Thank you very much. I want to thank NHS for opening their doors today, and for the great work they do on housing issues all across the country.

The Senator laid out the issue very well. The good news is the housing market in this nation has never been stronger. The rate of home ownership has never been higher: 67 percent of the American people now own their own homes.

The value of the homes, are going sky- high. In the past two years or so, the value of a home could go up about 20 percent. What does that mean? It means that if you bought for $200,000, that house is now worth about $240,000. That's a good thing. That means you have $40,000 of equity, 20 percent more equity than you had just a couple of years ago.

So there's now wealth in that home. That's all good news. But when you have wealth, when you have riches, it seems in this society that you always have people trying to steal that wealth. You always have the modern-day version of the pirates who have targeted that wealth.

You now have a group of scam artists who have seen this increase in the equity in the home, and literally are trying to steal it. They're trying to scam it, they're trying to connive it away from people who own homes legitimately.

The FHA, Federal Housing Administration, which is part of HUD, and does mortgage insurance, was not immune to that. That's what the Reverend brought to our attention, and that's what the Senator brought to our attention.

We've been working on this in other parts of the country. Because FHA does many mortgages, many mortgages for people who can't find affordable housing otherwise, FHA was involved with these "scam artists".

As the Senator said, they run the gamut. They are the appraisers, they are the inspectors, they can be the lenders, they can be the brokers. They conspire among themselves to defraud the homeowner. There are different varieties of the scam, but at the end of the day, they wind up getting rich, they steal the equity in the home.

We've said, at the FHA, not only did we want to correct the problem, but we wanted to become the model for what the industry should be doing. That's what we've done with the FHA. We've not only remedied the problems, but we believe we now lead the industry in establishing the model of what should be done.

We set up something called the Home Buyer Protection Program, which revamps the entire home-buying process, puts in stiffer penalties for anyone who would defraud the buyer. What we say in the Home Buyer Protection Program is that if the appraiser lies to the owner, or deceives the owner, that will now be a federal offense, punishable as a federal violation of law. Likewise with the inspector, because the home inspectors are often working in league with appraisers.

The FHA Home Buyer Protection Program also says that any time an appraiser goes into a house and does an appraisal, they'll also do a physical review of that home. So if there's a serious physical issue, you'll find out as part of the appraiser's process.

We have kicked bad lenders out of the FHA program. We have increased monitoring of the bad lenders. We believe that the FHA transaction now can be a model for the private sector to follow. The FHA default rates are already down to 1 percent. So we've seen the results already.

That doesn't mean that we can all breathe a sigh of relief because this has been taken care of. It's been taken care of with FHA.

But FHA is only one player in the market. The basic problem still exists. They call it predatory lending. These are predators. As long as you have wealth in society, you will have predators. We have wealth in the home industry. That's why we want buyers to beware.

There has been a tremendous explosion in what they call the subprime market. These are the home improvement loans. These are the cash stores. These are the ads you see late at night that say, "Need cash fast? Call 1-800-CASH. You may have cash in your home. No questions asked, you'll have cash tomorrow."

My grandfather used to say, "If it sounds too good to be true, it probably is." These are the con men at work. Sometimes they'll have a great spokesperson. Buyer, beware. Buyer, beware.

That's what we are talking about today. The subprime loans have exploded, from 100,000 in 1993 to 1 million in 1998. We want to make sure that the buyers are on notice.

The 24 zip codes that we announce today are what are called Hot Zones. If you live in one of these zip codes, be on extra alert. Because in these areas, we believe you have predators operating.

Be especially careful, if you're in one of these Hot Zones. Every buyer should be careful, and we want to be helpful with that. We have a hot line number, 1-877-554-9316. If you have any question about a transaction, ask the question before you sign on the dotted line. Afterwards, might be too late. Ask the question first. If you have any, any problem, any feeling that this might not be right, please call and get the information first.

We're also announcing today, that we are going to be funding organizations like the NHS all across the nation, who will be available to do what we call Home Buying Counseling, who when a potential home buyer, or a homeowner who's doing a refinance or a second loan, has a question, we'll have groups who can be responsive to them, and can answer the questions.

Here in New York, we're proud to announce grants to the Neighborhood Housing Services, to Jamaica Housing Improvements, and to the Cypress Hill Local Development Corporation, as well as the AARP, and ACORN, who work nationwide. They do great work here in New York, but they also work nationwide.

These groups will be operating. They'll be available to do counseling - to answer your questions. We've put that together with the hot line, and I think we'll have a real system that, if buyers have questions, we can get them the answers. We can keep the dream of owning your own home, which has always been the American Dream. The dream of owning your own home should stay a dream, should not turn into a nightmare. Know the facts before you sign on the bottom line.

Content Archived: January 20, 2009