Prepared Remarks of Secretary Shaun Donovan at the National Council of La Raza 2010 Annual Conference
Thank you, Julie, for that generous introduction.
It's a pleasure to be before the National Council of La Raza. And let me thank everyone here today--my fellow panelists. Mayor Castro, thank you for hosting us. It's always good to see Angela Glover Blackwell. And I want to say a special word of thanks to NCLR's board and president, Janet Murguía.
Lastly let me recognize two HUD faces here--Assistant Secretary for Community Planning and Development, Mercedes Marquez and Assistant Secretary John Trasvina, who heads up our Office of Fair Housing and Equal Opportunity.
For more than four decades, the National Council of La Raza has been bringing people together to create opportunity for Hispanic Americans. That's what this conference is about--and I'd like to take a few moments to share some of the progress we've made to make that possible since I joined you last.
We meet at an important moment for our country and our economy--when even after six straight months of private sector job growth, Americans are still hurting from a crisis that took a terrible toll on all of us--but minority communities in particular.
We all know how foreclosures in urban cores rolled back 15 years of gains in some areas--and how many of those families who have been able to stay current on their mortgage, have found themselves underwater, making it difficult for our economy to recover. Because when you can't sell your house, you can't move to where the jobs are.
And so, I'd like to make news today in that respect. Many of you are no doubt familiar with the Neighborhood Stabilization program, which has pumped $6 billion into communities around the country devastated by concentrated foreclosures and declining property values.
Today, I am announcing "FHA First Look"--which will give communities and consortia who have received funds from the first and second rounds of NSP the first crack at buying foreclosed homes that were previously insured by the Federal Housing Administration, part of HUD.
We are working closely with the National Community Stabilization Trust, of which NCLR is a key partner, to further expand this program beyond FHA properties--and I want to thank Janet as well as Mark Morial of the Urban League for their partnership in this effort.
We believe FHA First Look will provide communities with a powerful tool to help them convert these vacant properties into the affordable homes families need to thrive and our local economies need to recover.
FHA First Look speaks to a broader point about our housing recovery. The truth is, as hard as it is right now, it's even harder to imagine what would have happened had we not acted when we took office--when we were losing 753,000 jobs a month, home prices had declined for 30 straight months and Americans had lost $6 trillion in home equity.
That's why we boosted our housing counseling budget, which has served more than 288,000 Hispanic families since last October alone, many of whom were served by your HUD-approved counseling intermediary, the NCLR Homeownership Network. At HUD, we recognize that housing isn't about bricks and mortar--it's about people.
That's why we acted to shore up the FHA, which in 2008 was responsible for 45 percent of all new home purchases by Hispanics--more than Fannie Mae and Freddie Mac combined.
That's why HUD and Treasury launched the Home Affordable Modification program. The program wasn't perfect--partly because we wanted to get it up and running as quickly as possible. But we've made changes to make the program more accessible--holding servicers accountable, not allowing them to start foreclosure proceedings until the application process is complete, and allowing unemployed borrowers to get a minimum of three months of mortgage payment relief while they look for work.
And as of last month, we made sure that if you receive a trial modification, you get pre-approved for a permanent modification. The only requirement is that the borrower has to successfully make the trial period payments.
Of course, not everyone will qualify for a HAMP modification. But they shouldn't lose hope.
If a family's loan is insured by the FHA, they may qualify for help through the FHA. More than a half million families have been assisted through FHA's loss mitigation options--about one out of every seven of whom are Hispanic or Latino.
Indeed, in large part because HAMP and FHA have helped set a standard across the industry, servicers now regularly offer loan modification programs of their own that provide reduced and sustainable monthly payments for families facing foreclosure.
As a result, nearly 3 million borrowers have received restructured mortgages since April of 2009--almost three times the number of foreclosures completed in that time.
And we're about to introduce another option this fall, when FHA unveils an expanded refinancing option for non-FHA borrowers who are underwater and owe more on their home than it is worth.
Because of these actions, while we are hardly out of the woods, we reversed the decline in home equity, home prices have largely stabilized and we have begun to create jobs again.
But we need to keep the pressure on. Through President Obama's Recovery Act, HUD invested $13.6 billion in communities around the country--to green its housing stock and revive stalled affordable housing projects while stabilizing neighborhoods devastated by foreclosures and preventing homelessness.
Many of these developments are just breaking ground now. In fact, just an hour ago I visited Lewis Chatham Apartments here in San Antonio where you can really see that this investment was targeted to the communities that need it most. Nearly two-thirds of dollars rehabbing or greening homes was invested in neighborhoods with median incomes under $30,000. Nearly half of these funds went to communities of color.
And it is creating jobs in those communities. Earlier this year, I visited a Philadelphia window manufacturer--which had been able to hire 100 workers thanks to NSP and Public Housing Capital funds provided through the Recovery Act.
Last month, HUD's Deputy Secretary, Ron Sims toured Wayland Village Senior Apartments, a $13.7 million Recovery Act-funded affordable housing development in Baltimore, which is not only contracting with minority-owned businesses, but also hiring people from the community to do the work.
Fifty-four percent of the contracts for that development went to minority- and women-owned businesses--and we see these types of job creating investments in communities of need as a model for how Recovery funding should be spent.
At the same time, we've been able to increase Section 3 reporting by 55 percent in 2009, bolstering our commitment to ensuring that low-income individuals have the same access to employment from businesses receiving Recovery Act contracts as anyone else.
Transforming Rental Assistance, Creating Jobs
These investments remind us that it's not just homeowners who are suffering in this crisis. That's why President Obama and I have proposed to transform the way America provides rental assistance to the four-and-a-half million people who rely on help from the Federal government to put a roof over their heads.
In many ways, our Transformation of Rental Assistance initiative is symbolic of this Administration's commitment to fundamental change.
Right now, public housing faces a backlog of capital needs that could be as high as $30 billion. At the same time, we estimate there is $25 billion of private and other public capital sitting on the sidelines, waiting to be invested in public housing--but can't be because of antiquated federal rules.
TRA would create hundreds of thousands of jobs--good jobs that can't be outsourced, including 90,000 jobs in the first year alone, in the neighborhoods that need them most.
Not only that, it would link public housing to investments in neighborhood schools, local businesses and other community anchors. Instead of being a problem for neighborhoods, this housing can be an asset to our communities.
Perhaps most importantly of all, TRA would put an end the "separate but inherently unequal" public housing system we have in this country where most families live in housing financed, developed and managed in ways that can be integrated--literally and figuratively--with the surrounding communities--while the two-and-a-half million poor families served by HUD's oldest programs don't.
Bringing change to these families won't happen overnight--it will require the grassroots to speak up and speak out. And we need your help--we need you and your members to let your representatives know how important creating jobs by transforming rental assistance is to your communities.
Realizing Our Potential
Before I open this up, let me say that I recognize that this is a difficult moment--that many of us are frustrated.
But let's not forget how far we've already come. When we took office, we were on the verge of a second Great Depression. Now, we're creating jobs and restoring home equity.
This year, we broke a 100-year impasse--providing 31 million Americans with health care. We are about to enact the most sweeping financial reforms to protect families since the Great Depression--creating a watchdog that looks out solely for the financial interests of families.
That is not only change we can believe in--it's change we need. Change that will impact each of us and our families for generations.
We need to remember how far we've already come, and together how far we have already proven we can go--when we work together, in common purpose, as one people.
In the coming months, that is our challenge--and I have no doubt that, together, we can meet it. Thank you.
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