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HUD No. 02-003
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For Release
January 28, 2002

President Bush and HUD: Unlocking the American Dream to More People than Ever Before

WASHINGTON - Housing and Urban Development Secretary Mel Martinez said today that, through the efforts of HUD to aggressively implement President Bush's housing agenda during the past year, families now have more opportunities than ever before to achieve the American Dream of homeownership. Martinez cited the growth in homeownership and affordable housing opportunities for low-income Americans; more protections for vulnerable populations such as homeless individuals, those with AIDS, and the elderly; and a strong emphasis on community renewal and neighborhood redevelopment.

"I am proud of our achievements during this past year at HUD," said Martinez. "Our successes in creating homeownership opportunities, increasing the supply of affordable housing, and rallying the President's armies of compassion to better serve the less fortunate are making a real difference in people's lives."

Since being confirmed as the nation's 12th Housing Secretary last January, Martinez has focused on:

Increasing Minority Homeownership. 2001 saw a record level of minority homeownership - 49%. Martinez introduced several key initiatives that have simplified the homebuying process, especially for minority and low- and moderate-income Americans.

  • Provided $50 million to implement President Bush's American Dream Downpayment Fund, which will enable more people to become homeowners by offering them downpayment assistance - often the biggest hurdle to homeownership. HUD will expand the program and provide $200 million in the 2003 budget.
  • Proposed increased flexibility of the Section 8 voucher program to permit low-income families to use up to one year's worth of the vouchers for the downpayment on a home, a move that could help hundreds of thousands families to buy their own home.
  • Created a new Federal Housing Administration hybrid adjustable rate mortgage to reduce a family's initial cost of owning a home.
  • Awarded $17.5 million in housing counseling assistance grants to 11 national and regional intermediary agencies and 358 local and state housing counseling agencies to counsel both current and would-be homeowners about their responsibilities and rights as owners and renters.
    Will increase housing counseling grants by $15 million in 2003 budget to bring a total of $35 million for housing counseling this year.
  • Announced simplification of FHA's streamline refinance transactions, which enable homeowners to have lower monthly mortgage payments without having to bring additional cash to the settlement.

Ensuring Affordable Rental Housing Opportunities. Recognizing that homeownership is an important goal, but not an option for everyone, Martinez took several important steps in 2001 to expand the availability of affordable rental housing, and ensure quality and options for residents.

  • Raised the loan limits for FHA multifamily insurance for the first time since 1992. The FHA mortgage insurance program has insured over $1 billion worth of new rental housing in the first three months of the fiscal year beginning October 1, 2001; this amounts to 85 projects, with about 15,000 apartments.
  • Preserved affordable housing in New York City through an unprecedented partnership between HUD and the City. Martinez and Mayor Rudolph W. Giuliani brokered a five-year plan to save affordable housing for 1,500 families who have fallen prey to unscrupulous lenders and nonprofit organizations in Manhattan, Brooklyn, Queens and the Bronx. In the partnership, HUD and New York City are investing nearly $168 million to rehabilitate more than 500 properties that were originally insured under HUD's 203(k) mortgage insurance program. These HUD-owned properties will now become part of the City's overall revitalization efforts in these neighborhoods.
  • Made the most significant multifamily programs self-sustaining, to help ensure continued production of multifamily rental housing.
  • Dedicated nearly $500 million to revitalizing public housing complexes across the country through the HOPE VI program.
  • HUD also awarded:
    • More than $604 million in housing assistance for the nation's low-income elderly.
    • $150 million in housing assistance for persons with disabilities.
    • Some $257 million to house people with AIDS. About 90 percent of the funding was awarded by formula to cities and states according to the number of reported AIDS cases, while the remaining 10 percent was awarded competitively to local and state governments and nonprofit organizations that provide housing to individuals with HIV/AIDS.
    • Nearly $105 million in emergency funds to help pay skyrocketing utility bills for public housing residents during the nation's energy crisis last winter.
    • $20 million in grants to improve access to housing by people with disabilities.

Protecting Vulnerable Americans. Under the leadership of Martinez, HUD strengthened its efforts to protect the nation's most vulnerable people: adults and children from low-income families, the elderly, and those with physical and mental impairments. Martinez focused special attention on predatory lending practices, lead paint abatement, preserving affordable housing in New York and homeless assistance.

Combating Predatory Lending. HUD has placed special emphasis on combating predatory lending practices, which include charging high interest rates, padding closing costs with excessive or unearned fees, "flipping" or selling properties for far more than they are worth, charging prepayment penalties and falsifying loan documents. HUD's focus on predatory lending practices in Baltimore and across the country has led to impressive results in the areas of enforcement and prevention. In just the past eight months, HUD's Fraud Prevention Initiative in Baltimore has netted more than 40 indictments, 27 successful prosecutions and 66 disbarments of individuals and corporations involved in predatory lending.

