Prepared Remarks of Secretary Shaun Donovan at the National Council of La Raza 2012 Annual Convention

Mandalay Bay, Las Vegas, Nevada
Monday, July 9, 2012

Thank you, Maria, for that kind introduction, as well as Jerry Ascencio and Maria Cabildo.

And of course, I'd like to thank my partner at the Consumer Financial Protection Bureau, Richard Cordray, for his leadership on behalf of hard-working families across the country.

Finally, I'd like to thank Janet Murguia and the leadership of NCLR for the extraordinary work you've done on behalf of Latino families, particularly in the wake of this economic crisis.

I'm proud to say that the Obama Administration and HUD have been your partners every step of the way.

Think about it. With your help, we've connected struggling families to the housing counselors they need to stay in their homes -- and because we did, in the last three years nearly 8 million families have been assisted by HUD-approved housing counselors like NCLR and its affiliates.

With your help, we've targeted neighborhood stabilization dollars to places with the greatest need -- so the communities hit hardest by this crisis have a real chance to rebuild.

And standing shoulder-to-shoulder with you, we've fought housing discrimination in communities across the country.

That's always important, but particularly so as we help Latino families rebuild in the wake of this devastating crisis.

And let's be clear, while this crisis has touched the lives of every family -- with 1.3 million Latino families having lost their homes, the Latino community has been hit hard.

According to the Center for Responsible Lending, Latino and African-American homeowners are almost twice as likely to have gone into foreclosure as other populations.

Twice as many Latino and African-American homeowners have lost their home to foreclosure or are seriously delinquent compared to non-Latino and African-American homeowners.

To anyone who cares about an equitable, fair, and inclusive America, those statistics aren't just troubling.

They are completely unacceptable -- to me, to President Obama, to anyone who is working to lift up our families, rebuild our communities, and grow our economy.

And so, I want to talk to you today about this Administration's commitment to Latino families and homeowners, and the steps we've taken to preserve the dream of homeownership.

I want to discuss the work we've done to help struggling homeowners rebuild what they've lost during the crisis.

And I want to describe the steps President Obama, Director Cordray, and I know we still need to take to ensure every Latino family gets a fair shot in America's 21st century economy.

The Progress We've Made

I don't have to tell this audience where we were when the President first stepped into the Oval Office some 42 months ago.

America's economy was shedding 750,000 jobs per month. Housing prices had fallen off a cliff -- declining for thirty straight months. And every month, it seemed foreclosures were setting new records.

And while too many families are still struggling to pay their mortgage or keep their homes, we now stand at a far more encouraging moment.

Foreclosure notices are half what they were in early 2009.

Because we helped communities struggling with concentrated foreclosures, places with targeted neighborhood stabilization investments have seen vacancies fall -- and home prices rise.

Because we provided critical support to the FHA, we preserved homeownership opportunities for minority families. In fact, since the President took office nearly 600,000 Hispanic families have bought or refinanced their home using an FHA-backed loan -- and this year alone, approximately 55 percent of Hispanic families have used FHA financing.

But even as we work to speed recovery, we have reason for optimism. In fact, we've just come out of the best winter and spring for home sales since the crisis began -- with home prices increasing not just month-to-month, but year-over-year.

We haven't seen that kind of momentum in our housing market in 5 years -- before the crisis began.

But we know we have more work to do, especially to reach Latino families. And that's why today, I'm proud to announce that the Obama Administration is launching a redesigned, Spanish-language version of our Making Home Affordable website.

Not only will this website be more interactive and easy to use, but with program information organized to respond to a borrower's individual needs, step-by-step information on how to apply for help, and resources on how to contact housing counselors and avoid mortgage scams, Spanish-speaking families will have the tools they need to get help.

That's the kind of inclusive, smart government approach we're using to push back against this crisis -- and you can visit to learn more.

But this new website isn't the only tool Latino families have to continue the momentum we've built in our housing market. Indeed, with the recent $25 billion servicing settlement, we have an opportunity to speed our progress still further.

You know the appalling way banks treated families throughout this crisis -- from lost paperwork when people were applying for help, to dropped calls to signing thousands of foreclosure documents that banks never bothered to read.

