Prepared Remarks for Regional Administrator
Rick M. Garcia at the
2011 Colorado Association of Hispanic Real Estate Professionals
Denver, Colorado
Friday, April 1, 2011, 9:30 am

Introduced by Rogelio Rodriguez, President
Colorado Association of Hispanic Real Estate Professionals (CAHREP)

Regional Administrator Rick Garcia speaks to audience

Thank you, Rogelio for your warm introduction and for your leadership with the Colorado Association of Hispanic Real Estate Professionals. I am glad to join you today as you help increase the sustainable Hispanic homeownership rate by empowering the real estate professionals that serve Hispanics. Here with me today also are: Charlene Dombrosky, Director of the 17-state Homeownership Center and Nancy Sullivan, Director of our REO Division, who will speak specifically about FHA updates and FHA regulations on your educational panel this morning.

You may remember that just three years ago, FHA was marginalized, insuring only two percent of new mortgages. Millions of borrowers took out exotic subprime loans. And, there was a general over-enthusiasm in the housing market, particularly as an investments strategy. As a result, the housing market slowed, and then entered a prolonged period of turbulence.

Today, thankfully, we are on the road to recovery. The slow, steady process of stabilization has begun.

But we still have a lot of work to do. This is a decisive moment in our economic history. We needed the vision and wisdom ...the king that created Federal Housing Administration-FHA- in 1934. Nearly 80 years ago, responding to the housing crisis was a result of the depression. President Roosevelt worked with Congress to pass legislation which established the FHA.

One historian described the rapid improvement in the housing market "arranged an institutional landscape in which unprecedented amounts of private capital could flow into the home construction industry...and revolutionized the way Americans lives."

Another historian wrote "the creation of FHA and other actions saved the American Dream of Homeownership."

We see this happening again. Over the past three years, FHA has shown, once more, that is a necessary countercyclical force in the housing market. It reacted to the difficulties in the housing sector by increasing its market share, helping those in need, especially those which low incomes and homeowners from minority communities.

The market trends show that FHA now insures approximately 30 percent of new loans and 20 percent of the refinances over the past 2 years. The resurgence of FHA is one of the most important reasons that the economy is starting to stabilize. 

I would hate to think of where the housing market would be without FHA:

• without the hundreds of thousands of new loans and refinances;
• without the 400,000 people who still have a home through our loss mitigation efforts; and
• without the liquidity and stimulation provided by our growing presence in the housing market.

Data shows that FHA has been particularly key to supporting homeowners from minority communities.

Have the market for Homeownership changed?
The latest PEW Hispanic Center statistics indicate that in Colorado:
the overall homeownership rate was 67.5%;
Hispanics having a 50.5% homeownership rate.
FHA insured about the same amount of first-time Hispanic Homebuyers.-15% in 2010 and the 16% to-date in 2011.

Will there be more financing for homeownership, particularly, first-time buyers?
Nationally, about 60% of FHA endorsements are home purchases. The other 40% is FHA refinancing. Of the single-family home purchases, 80% are first-time homebuyers.

FHA continues to be a good option for first time buyers with 15-30 year fixed or adjustable rate mortgage, 3.5% down payment, and with upfront and 6% maximum seller contribution. Also, FHA loans are assumable by qualified buyers.

Regional Administrator Rick Garcia sitting with the CAHREP President Rogelio Rodriguez

Many people ask me, what are the REO trends? Will there be an increase of HUD REO properties coming to market? At the end of February 2011 approximately 2,400 Colorado homes were in HUD's REO inventory, compared to about 1,350 Colorado homes in our inventory last year. Currently, the supply of REO properties is higher than the past three to four years.

Another question that I am frequently asked: What is the trend of between purchases of single-family homes by investors compared to owner-occupants?
In FY 2009 and 2010 about 21% of HUD REO sales were to investors. The sales to investors have increased 8%, thus far in FY 2011. So far, this fiscal year, 29% of REO home purchases were by investors.

As we look to the future, we can optimistically discuss an increase in homeownership from Generation Echo and Generation Y- those born between 1982 and 1995. There are nearly 80 million young people and they're already having a huge impact on entire segments of the economy. As their population ages, they will be become the next dominant generation of Americans to purchase and/or rent housing.

Our new Homeownership Director Charlene Dombrosky and REO Director Nancy Sullivan will give you more in-depth information on risk management and FHA policy changes in a few minutes. We have also provided each table with a Colorado FHA statistic sheet to give you more in-depth data that our Homeownership staff will explain.

