The real estate industry faces “an enormous trust deficit with the next generation of homebuyers,” according to David H. Stevens, assistant secretary of housing at the U.S. Housing and Urban Development (HUD) and commissioner of the Federal Housing Administration (FHA).
“We’ve been through hard times before and the market will recover,” Stevens told real estate agents at the recent conference of the National Association of Hispanic Real Estate Professionals (NAHREP) and the Asian Real Estate Association of America (AREAA).
Stevens said that after a 30-month free fall in the real estate market, jobs being lost and credit frozen, the government had to intervene. He believes without the intervention, many lenders wouldn’t be doing business today. He added that with that intervention would have to come some new governmental regulation.
There are three areas that the real estate market needs to continue its recovery, according to Stevens:
- Fair access – Qualifying buyers should be more than the buyers’ FICO scores. It’s possible that access to housing will be cut if lenders continue to qualify buyers only by their credit scores. It’s important to provide responsible access, sustainability and affordability.
- Transparency – Regaining consumer trust will be key to the real estate industry’s recovery. The new RESPA regulations provide more disclosure to consumers but they may slow down the process. Excessive disclosure is needed at this time and REALTORS® should be embracing the reform. The rules will help replace trust in the industry.
- Accountability – FHA commissioner has shut down 1,500 financial institutions because the companies took advantage of the situation. Financial institutions have paid nearly $4.25 million in penalties.
“If financial institutions aren’t operating ethically and responsibly, we’re going to shut them down,” Stevens said. “We’ve suffered enough reputation damage. Our industry will have to continue to police itself and get rid of the bad actors.
“It’s as simple as treating everyone like your mom and dad,” he added. “Would you be making the same recommendation to your own parents? We need to operate under a new set of standards because we’ve shaken the confidence of an entire generation. We have a bright future because no one else can create the American dream like we do.”
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