HUD Secretary and Mayor Reed Discuss New Housing Refinancing Plan to Help Underwater Borrowers, Stabilize Housing Market

City of Atlanta Mayor Kasim Reed, HUD Secretary Shaun Donovan, Mike Beatty, Commissioner, Georgia Department of Community Affairs and Noel Khalil, CEO and Chairman of Columbia Residential

The U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan and Atlanta Mayor Kasim Reed toured the Edgewood development in Northeast Atlanta October 25, 2011 to demonstrate how the President Obama's proposed American Jobs Act and Project Rebuild can help stabilize home prices, revitalize neighborhoods, create jobs, and support local economies throughout the City of Atlanta. Secretary Donovan also spoke about the new refinancing plan announced yesterday and how it will help families who are underwater on their mortgages.

"We can do more to help American families and improve the housing market. Too many Americans who have done all the right things - they have paid their bills and are current on their mortgages - are still stuck in 6% or 7% mortgage because home price declines have made them ineligible for refinancing. Yesterday we announced a series of steps which will help responsible borrowers take advantage of today's record low mortgage rates," said Secretary Donovan. "These new steps will save underwater homeowners thousands of dollars each year, and it didn't take an act of Congress. Now we need Congress to step up and pass the American Jobs Act. Included in the American Jobs Act is Project Rebuild, which helps put construction workers to work rehabilitating vacant or abandoned homes and businesses," he added.

Edgewood Development in Northeast Atlanta

Yesterday, the Federal Housing Finance Agency (FHFA) announced a set of steps which will help responsible borrowers with little or no equity in their homes take advantage of today's low mortgage rates. The FHFA removed caps for deeply underwater borrowers and cut costs and eliminated refinancing fees. That means more homeowners will have the ability to refinance and save hundreds of dollars each month. Additionally, those who are looking to refinance through this program will finally find competition for their business from other lenders, because the FHFA has removed key frictions that have made lenders reticent to offer new refinancing to underwater borrowers. This will mean better rates and lower costs for borrowers. FHFA also extended the date for homeowners to take advantage of this program through 2013.

Recent HUD statistics have shown that communities with neighborhood stabilization investments have seen 67 percent better home sale price changes, 73 percent saw better vacancy rate improvements, and 47 percent saw better home sale and vacancy rate improvements, as compared to similar communities without neighborhood stabilization improvements.

The State of Georgia has received over $341 million in previous neighborhood stabilization efforts and municipalities like the City of Atlanta could receive up to $47 million in funding for Project Rebuild.

If approved by Congress, Project Rebuild would invest $15 billion in proven strategies that leverage private capital and expertise to rehabilitate hundreds of thousands of properties in communities across the country. Building on the successful ideas developed during the implementation of the Neighborhood Stabilization Project (NSP), Project Rebuild would include the following innovative ideas:

• Allow for the revitalization of commercial properties
  
  
• Include For-Profit Entities to Gain Expertise, Leverage Federal Dollars and Speed Program Implementation
  
  
• Increase Support for "Land Banking"
  
  
• Create Jobs Maintaining Properties and Avoid Community Blight

Project Rebuild will create nearly 200,000 jobs nationwide and is fundamentally an investment not just in hard hit places but also in the families who live there - the millions of homeowners who have seen their property values decline through no fault of their own, just for being near a foreclosed property. Its inclusion in the American Jobs Act reflects President Obama's belief that rebuilding neighborhoods is essential to rebuilding our economy.

###