Now, let me turn to our Fair Housing Program. We are particularly proud to be with you this week as we recognize César Chávez Day, celebrating the birthday of César Estrada Chávez and serving as a tribute to his commitment to social justice and respect for human dignity. In addition, April is Fair Housing and Equal Opportunity Month, a time to reaffirm HUD's commitment to fair and decent housing in inclusive, sustainable communities for all. That isn't just "part" of HUD's mission - but its very core.

With passage of the Fair Housing Act in 1968, we affirmed that government has a role to play in creating integrated, inclusive, diverse communities with access to opportunity for all.

That is fair housing.

That is equal opportunity.

And that is what we are working toward every day at HUD.

And not just at HUD. This commitment starts at the top in this Administration. Indeed, long before he became our President, access to opportunity for all was what a young community organizer named Barack Obama, was fighting for in Chicago's neighborhoods of concentrated poverty.

To be sure, one of our most important responsibilities is enforcing that historic law. This work is always important, but particularly so today, as we battle an economic crisis in which housing was ground zero for discrimination, fraud and predatory lending. At the same time, evidence shows that discrimination continues, particularly against people of color, families with children and the disabled.

This past year, HUD has filed 10 Secretary-initiated complaints and completed 14 Secretary-initiated investigations nationally. We're not waiting for individuals to come to us, we are monitoring, tracking and taking the initiative.

In Colorado, 97 FHEO cases were filed with HUD and Colorado Civil Rights Division in 2009. In FY 2010, 92 cases were filed with HUD and CCRD.

Of those the cases filed on average, there were 55% by disability,26% by race, and 6% by sex. We experienced a decrease in discrimination complaints by national origin from 20 % in 2009, to 7% in 2010. We did see an increase in retaliation claims filed. In 2009. they were 7% of the cases filed increasing to 23% in 2010. Claims on familia status stayed the same at 10%.

We are seeing fewer discrimination issues with real estate ads.

And while there isn't a federal law yet to protect against discrimination on the basis of sexual orientation and gender identity, the Department has taken a number of steps to ensure the inclusion of the LGBT community in a number of our core programs.

Panel members L-R: Nancy Sullivan, Homeownership Center (HOC) Real Estate Owned (REO) Director; Charlene Dombrosky, HOC Director; Deb White, CAHREP member/presenter

In January, Secretary Donovan proposed new regulations intended to ensure that its core housing programs are open to all eligible persons, regardless of sexual orientation or gender identity.

This new commitment to the strategic and aggressive enforcement of the Fair Housing Act and protecting against discrimination of all kinds starts at HUD.

Our success is measured by whether HUD is increasing the number of low-poverty, racially-diverse communities in America------what we call "Affirmatively Furthering Fair Housing."

It's measured by whether those touched by HUD programs have access to opportunity - good schools, safe streets, decent jobs.

It's measured by whether families live in opportunity-rich neighborhoods or have the choices they need to move to one.

HUD's fair housing mission is embraced by every office of the Department, including our Homeownership program---all who are committed to promoting diverse, inclusive and sustainable communities that welcome all-comers and strengthen America's position in a global society.

Whether it is housing-specific resources like counseling and vouchers, new financing tools for transit-oriented development, or incentives that encourage the repurposing of polluted land for affordable housing development, we want to help communities across the country use every available resource to turn segregated neighborhoods of concentrated poverty into the integrated, healthy, sustainable communities that Dr. King envisioned and the Fair Housing Act requires.

An example of Denver's transit-oriented development is in the La Alma Lincoln Park neighborhood near the 10th and Osage light-rail line. La Alma Lincoln Park is one of Denver's oldest neighborhood's first settled in the 1850s. Secretary Shaun Donovan came to Denver just a year and a half ago to provide $10 million in funding to help develop sustainable, energy efficient multifamily housing for all: from babies to seniors.

We know that diverse, inclusive communities offer the most educational, economic, employment opportunities to their residents, cultivate the kind of social networks our communities and our country need to compete in today's increasingly diverse and competitive global economy. When you choose a home, you don't just choose a home - you also choose schools for your children and transportation to work.

We know students of all races and backgrounds are better prepared for the workforce and engage in more complex and creative thinking when they learn in a diverse environment.

We understand that home buyers choose a community - and the opportunities available in that community.

Whether it's pushing back against foreclosures, making affordable rental housing a priority again in this country, or planning our communities in a more integrated and inclusive way, how we develop our national housing policy in this moment of national crisis is a defining challenge - and it is absolutely essential to the success of the Latino community in the 21st century.

With each of us doing our part to ensure that tax dollars are invested in diverse, inclusive communities, to make clear what is expected of local governments and to work together to increase access to opportunity for all, we can ensure that our children's futures-and the choices available to them-are no longer determined by the zip code they grow up in. I'm honored to join you all today. Thank you.

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