacancy and turnover, in a bad neighborhood, for an 18% Cap Rate where the value is likely to deteriorate even further 2. Buying a well maintained apartment building, with good tenants, in a nice neighborhood where values are appreciating over time for a Cap Rate of 7.00% We are comparing apples with lemons.

In this case the 7.00% Cap Rate (the apple) is far more attractive than the 18% Cap Rate (the lemon).

On the other hand, if I’m looking at two comparable buildings (comparing apples with apples) I would prefer the building with the higher cap rate and lower price.

You might read that a prime office building in the downtown area sold for a 7.00% Cap Rate.

The investor did not buy the building using a 7.00% Cap Rate. The Cap Rate is simply the Net Operating Income for next year divided by the purchase price.

Instead the cash flows were projected over many years and include future capital expenditures such as replacing the roof, upgrading the building, increases in operating costs and lease rates, the impact of tenants moving out, refinancing and the eventual sale of the property and the income tax implications.

The price was based on the future cash flows and the investor’s desired return on investment given the risk involved, not a simple measure like the Cap Rate.

Summary The Cap Rate is probably the most commonly used measure for evaluating income properties but is a very simple and somewhat naïve approach to determining value.

Extreme care has to be taken when calculating Cap Rates from comparables and serious mistakes can be made by calculating the Cap Rate based on the Sale Price and the Net Operating Income if there are hidden factors that influenced the Sale Price. As mentioned at the start, the Sale Price, Net Operating Income and the resultant Cap Rate are just the tip of the iceberg. Under the surface there may be a variety of factors that have influenced the Sale Price.

Neil Osborne is the developer and presenter of the popular Raising Your Commercial IQ Webinar Series and is the creator of Investit, a comprehensive, easy to use and affordable real estate investment, lease and development analysis software. He has presented seminars on commercial real estate at the National Association of REALTORS annual conference.

For more information visit www.investitpro.com or call 1-877-878-1828.

39

The HOPE Awards Making the dream of homeownership for minority families a reality

By SARA WEIS

Photos by OSCAR EINZIG

Every house where love abides And friendship is a guest, Is surely home, and home sweet home For there the heart can rest.

- Henry Van Dyke

omeownership changes peoples lives in many ways. Homeowners can enjoy better schools, safer streets, and greater engagement in community issues, and with time, nancial security. If they are like most homeowners, they will also enjoy better household health, a higher level of educational achievement and greater personal security.

Most of all homeownership means having your own piece of the American dream.

The Homeownership Gap

Unfortunately, not all Americans share equally in that dream.

Reaching the dream of homeownership can be especially challenging

for minorities, whose homeownership rates are well below those of white homeowners. In fact, while more than three out of four white households in the U.S. own their own home, only half of minority households enjoy the same level of homeownership.

A er years of slow gains, minority homeowners are once again losing ground as a result of the signi cant challenges that America has recently faced with its economy, especially in the mortgage and housing markets. According to the Joint Center for Housing Studies of Harvard University, home price declines have hit minority house-

holds especially hard. Even before the recession began the share of minority homeowners with equity cushions of less than ve percent of the homes value was twice as high as that of whites (6.9 percent versus 3.4 percent).

While many communities have been a ected regardless of race or income, lending issues disproportionately a ected minorities, who were more likely to assume risky, high-cost mortgages and as a result, have been in danger of losing their homes to foreclosure.

Harvard s Joint Center for Housing Studies estimates that the median foreclosure rate from January 2007 through June 2008 was 8.4 percent in low-income minority neighborhoods signi cantly higher than the 6.3 percent in low-income white neighborhoods.

Tighter lending standards have also made it harder for many minority households to qualify for a mortgage; hampering e orts to build equity and long-term wealth through homeownership. For some this is making the dream of owning a home seem even further out of reach.

Although these di culties are not exclusive to any one particular group, they are especially di cult for underserved homebuyers.

Families in this category are counting on individuals and organizations across the country, in cities large and small, to create opportunities for their family to realize the dream of having a place of their own to call home. And many others are hoping help is available to protect their dream and avoid losing their home to foreclosure.

A Home for Everyone

Home ownership participation for everyone. e words are simple, yet the goal of the Home Ownership Participation for Everyone (HOPE)

Awards is lo y. To make a signi cant contribution to the cause of minority homeownership by recognizing outstanding contributions by individuals and organizations to increase sustainable minority homeownership, revitalize communities, and expand a ordable housing opportunities allowing more Americans to have a place of their own to call home.

