Prepared Remarks of Secretary Shaun Donovan at the National NeighborWorks
Association Annual Membership Meeting

Arlington, Virginia
Thursday, March 22, 2012

Thank you, Lou -- for that introduction and for your tremendous work with the National NeighborWorks Association. Many thanks also to your executive director, Dave Brown.

And I want to thank each of you -- for your support during this budget process, as well as your work to put a spotlight on the importance of funding housing and community development this year.

Indeed, one of the most important missions of the National NeighborWorks Association is that you not only get to work in local communities -- you also articulate the concerns and challenges facing these places to the Congress and to the Administration.

Today, I want to talk with you about this environment we're in -- how far we've come, and the role you've played in helping us get to this point.

I want to talk about how HUD's budget invests in the families and communities you serve.

And I want to discuss why stretching every dollar as far as it can possibly go is central to creating housing and communities built to last.

Pushing Back Against the Crisis

But first, let me simply say, this is an audience that understands what home means.

As you put it, "Home Matters."

It matters to jobs, to economic development, to our health and to our children's future.

And in this crisis we've seen just how true that is.

Think about how far we have come -- when President Obama took office, we were losing 753,000 jobs per month.

Home prices had declined for 30 straight months.

And foreclosures were surging month after month.

Today, while more work remains to be done to create an economy built to last, we meet at a far more encouraging moment.

We've added private sector jobs for two straight years, for a total of over 3.9 million jobs.

In the last year, 2.2 million private sector jobs were added -- and we've added more jobs in the last 6 months than any six-month period in nearly 6 years.

Foreclosure notices are half what they were at the beginning of the Administration.

And more than 5.7 million families have received mortgage modifications that have helped them stay in their homes.

Very little of that progress would have been possible were it not for housing counselors in communities across the country.

After all, it was a NeighborWorks study that showed that distressed homeowners are nearly twice as likely to receive a modification on their mortgage if they are working with a housing counselor.

A recent Urban Institute study that found that borrowers in foreclosure were 70 percent more likely to get up to date on payments if they received counseling, and homeowners who received a mortgage modification to resolve a serious delinquency were 45 percent more likely to sustain that modification if it was obtained with the help of counseling.

In terms of pre-purchase counseling, many of you know that one study found that face-to-face counseling was the most effective mode of delivering counseling, resulting in a 34 percent reduction in delinquency for participating homeowners. And HUD is conducting its own long-term study to demonstrate how technology is transforming and improving the effectiveness of these services.

That's why I believe that the vast network of housing counselors that HUD funds is one of our greatest strengths -- one we recognized last month when NeighborWorks helped us honor our nation's housing counselors in Los Angeles as part of the White House Champions of Change initiative.

Think about it: HUD-approved housing counselors like so many in this room have assisted nearly 8 million families over the last three years -- nearly 2 million last year alone.

But it's not just the sheer number of people we've helped that's important -- even more important are the results we've produced.

A recent study found that 9-in-10 families who received foreclosure counseling from HUD-approved counselors continued to live in their homes 18 months later.

For serving on the front lines in the battle against foreclosure since the housing crisis began, to assisting homeowners and tenants to improve their housing conditions, we owe a debt of gratitude to skilled, objective and knowledgeable housing counselors -- and to express to you my personal gratitude, I will be sending each HUD-approved housing counseling agency a statement of appreciation in the days ahead.

After all our counselors have done these past few years in particular, like many of you, I was, frankly, stunned when Congress eliminated funding for our grants in Fiscal Year 2011.

But we didn't sit on our hands. With your help, together we built our case for restoring some of that funding.

This audience knows that housing counseling is about so much more than helping families who are in trouble with their mortgages.

Just as important is the critical work counselors do to give families the quality information they need to make good housing and financial decisions.

