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While the context was really commercial real estate finance, our own Joe Cosenza—a REALTOR® for 42 years and one of four principals for The Inland Real Estate Group, Inc., headquartered in Oak Brook, Illinois—represented the National Association of REALTORS® (NAR) and the Illinois Associations of REALTORS® at a field hearing of the U.S. House of Representatives Subcommittee on Oversight and Investigations yesterday in Chicago.
Cosenza gave suggestions to help rebuild the commercial real estate industry, which supports “9 million jobs in every sector of the economy.” His message was well received by the five members of Congress at the hearing including from Illinois Judy Biggert (R-Hinsdale), Luis Gutierrez (D-Chicago), Melissa Bean (D-Barrington), and Bill Foster (D-Geneva) and from Kansas, Committee Chairman, Dennis Moore (D-Lenexa).
Cosenza shared suggestions developed by NAR in the context of his own experience to the members of Congress:
- Accelerate depreciation on commercial assets to 15 years from 39 to improve cash flow.
- Increase the asset cap on business lending from 12.25% to 25% for credit unions in an effort to provide more market liquidity and options for business owners. Cosenza asked the members of Congress to support H.R. 3380 which is legislation that addresses this issue.
- A mortgage insurance program that would cover the “gap” between current appraised value and the debt owned in order to refinance healthy, performing loans.
- Federal guidance to encourage extending current loans as an option instead of refinancing.
- Extending and simplifying the Term Asset-Backed Securites Loan Facility (TALF) program. Commercial mortgage-backed sercurities deals can be complex and lengthy and with the expiration date of June 30, 2010 potential investors will be excluded from this program. TALF simply has not had enough time to maximize its effectiveness.
- Improving and expanding the Small Business Administration 7A and 504 loans in addition to simplifying and decreasing costs in the application process.
Regional Director of the Federal Deposit Insurance Corporation Anthony Lowe acknowledged that Chicago area unemployment has doubled and that the region accounts for nearly three quarters of the state’s total workforce; to the degree that commercial real estate can be improved, unemployment can begin to improve as well.
Said Cosenza in an NAR statement on the hearing: “Commercial real estate is the basis for much of the growth in the American industry and economy, and having a stable and well-functioning commercial market is crucial to our nation’s economic recovery. But the market is now in the midst of a financial meltdown and many property owners are underwater. We cannot regain our footing until action is taken on such issues as an enhancement of liquidity and extension of terms for performing properties.”