Across America individuals and organizations are helping to lower barriers and change the color of homeownership. Some are doing it to make a living; others aim to make their community a better place to live. For many, it s become their lifes mission.

And it s become the mission of the HOPE Awards to identify and showcase those innovative and successful programs and to hopefully encourage others to make a commitment to serve minority populations in their own community.

The Beginning of Hope

e HOPE Awards are the product of a partnership of six professional real estate organizations. e partnering organizations include the Asian Real Estate Association of America (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 Real Estate Brokers (NAREB), and the National Association of REALTORSfi (NAR). e organizations share a common vision to elevate the issue of minority homeownership on the national agenda, and to honor those who are truly making a di erence. e rst HOPE Awards were conferred in October 2001 to a group of seven individuals and

Charles McMillan, 2009 President, NATIONAL ASSOCIATION OF REALTORS速 Allen Chiang, AREAA 2009 Chair and 2005 HOPE Award recipient

organizations that were helping make the dream of homeownership for minority families a reality, forever changing their lives and enhancing their future.

Since then, every two years the HOPE Awards select up to seven organizations or individuals, shining a spotlight on their outstanding leadership and achievement, including the great work they are doing to create equality in homeownership.

Recognizing Outstanding Contributions To date, the HOPE Awards have been bestowed upon 30 individuals and organizations for responding to Americas many housing challenges and making a commitment to eliminating the homeownership gap that exists today. People like Hyepin Im, who founded Korean Churches for Community Development, a Los Angeles non-pro t organization that acts as a bridge between the KoreanAmerican and Asian communities and the greater community.

Among our many initiatives, one primary focus has been providing culturally and linguistically appropriate assistance on homeownership since Korean-Americans have one of the lowest rates of homeownership, says Im. ese services are critical to the Korean-American community, which the U.S. Census cites as having the second highest language barrier. For many in this community, the language barrier makes accessing most community services nearly impossible, says Im. KCCD has had great success in helping remove cultural, linguistic, and economic

42

“Winning the HOPE Award was great because it encouraged and affirmed the work of our staff.

It also gave us more visibility and credibility, which has led to additional partnerships and funding opportunities.�

- Hyepin Im, KCCD

barriers in the KoreanAmerican community through education, economic development programs and strategic public and private partnerships; which is why the organization was selected as one of ve HOPE Awards winners in 2009.

KCCD, like the other winners of that year s HOPE Awards, has eliminated barriers and opened the doors to homeownership to hundreds, if not thousands of families, demonstrating their strong belief in the future of homeownership.

KCCD and their fellow 2009 HOPE Awards winners were selected from more than 100 entries in the categories of

nance, homeownership education, housing project of the year, real estate brokerage, public policy, media and leadership.

Winning entries are selected by a distinguished panel of judges, all of whom are nationally recognized in the elds of housing or public policy. e 2009 HOPE Awards judges included Henry Cisneros, former Secretary of Housing and Urban Development; the Honorable William Lacy Clay, Congressman from Missouri; Steven Nesmith, former Assistant Secretary of Housing and Urban Development; Nicolas Retsinas, Director of the

Joint Center for Housing Studies at Harvard University; and Judge Lillian Sing of the San Francisco Superior Court. e winners were chosen because they ve demonstrated outstanding leadership and achievement in responding to housing challenges. rough innovative and creative approaches they have made an overwhelming di erence in their communities, and in the nation, says Judge Sing. e judges look at impact, innovation, minority focus, and a ordability. Indeed, the winners are committed to eliminating the homeownership gap that

Eva Hom (far left) and John Lee (far right) on stage with Jin Kim and Hyepin Im during the presentation of the 2009 HOPE Award for education

exists today between the minority population and the rest of the country.

also gave us more visibility and credibility, which has led to additional partnerships and funding opportunities.

HOPE Awards winners receive $10,000 grants to help them continue their important work in the community. Past winners say they have bene ted from the grant money and increased exposure.

Since its inception, the HOPE Awards have granted more than $300,000. Winners also receive a trophy and paid travel expenses to the HOPE Awards in Washington, D.C.

We were able to use the $10,000 grant money to strengthen our homeownership program as well as expand into a new area and provide our services to help residents in Las Vegas, says Im. Winning the HOPE Award was great because it encouraged and a rmed the work of our sta . It

Im says winning the HOPE Award was a great experience for her and KCCD. It was impressive to see the level of support and investment by the members of the various real estate associations, as well as the judges and guests present, recalls Im. It was also wonder-

ful to see the diversity of the real estate associations collaborating on each award. It was quite memorable and I appreciate having met so many great people, including all the other honorees.