And thank you for helping Congress understand that while the National Foreclosure Mitigation Counseling funds that NeighborWorks administers are essential to our ability to assist homeowners in acute distress, HUD funds support the entire range of counseling and training necessary to ensure people make good, responsible choices that work for families in their communities -- whether it's buying or renting, improving financial literacy, protecting families' rights against discrimination, or even preventing homelessness.

You've helped us make the case that housing counseling works.

And because you did, last week we announced more than $42 million in housing counseling grants to 468 organizations in communities across the country that prevent foreclosures and help families find decent housing.

I'm proud we were able to restore some of this funding.

But I'm even prouder that we were able to cut the time it took to get these funds on the street by nearly 70 percent compared to 2010. And I expect that progress to continue once Congress approves our plan to establish the Office of Housing Counseling within HUD.

As important as these resources are, at a time of great need and limited resources, they are not the only arrow we have in our quiver.

Indeed, in the recent $25 billion mortgage servicing settlement with the five largest servicers, $2.6 billion was provided to states that can be used for foreclosure prevention efforts such as housing counseling.

Already, we've seen Attorneys General across the country commit to using these funds to help homeowners.

Indeed, in the hard-hit Midwest, Illinois Attorney General Lisa Madigan--a Democrat--and her neighbor, Indiana Attorney General Greg Zoeller--a Republican--are each planning to use these funds for counseling and other resources that have proven track records of stopping foreclosures.

While needs and requirements vary from state to state, we are encouraging Attorneys General from all 49 states that received funds from this settlement to follow their lead. And we are looking to NeighborWorks to continue your engagement with the Attorneys General -- and to let them know the importance of using these funds to help homeowners.

Housing and Communities Built to Last

But as this audience knows well, to create an economy built to last, we need housing and communities built to last.

That's why the Fiscal Year 2013 budget President Obama recently proposed is so important. Targeting scarce federal resources to the areas critical to growing the economy and restoring middle-class security, this budget invests in education and skills for American workers, in innovation and research and development, and in clean energy and infrastructure.

I'm proud HUD's budget does its part to meet the President's charge -- bringing private capital back to the housing market, keeping vulnerable families in their homes, continuing progress on our economic recovery, and reforming government.

And nowhere is that charge clearer than our investments in community and economic development -- in the funding for the Community Development Block Grant and the HOME Investment Partnerships and the $100 million of funding the budget would restore for our Sustainable Communities Grants.

Collectively, these investments help each of you strengthen neighborhoods in your communities and connect those neighborhoods to the vibrant regional economies America needs to compete.

This audience knows how important CDBG is to economic development and creating jobs at the local level.

From funding the construction of public facilities and housing rehab, to acquisition and public services, to more costly repairs like water and sewer infrastructure, dollar for dollar, CDBG is the most effective job creator in our budget.

In fact, results from the Recovery Act show that CDBG created twice as many jobs per dollar as other Recovery Act programs.

Indeed, for every dollar CDBG invests in our communities, it leverages another $3.55 in private and other public dollars -- and efforts like the Section 108 loan guarantee program allow grantees to borrow five times their annual CDBG allocation.

That's serious bang for the buck.

CDBG not only creates jobs in the hard hit construction sector. By helping communities forge innovative partnerships around child care, it also provides the basic conditions communities need to attract businesses and grow and nurture their workforces for the 21^st century.

Equally important is the HOME program, which is responsible for producing a million affordable homes in your communities since it began.

HOME has been particularly critical during this crisis -- housing low-income families, creating good-paying jobs in your communities, and providing struggling cities and towns with essential help in a time of serious cutbacks.

As we make the case for funding these vital programs, we need to be able to make the case that these funds are being well spent.

That's why as soon as we took office we began moving forward with a rule including stronger standards for HOME developers, tougher underwriting requirements and additional spending deadlines. And in May, we will be unveiling our new web-based Consolidated Plan to ensure CDBG resources communities are using are connected to their larger goals for economic development and job creation.

