April 20, 2010 – MBA Staff (continuing its series of interviews with key players in the real estate finance industry, MBA NewsLink sat down with Mortgage Bankers Association Vice Chairman Michael Young. He is chairman of the board at Cenlar FSB, Ewing, N.J., and became MBA vice chairman October 2009. An active MBA member for more than four decades, Young is a former member of MBA Board of Directors and currently sits on MBA’s Council on Ensuring Mortgage Liquidity, a task force of MBA members created to examine policy options and issue recommendations for the future of the secondary mortgage market. Young has also served on MBA’s Residential Board of Governors (RESBOG) and its Strategic Planning Committee.)
MBA NEWSLINK: What do you see as the single-most important issue facing the real estate finance industry in the short term? In the long term?
MICHAEL YOUNG: The single-most important issue facing the real estate finance industry in the short term is job creation in the United States. Significant job creation would lead to increased consumer spending, which in turn would stimulate the economy and stabilize housing values and simultaneously boost the mortgage industry.
As to the long term, the past two years have surfaced issues which stressed industry assumptions grounded in the experience of the past 40 years. Those issues include the moral hazard of principal reduction, routine short sales, homeownership for all and the discussion of bankruptcy cramdown on first mortgages.
In the long term the real estate asset must be re-established as a bedrock investment. This process will require real estate financing consistent with the long-term value proposition required of a bedrock investment.
NEWSLINK: You’re a member of MBA’s Council on Ensuring Mortgage Liquidity, which has gotten attention on Capitol Hill and within the industry. Are you optimistic that the secondary markets can revive? What needs to be done to make that happen?
YOUNG: Yes, I am very optimistic that the secondary market can be revived. The Council on Ensuring Liquidity in the Secondary Market under the leadership of MBA Chairman Elect Michael Berman,CMB, has served as a thought leader in examining alternatives to create a vibrant and sustainable secondary market. The Council concluded that an explicit federal guarantee on securities collateralized with conforming vanilla products offered the least complex and most direct route to revive the secondary market. The Council’s recommendations have been forwarded to Congress, the Treasury and a broad spectrum of interested organizations. The work product developed by the Council has served as a starting point in the discussions of both the short and long term role of GSEs.
Finally, there is already a revival well underway in the commercial secondary market. A number of transactions have been consummated over the past nine months based on the long-standing relationship history of the issuers and investors.
NEWSLINK: How has Cenlar specifically responded to challenges to position itself for the future?
YOUNG: Cenlar has positioned itself by focusing on the needs of the marketplace. We then created scalable capacity through arduous planning for technology, personnel and space. We review strategic directions in the marketplace on an ongoing basis to keep ourselves ahead of the curve in order to provide the broadest menu possible to our clients. In the end we are able to offer our clients a private label product selected to meet their individual strategies.
NEWSLINK: As you move up the MBA leadership ladder, what issues do you see where you can have influence?
YOUNG: Under the leadership of current MBA Chairman Rob Story Jr., CMB, a strategic planning process including governance has been undertaken. Completion of this initiative is particularly important as the industry remakes itself and MBA continues its role as the principal spokesman for the real estate finance industry. I believe that I can contribute to the strategic planning, governance and financial reform issues as well as the determination of the GSE role.
(These conversations are intended to have an interactive element as well. If you have questions for Young or other MBA officers featured in coming weeks, submit them to email@example.com. We will publish selected questions/responses in subsequent issues of MBA NewsLink.)
Source: MBA NewsLink, April 20, 2010