Join the Next Celebration e sixth HOPE Awards will take place next year in May 2011, when the awards will celebrate 10 years of helping make the dream of owning a home possible for Americans of every background. In the decade since the rst HOPE Awards were given, thousands of minority families have become homeowners but the nation

faces new challenges today, and so the work is just starting.

We hope you ll join the 10 year celebration of helping close the divide in the American dream by submitting an application or spreading the word to others.

Applications and sponsorships are currently being accepted at www.hopeawards.org.

43

he May 6th launch of AREAA’s newest chapter in Silicon Valley was a huge success. The event was held at the elegant and trendy new high-rise condo towers in downtown San Jose, “The 88”. It drew a wonderful group of real estate industry leaders from the South Bay, the greater Bay Area and across the country. The launch was well-supported by national AREAA leaders including Founding Chair/CEO John Wong, Chair John Fukuda, President Jim Park and other national board members and representatives.

Guest speakers for the event were Ivan Choi, Vice President of Prospect Mortgage and President of REOMAC; Kitty Lee, Vice President of Bankers Preferred; and Jim Park, President of New Vista Asset Manage-

ment. These industry experts shared great insight on the current real estate market with the practitioners in attendance.

The attendees were entertained with a great spread of Pan-Asian appetizers by the pool terrace on the panoramic 5th Floor of the 88.

The location provided a central downtown San Jose vantage point symbolic of the new organization. Tours of the new condo units were led every few minutes by a very attentive staff and the new membership registration desk was busy throughout the event. Many attendees were impressed and registered for annual membership onsite.

Sponsors were tremendously supportive of the AREAA Silicon Valley rollout. Donations came from various donors in the way of wine from Regale Winery in Santa Cruz

PHOTOS COURTESY OF AMIR SHAHKARAMI

and generous funds from Wells Fargo Bank, Standard Trust Services, Rainmaker Properties, Uniquify and Bridgepointe Group.

prize that clearly drew a lot of attention.

Other winners won donated dinner prizes, bottles of champagne and entertainment tickets.

Board leaders came from the Santa Clara Association of REALTORS®, Silicon Valley Association of REALTORS®, Chinese Association of REALTORS®, Filipino Association of REALTORS®, National Association of Real Estate Brokers and National Association of Hispanic Real Estate Professionals. Also in attendance was the local District Attorney Dolores Carr from Santa Clara County, who is running for election in June.

he focus for the rest of the year will include a public presentation every other month, starting with a seminar on Doing Business with the Asian Marketplace in July. Interspersed between the informative meetings will be a cocktail mixer for members to network and share ideas. The first mixer was held on May 20th at Intero’s Santana Row office. It was attended by over 40 agents and affiliates. In less than a month, AREAA Silicon Valley has already grown to over 40 members!

To end the evening, one lucky winner walked away with the big price of the day, an Apple IPad 3GS! This was a cutting edge

The founding members of the organization consist of the following dedicated leaders:

JULIE DUONG FOUNDING CHAIR

A longtime lending industry leader with ties into the bulk REO marketplace and multiple bank relationships dealing with commercial note sales. Julie ran the largest wholesale division for Countrywide finishing a 17 year career with the bank.

CHRISTINE KIM FOUNDING PRESIDENT

Broker Owner for Bridgepointe Group, a full service real estate firm. She is responsible for managing company growth and sales in Northern California, facilitating all residential and commercial investments. She believes strongly in promoting sustainable homeownership through education and active participation in the local community. [ Continued on page 46 ]

45

ALEX WANG VICE PRESIDENT

Founder of Rainmaker Properties. Alex runs a residential and investment referral-based residential real estate firm in Palo Alto. His company donates a portion of their revenue to charities throughout the Bay Area. Alex has vast connections to the real estate industry and provides great networking abilities.

NICK PHAM SECRETARY

A REALTOR since 2001, Nick brings a wealth of corporate industry experience to his roles as organizer of the AREAA chapter and his dedicated commitment to his residential real estate clients. Nick was a founding member of a new vertically integrated real estate firm in San Jose in 2009. He also dedicates himself to local participations on the real estate boards, technology committees, school organizations and as Chairman of the Evergreen School District Advisory.

46

ANDY LAI FOUNDING MEMBER

Broker of Choice Properties in Cupertino. Andy is a true industry insider with representations on the boards of various real estate organizations including: the Chinese Association of REALTORSÂŽ, CAR, NAR, SCCAOR and SILVAR. He is fluent in five languages and leads this organization with deep knowledge of organized real estate.