To prevent future predatory practices, HUD has:

  • Strengthened appraiser licensing and certification requirements.
  • Modified policies to now require a written report on a property's condition prior to making federally backed mortgage loans.
  • Published a rule that will prohibit "flipped" loans from being insured by FHA.
  • Increased funding by $15 million for housing counseling to educate homebuyers on the lending process and how to avoid becoming a victim of predatory practices.

Simplify the Homebuying Process. (Reform of the Real Estate Settlement Procedures Act). Martinez took several bold steps towards reforming and simplifying the homebuying process by calling for full, upfront disclosure and explanation of all fees that buyers pay at settlement.

  • Announced comprehensive reform of the homebuying process to make it simpler, clearer and less expensive.
  • Issued a clarification of existing rules for lenders and borrowers.
  • On November 13, 2001, entered into agreements resulting in $2 million in payments for violations involving illegal kickbacks and referrals.
  • Issued a mortgagee letter to all FHA lenders encouraging full disclosure at the beginning of the process, and also issued a policy statement for clarification and guidance on homebuying fees.

Protecting Children Against Lead Paint Hazards. HUD moved aggressively during the year to protect America's children and workers against the hazards of lead-based paint.

  • HUD and EPA recently brokered a landmark settlement with a Denver management firm that violated the Residential Lead-Based Paint Hazard Reduction Act. Under terms of the settlement, the Apartment Investment and Management Co. - AIMCO - will test and clean up lead-based paint hazards in more than 130,000 apartments in 42 states and the District of Columbia, and will pay a $129,580 penalty.
  • Provided $110 million to support a 10-year strategy to eliminate lead paint hazards in millions of private housing units occupied by low-income children.
  • Settled cases against landlords in New York City, Los Angeles and Chicago that resulted in $328,000 in civil penalties and child health improvement projects. The agreements also called for testing and clean up of lead-based paint hazards in more than 16,000 apartments nationwide.
  • Trained 22,000 workers in 200 cities on how to work safely with lead.

Providing Help for the Homeless. In November, Secretary Martinez and President Bush announced more than $1 billion in grants - the highest amount in history - to provide housing and support services to some 200,000 homeless families and individuals, including veterans. The grants, part of HUD's Continuum of Care and Emergency Shelter Grant programs, will help the homeless find emergency shelter, transitional housing and permanent homes.

  • Reactivated the Interagency Council on the Homeless, an independent working group chaired by Martinez which is coordinating the activities of 15 federal agencies to improve the delivery of housing and services to homeless individuals and families. Martinez also joined forces with Health and Human Services Secretary Tommy Thompson in forming a new HUD/HHS task force on the homeless.
  • HUD and HHS are also sponsoring training academies with state agencies to improve access by homeless men and women to the services they need. These academies bring senior state and local policymakers together to discuss how to improve access to mainstream federal service programs by persons who are homeless.

Implementing Sound Management Reforms. Martinez has worked to restore HUD's credibility in the eyes of the American public, putting the agency on sound managerial footing so that we can best meet the needs of those we serve. Among other initiatives, Martinez:

  • Streamlined HUD's management reporting structure to reduce the number of steps necessary to reach executive decisions, thereby improving the quality and delivery of services.
  • Established policies that require the agency to act on Inspector General audit findings in a timely manner. For the first time in two years, HUD completed the six-month period ending September 30 with no overdue management decisions on any of the Inspector General's 363 audit recommendations.
  • Immediately suspended the Officer Next Door and Teacher Next Door programs after discovering loopholes that could lead to fraud, thereby signaling HUD's resolve to address management deficiencies quickly. Martinez ordered a comprehensive review of the programs and implemented tighter oversight procedures before reinstating the programs in the fall.

Terrorism Recovery Efforts. Martinez directed HUD's swift response to the terrorist acts of September 11. Most notably, HUD awarded $700 million in funding - the largest such grant in its history - to help stimulate New York City's economic recovery following the terrorist attacks. The announcement was part of the Bush Administration's $2.8 billion assistance package to help businesses affected by the attacks on the World Trade Center and to spur the City's economic recovery.

As part of the recovery efforts, Martinez also:

  • Directed all FHA-approved lenders to provide mortgage payment relief to families affected by the terrorist attacks holding FHA-insured mortgages. Martinez also took the unusual step of asking all major mortgage lenders to provide relief to families with mortgages not insured by FHA.
  • Announced, with Defense Secretary Rumsfeld, that reservists and members of the National Guard called to active duty would receive a cut in their home loan interest rates. Under the 1940 Soldiers' and Sailors' Civil Relief Act, HUD advised all FHA-approved lenders to reduce mortgage interest rates to no more than six percent for military personnel on active duty.
  • Awarded the New York City Housing Authority and the New York City Department of Housing Preservation and Development $15 million in emergency assistance to help defer extraordinary costs incurred after the terrorist attacks.



Content Archived: April 9, 2010

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