Prepared Remarks of Secretary Shaun Donovan at the Piece-By-Piece Conference

The Carter Center, Atlanta, GA
Tuesday, May 10, 2011

Thank you, Kelly, for that introduction and for your work at the Home Depot Foundation to provide affordable housing for America's families.

Thanks to all the remarkable partners here today who make up the Piece-by-Piece Initiative. Your work to help families is an inspiration -- and your collaboration is a model for communities across the country.

And finally, I'd like to thank HUD's own Ed Jennings. With Ed's leadership, HUD has committed to assisting 400,000 homeowners at risk of foreclosure in the region -- including nearly 60,000 here in Georgia.

It's an ambitious target. But as Ed knows, and so many of you know, with clear goals, the right tools and the right partners, you can achieve real progress for families.

So I'd like to talk to you today about how the Obama Administration and HUD have been working with all of you to keep families in their homes and rebuild neighborhoods harmed by foreclosures.

 I'd like to discuss the progress we've already made together, and the challenges that still lie ahead.  

And most important of all, I want to talk about holding ourselves accountable to producing results, so that every community can be a part, as President Obama says, of "winning the future." 

Weathering an Economic Storm

Obviously, the devastating effects of the recent tornadoes are on everyone's mind. Just this morning, I was in Griffin, Georgia, and saw some of the damage for myself. And our thoughts and prayers go out to all those families who have lost loved ones, or who have been displaced from their homes.

We are going to make the lives of those families whole again.

But Georgia's families--and families across the country--have only recently begun to emerge from a different kind of storm -- a storm in the housing market.

When President Obama took office, we were losing an average of 753,000 jobs a month. Job numbers had declined for 22 straight months, while home prices had fallen every month for 30 straight months -- by nearly a third. And home equity had been sliced in half, translating into a loss on average of over $80,000 for each American homeowner.

Indeed, before President Obama even set foot in the Oval Office, Georgia was one of the ten states hardest-hit by foreclosures.

Economists across the political spectrum were predicting a second Great Depression.

And so, this Administration took swift and comprehensive action to stop the bleeding.

Both the Federal Reserve and the Treasury intervened to keep interest rates at historically low levels for more than a year. This helped stabilize housing markets and the broader economy.

But of course, low interest rates only benefit consumers if there are mortgages available at those rates.

That's why the Administration moved to restore confidence in Fannie Mae, Freddie Mac and the FHA, which have enabled a robust refinancing market to emerge.

Indeed, tying many of our efforts together has been the FHA, which has been every bit the countercyclical force for our housing market it was designed to be when FDR created it.

Over the last three years, FHA's market share increased significantly, helping those in need, especially those with low incomes and homeowners from minority communities.

The most recent data shows that 60 percent of all African-American and Hispanic homebuyers purchase homes with FHA financing.

During that time, FHA has helped over 2 million families buy a home--80 percent of whom were first-time buyers--and helped nearly 1.5 million homeowners refinance into stable, affordable products, with monthly savings exceeding $100.

Collectively, these initiatives have resulted in record affordability of mortgage credit across the market. 

As the housing scorecard we released this month indicates, low interest rates have helped nearly 10 million homeowners to refinance, resulting in more stable home prices and $18.8 billion in total borrower savings.

Just as importantly, our economy has added 2.1 million private sector jobs over 14 consecutive months, including more than 800,000 jobs since the beginning of the year.

Working to Keep Responsible Families in Their Homes

At the same time we have worked to help our economy weather a storm in the housing market, President Obama and I are committed to making sure that families that try to do the right thing--the responsible thing--have every opportunity to stay in their homes.

Here again, FHA has been a critical tool in our toolbox -- responsible for more than 800,000 loss mitigation actions to help families keep their homes.

We've worked with the Treasury Department to improve the "Making Home Affordable" program to help troubled borrowers -- and while there's no doubt that HAMP has helped fewer people than we'd initially hoped, let's be clear: it has made a difference.

Our latest scorecard shows that more than 670,000 families have had their mortgages permanently modified by HAMP.

Together, HAMP and FHA's loss mitigation programs have set a standard for mortgage modification efforts that the private market has scaled up.  

All told, more than 4.5 million families have received restructured mortgages since April 2009 -- more than twice the number of foreclosures completed in that time.

Of course, for these efforts to make the biggest possible difference, families need to be able to access them. 

That's why the counseling so many of you provide is so important.

Over the last two years, HUD-approved housing counselors have helped 6 million distressed homeowners. 

According to NeighborWorks America, distressed homeowners working with a housing counselor are nearly twice as likely to receive a modification on their mortgage.

I've seen for myself the difference counselors can make. 

Last year in Oakland, with Congresswoman Barbara Lee, I met an elderly widow named Elizabeth Gilmore who had been stuck in limbo with her servicer for over a year -- unsure if she was ever going to get the loan modification she needed to save her home from foreclosure.

Hers was the kind of story we've heard about time and again -- families doing everything they can to do the right thing, only to find themselves overwhelmed by what is sometimes a daunting process.   

But at HUD's Help for Homeowners event in Oakland, she was able to sit down with a HUD-approved housing counselor and work out a modification with a payment she could afford to save her home.

And I've seen other examples of what counselors can do for families in communities all across the country -- including right here in Atlanta at an event with Congressman John Lewis.