MARIO PINEDO TREASURER

Mario manages an office for Intero Real Estate in San Jose. A commercial and investment REALTOR since 1991, he specializes in apartment and shopping center investments with a special emphasis on bank REO representations.

In 2005, he was selected to participate in a US real estate trade mission to China with CCIM to explore cross country real estate opportunities.

LAILA FIELDS FOUNDING MEMBER

Laila brings excellent organizing skills and multi-media presence to AREAA Silicon Valley. She has a long career as a residential REALTOR with a large regional firm. She currently works at Bridgepointe Group with Christine Kim. Her specialties are residential real estate transactions.

The AREAA Silicon Valley chapter is also supported by a deeply knowledgeable Advisory Board that consists of Gino Blefari, President of Intero Real Estate; Tamon Norimoto, Director of Asian Americans for Community Development; and Rick Sung, Public Information Officer of the Santa Clara County Sheriff 's Department. AREAA Silicon Valley’s launch was a grand collaboration of many hands. The chapter welcomes your participation in its future growth and community involvement.

In observation of Fair Housing Month in April, the Contra Costa Association of REALTORS® Diversity Committee presented a “Defining Fair Housing Practices” workshop on April 23rd in Walnut Creek, California.

John Trasviña, Assistant Secretary of Fair Housing and Equal Opportunity, was the featured speaker. Assistant Secretary Trasviña spoke on the background of the Fair Housing Act and how it has impacted minority homeownership in this country.

Trasviña reminded the participants about the federal protected classes under the fair housing laws and commented on the importance of getting the message of fair housing practices to the real estate community.

The workshop also featured Susan Saylor, the Associate Chief Counsel of the California Department of Fair Employment and Housing. Saylor spoke on the expanded protected classes in the State of California and discussed actual examples of fair housing violations and their respective settlements.

In the audience were leaders from the Contra Costa Association of REALTORS®, Oakland Association of REALTORS®, Bay East Association of REALTORS®, Asian Real Estate Association of the East Bay, Chinese Real Estate Association of America, National Association of Hispanic Real Estate

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Professionals, National Association of Real Estate Brokers, East County Association of REALTISTS® and Women Council of REALTORS®.

Government officials from both the Alameda and Contra Costa Counties were also in attendance.

Nations” diversity potluck mixer where participants brought cultural dishes and dressed in cultural costumes; and “Defining Fair Housing Practices” workshop to educate real estate professionals about the importance of fair housing practices.

Participants also took part in the breakout session discussions on “Protected Classes,” “Fair Housing Practices,” “Disability” and “Consequences.” Participants unanimously agreed that it was an educational event and should be presented more often.

Local resources on fair housing support in Alameda and Contra Costa Counties were distributed at the end of the workshop.

“‘A Taste of Nations’ is a fun way for REALTORS and affiliates to get together to learn about how many ethnicities there are in the real estate profession in the area. A diverse environment is an enriching environment,” said Ellen Osmundson, the chairperson of the Diversity Committee. “Developing a basic understanding of and appreciation for the diverse community that we are in is crucial for us to better serve our diverse clients.”

The workshop has laid the foundation for future collaborative efforts in promoting diversity awareness and fair housing practices in the San Francisco Bay Area.

The mission of the CCAR Diversity Committee is to promote diversity awareness and fair housing practices and its vision is to enhance and advance sustainable homeownership among minorities and to address and resolve common concerns in serving equally deserving consumers.

Since its inception in November 2009, the CCAR Diversity Committee has presented two major events: “A Taste of

Ellen.Osmundson@Prurealty.com

“We make a living by what we get, we make a life by what we give.”

- Sir Winston Churchill The Asian Real Estate Association of America (AREAA) San Diego Chapter was founded in August of 2008 by a group of real estate professionals who have been dedicated to helping the local housing market with a vision of creating opportunity for minority communities. The need to disseminate information and make it accessible not only to homeowners, but also for real estate professionals, was the driving force and the main objective for the creation of AREAA San Diego. Since its inception in 2008, the San Diego Chapter of AREAA has been working diligently to create partnerships throughout San Diego County to create programs that allow local real estate profes-

sionals and homeowners to appreciate the cultural diversity that San Diego enjoys while responsibly contributing to the local housing recovery and long term success of the San Diego housing market.