Even still, as you know, this is a difficult budget environment -- one in which we have had to make tough choices. Choices we wouldn't make in a different fiscal environment.

In last year's budget agreement, we were forced to accept less funding for CDBG and HOME, despite great need at the local level -- and funding for our Sustainable Communities Grants was eliminated entirely.

This year, some have asked why not just simply combine Sustainable Communities funding with CDBG.

Well first, let's be clear, with Sustainable Communities grants representing one-thirtieth of the CDBG budget, doing this would have little effect on CDBG overall funding levels.

We can't pit one kind of funding against the other.

To create an economy built to last, we need both -- and to let people know that the key to extending larger formula investments like CDBG and HOME is through small catalytic investments like Sustainable Communities.

For instance, Washington County, Oregon used a Sustainable Communities Challenge Grant to develop an affordable housing strategy for the region. Now, the County is using HOME funds to not just build that affordable housing -- but build it in proximity to light rail and amenities like grocery stores, coffee shops and restaurants that are the hallmark of any vibrant community.

Combining these funds not only leverages federal funds -- it also leverages new partners. Take Ranson, West Virginia--population 4,000--where economic decline has devastated more than a third of jobs in the local economy over the last decade.

Ranson is using a HUD sustainability grant to partner with neighboring Charles Town--population 4,300--to reverse that decline and create its own vision for a sustainable economic future.

In fact, with TIGER II grants from the Department of Transportation and funding from the Environmental Protection Agency to recycle contaminated Brownfield sites, the community is already in the process of creating a high-tech commerce corridor that includes housing, office space and community parks -- and using that investment to apply for a Section 108 grant to bring additional commercial development to the community.

Indeed, the demand for this kind of smart planning explains why half of our Sustainable Communities grantees come not from central cities, but from rural places.

And with one-third of your members hailing from rural areas, this is an especially important HUD initiative for your members to champion in the upcoming budget fight.

But ensuring our block grants work in concert with our planning grants isn't the only way we can create housing and communities built to last.

As this audience knows, over the last three years, the $7 billion we have invested in the Neighborhood Stabilization Program has been critical to helping some of the hardest hit communities during this crisis.

In fact, three-quarters of communities across the country with targeted neighborhood stabilization investments have seen vacancy rates go down -- and two-thirds have seen home prices go up compared to surrounding communities.

That is why President Obama has proposed Project Rebuild.

In places like Hernando County, Florida, targeted neighborhood stabilization investments have not only helped families like Sandy and Socorro Beiro move in to foreclosed homes in hard-hit places.

Just as importantly, they've helped builders like Dudley Hampton keep construction workers on the job and given real estate agents like Jackie King the opportunity to show and sell homes once again. Indeed, in the La Puente community, a predominately Hispanic suburb outside Los Angeles, these efforts have helped increase home prices by nearly 15 percent.

Project Rebuild would build on these successful investments -- allowing commercial redevelopment essential to neighborhood revitalization to be funded directly and expanding the ability of the private sector to participate with localities to ensure there is the expertise and capacity to bring these neighborhoods back in a targeted way.

And by creating 200,000 jobs in the places that need them most, Project Rebuild reflects a belief that I know all of you share:

That rebuilding neighborhoods is essential to rebuilding our housing market and economy. And I know we can count on you to deliver that message on Capitol Hill.

An Economy Built to Last

For me, for you--for all of us--each of these efforts comes down to a very simple belief:

That when you choose a home, you don't just choose a home. You also choose schools for your children, transportation to work, and public safety.

You choose a community and the choices available in that community.

And by providing counseling services families need to make good choices--and by planning for the future and stretching every community development dollar as far as it can go--these efforts are about creating an economy that isn't built on a house of cards, on phantom profits or on shady mortgage practices.

But rather an economy that's built to last.

That is why home matters.

That is why the work you do is so important.

And it's why I'm so proud to call each and every one of you a partner.

Thank you for all the work you do -- and will continue to do in the months ahead.

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