Now, I know many in this audience are HUD-approved housing counselors. And I know you are concerned about the recent budget agreement, which eliminated housing counseling funding for the fiscal year 2011.

I am, too.

To be clear, the $73 million for housing counseling grants to more than 500 national, regional and local organizations from our 2010 budget that we announced in December--including $4 million to over 20 Georgia housing counseling agencies--is still on the streets. 

But the elimination of housing counseling funds for FY 2011 will be particularly painful. The President made clear he disagrees with a number of cuts in the budget agreement, and this is one of them.

Indeed, President Obama's proposed FY 2012 budget requests $88 million for housing counseling. And I ask you to share the important work partners like you are doing to keep families in their homes, so we can make the case to Congress to restore housing counseling funding.

Rebuilding Our Hardest-Hit Neighborhoods

Because, as you know, foreclosures don't just harm families -- they devastate communities, as neighborhoods face vacant and abandoned homes, blight, and plummeting property values.    

Indeed, the foreclosure crisis hit our communities hard -- rolling back 15 years of gains in some urban cores.  

In communities from Jamaica, Queens, to Las Vegas, Nevada, to right here in Atlanta, far too many families felt the shock and the pain of losing a home, or saw the disastrous impact foreclosures had on their neighborhoods.

That's why the $7 billion in Neighborhood Stabilization funding we've provided communities around the country provided through three rounds is so important. 

Pumping $200 million into communities here in Georgia, NSP funds are helping localities buy up foreclosed and abandoned homes -- and in some neighborhoods have helped reduced vacancy rates by as much as 50 percent.

In Cobb County, we've seen how these tools have helped communities strategically target their resources to the properties that can be converted to the quality affordable rental housing families need -- and to the neighborhoods where the investment of these resources will have the biggest possible impact on the surrounding community, creating a multiplier effect. 

These resources have also given communities a leg up when it comes to purchasing REO properties.

Indeed, as Ed reported to me in our monthly HUDStat meeting in Washington, nearly three-quarters of the properties Cobb County's contractor bought under the first round of NSP were from FHA -- providing more homeownership opportunities and increasing the availability of affordable rental housing in our hardest-hit communities.

And through our "First Look" partnership, we're working with key financial institutions and advocates like NCLR and the Urban League to take to scale the approach pioneered by partnerships like Cobb County -- to ensure that those funds are targeted to places with the greatest need.

First Look gives NSP grantees an exclusive 12-to-14 day window to evaluate and bid on properties before others can do so -- maximizing the impact of NSP dollars in our hardest-hit neighborhoods, making it more likely the properties communities want to buy are strategically chosen and cutting the time it takes to re-sell foreclosed properties in half.

All told, we expect NSP will impact 100,000 properties in the nation's hardest-hit markets -- properties that make up 20 percent of the REO in NSP-targeted areas.

Tools like First Look help ensure we not only get these funds out the door -- but quickly and to the communities that need them.

Last year alone, our partner, the National Community Stabilization Trust, gave communities an exclusive window to purchase 70,000 REO properties -- helping 188 communities access REO properties and save over $26 million in taxpayer funds, an average discount of nearly 13 percent per property. 

First Look is precisely the kind of game-changing, market-oriented and cost-effective approach Piece-By-Piece has been forging on the ground here in Georgia.

Game-changing in the sense that instead of just buying the next 10 or 20 distressed properties that become REO, we can help communities selectively pick the most strategically important properties, whether they are REO, short sale or deed-in-lieu.

Market-oriented in the sense that instead of working with a few REO servicers, we can work with all the major financial institutions, sub-servicers, and GSEs who manage distressed assets.

Cost-effective in the sense that instead of using a staff intensive, one-off property acquisition approach, our partners have access to automated, state of the art mapping and property management tools -- so communities can spend less time and energy thinking about spending taxpayer dollars and more on getting the most out of them. 

Those may not be terms that have normally been associated with HUD in the past. But with new leadership, new tools and new partners, I'm committed to ensuring every community in America will in the years to come.

A Different Kind of Partner

All told, while there is no doubt we still have a long way to go, these efforts have helped us make progress. 

But where the number of homes delinquent for more than 90 days, in foreclosure or REO here in Georgia was steadily climbing when we took office -- over the last 15 months, with these tools, we've reversed that trend, cutting Atlanta's foreclosure rate by 16 percent. And we've seen similar progress throughout the state of Georgia.

Just as importantly, we've begun to lay a new foundation for partnership.

I hope it's clear that the Obama Administration, HUD and leaders like Ed Jennings are committed to helping your communities recover from this economic crisis -- to being the partner you need to rebuild in the wake of this storm.

Having been a city housing official, believe me: I understand the frustrations of dealing with HUD in the past.

And I also understand that different communities face vastly different challenges and require very different tools.

But one thing that every community needs is a partner -- who can provide resources, but also the guidance necessary to use those resources in the best possible way, specific to the challenges they face.

That's the kind of partner we're committed to being to Piece-By-Piece at HUD.

Together, we will help this state emerge from this crisis -- we will recover. 

We will rebuild.

Piece-by-piece, brick-by-brick, block-by-block. 

That's how you make change at the local level -- that's how you win the future. And that's what we're going to do here in Georgia.

So, thank you for your work -- and thank you for this opportunity.


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