On April 24, 2010, AREAA San Diego joined forces with the Housing Opportunities Collaborative (HOC) and conducted its first Home Clinic in San Diego at the Taiwanese Community Center. The goal was to educate and provide resources to help families stay in their home, gain access to legal information and resources, explore the homeowner’s options and possible courses of actions, and most importantly assess the emergency nature of their situation.

“Being able to assist families to save their homes is most rewarding,” says Ric Manalo,

Treasurer of AREAA San Diego. “This was a great opportunity to give back to the community and help spread the mission of AREAA.” During the event, the team of volunteers wore AREAA t-shirts helping them be easily identified. AREAA San Diego founding President Shonee Henry and the Housing Opportunities Collaborative shared the stage and introduced its organization and the purpose of the clinic.

While homeowners waited for their turn to be counseled, educational sessions took place and there were presentations on short sale options and bankruptcy. By incorporating several different components into the Home Clinic, AREAA San Diego was able to provide the homeowners from all ethnicities a spectrum of services at no cost to our community. According to HOC, as a small non-profit organization, AREAA San Diego now holds the record for the year with total attendance of 180 and 91 families individually counseled. Following are statistics that underline the impressive results of AREAA San Diego’s first Home Clinic: Total volunteers: 48, including HOC staff. (a record number for the year for most volunteers) 3 participating banks with a total of 11 representatives from Chase, Citi, and Wells Fargo.

Demographics: 35 of 91 counselees were Hispanic, representing 38.5% of the total.

The Asian American market segment was 17 of 91 which is 18.7% White market segment was 26 of 91 or 28.5% of the total.

The balance is represented by AfricanAmerican and American Indian.

Level of Income: Lower Monthly Income (LMI) was 55 of 91, equivalent to 60.5%; 12 of 91 were moderate income representing 13.2% and 26 of 91 (equivalent to 26.4% of total families served) were above 120% of Average Monthly Income (AMI).

The 60.5% is consistent with the overall HOME Clinics historical LMI market segment.

41 of 91 counselees, or 45% of total were San Diego residents, while 88 of the total families served, or 97%, were San Diego county residents.

The armed forces were also represented with 9 homeowners being active, retired or of a veteran status.

A total of 285 services were provided that included group counseling, one-on-one counseling by HUD approved

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housing counselors, attorneys, fair housing counselors, HOME Well-being, banks, and one first time home buyer.

The biggest hurdle homeowners face during these rough times is where to turn for help and vulnerability. It was great to see the community leaders come together.

“From attorneys, lenders, counselors, and volunteers; everyone was there for a reason,” says Regina Ong, AREAA San Diego Board member. “To make a difference in the community.”

Counseling was still going on for another two hours after the event’s scheduled close time. Families approached several of our volunteers and expressed their sincere appreciation and heartfelt thanks for the work we are doing in the community.

SAID ONE HOMEOWNER AS THEY WERE EXITING, “I AM GLAD WE CAME, NOW I KNOW WHAT MY OPTIONS ARE. THANK YOU.” In conclusion, AREAA San Diego would like to thank all the volunteers who made this inspiring and much-needed event possible. AREAA would like to extend its gratitude to Wells Fargo, Sycuan Casino Resort & Hotel, Epoch Times, The Filipino Press, and The Viet Times for their contribution to the event. AREAA San Diego and HOC will continue to provide help to distressed homeowners and with the success of the clinic, another Home Clinic has been tentatively scheduled for September 25, 2010. Stay tuned for the announcement of the venue.

It is with a very heavy heart that I announce to all of our AREAA San Diego family and friends of the passing of our Vice President Sandra "Kazuko" Chang on 01 April 2010.

Being involved in a non-profit organization is never easy. One has to devote countless hours and effort. With all the true meaning of the word “PASSION,” you will always think of Sandra! Her life was enriched by the countless number of people she has met over the years through her service and passion to serve the community.

She was also the President of the Taiwanese Chamber of Commerce at the time of her passing. I had the pleasure and honor to meet Sandra when AREAA San Diego was in the planning stage and that was the beginning of our friendship. Not only did she open her doors so we could have a place to hold our monthly meetings but also ensured breakfast was ready at her own expense. Sandra is key to the success of AREAA San Diego.

To our beloved Vice President Sandra “Kazuko” Chang, we will miss you terribly.

You have definitely left a LEGACY. You will always have a place in our hearts!

- Shonee Henry

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APRIL 15, 2010 PALM DESERT, CALIFORNIA

AREAA RECEPTION AT REOMAC

HOSTED BY AREAA ORANGE COUNTY

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