Our investigations at HUD revealed even more. We found homeowners only 30 days behind on their mortgage who never got a call from their lender about the options available to them.

As you know, over and over, folks who should have been able to get some help early on--never got that help -- help that in many cases banks were legally obligated to provide.

Allowing some of our largest and most powerful institutions to play by a different set of rules than everybody else--to commit forgery and perjury against ordinary families--is not only appalling.

It's also illegal. And it's not what this Administration--and this President--believes we stand for as Americans.

And so I'm proud to say that the servicing settlement makes them pay for that behavior -- and not just by cutting a check, but by forcing them to help actual homeowners.

Providing tens of billions in direct relief for families, it forces lenders to reduce the size of unaffordable loans. It forces them to refinance loans for underwater homeowners. And it forces them to pay billions of dollars to states and consumers to provide other forms of relief like housing counseling services.

With your help, Attorneys General from both parties--from Democrats like Catherine Cortez Masto here in Nevada to Republicans like John Suthers of Colorado--have committed to using these funds to help homeowners.

But the job's not done -- and in states that haven't yet decided how to use their settlement dollars, we need you to keep the pressure on. In places like Arizona, South Carolina, and New Jersey, you still have an opportunity to make a difference.

But billions of dollars in resources for struggling homeowners isn't the only victory in this settlement.

You just heard Director Cordray announce the important changes the CFPB has made to the Good Faith Estimate lenders are obligated to provide their customers. In keeping with the Homeowners Bill of Rights announced by President Obama, this will go a long way toward improving disclosure, putting an end to hidden fees, and bringing real transparency to the home-buying process.

And I'm proud that the new customer service standards the banks agreed to in this settlement ensure those protections won't simply end when homeowners get the keys to their new home.

That means, at the same time Director Cordray's team is putting in place a single, straightforward set of commonsense rules that families can count on when they're buying a home, the standards in this settlement will give people the confidence that lenders and servicers are following a comprehensive list of rights should they ever lose a job or have a medical emergency that puts their home at risk.

Just last week we past an important milestone--90 days since the federal court signed off on the settlement--and that means that borrowers can now expect these servicers to have made substantial progress on implementing the new servicing standards.

For example, a single point of contact when they ask for help from the bank. One person will know the borrower's status, coordinate all the documents and ensure the homeowners are considered for all assistance programs for which they are eligible.

This is a significant step in ensuring that the banks meet their obligation to implement all of the servicing standards within 180 days.

That means no more lost paperwork. No more runaround. And no more excuses.

Reducing Foreclosures, Rebuilding Equity

Still, for all the progress we've made, everyone here knows homeowners don't need to be on the verge of foreclosure to have been hurt by this crisis.

Right now, millions of responsible homeowners--who are doing the right thing, and making their mortgage payments every month--still can't refinance and take advantage of record-low interest rates because they are underwater.

Indeed, according to a survey by the Pew Hispanic Center, nearly a third of Latino homeowners owe more on their mortgages than their homes are worth.

That not only prevents them from saving thousands of dollars per year -- it also prevents our economy from receiving the lift that low interest rates typically provide.

That's why last fall, the President called for us to take more aggressive steps. Within six weeks, we had identified barriers that were holding people with loans backed by Fannie Mae and Freddie Mac from refinancing -- and as a result, nearly a million homeowners have applied and stand to save on average $3,000 per year.

Indeed, nationwide, refinancings have doubled since these changes were first put into place -- and in the increase is even more dramatic in hard-hit states like Florida, where applications are up 126 percent, and here in Nevada, where they're up 300 percent.

And as a result of our decision to dramatically cut fees for FHA financing which went into effect last month, we expect refinancings to rise still further.

In fact, where FHA normally processes about 17,000 applications per month, we've already seen more than 75,000 applications in less than three weeks.

But that is still not enough. That's why President Obama is pushing Congress to act on four legislative proposals that will help ensure every responsible borrower has the opportunity to refinance and rebuild equity.

The first, Senator Feinstein's Expanding Refinancing Opportunities Act, would provide homeowners whose loans are not guaranteed by the government access to simple, low-cost refinancing.

The second, developed by Senators Menendez and Boxer, would allow us to clear the remaining barriers to refinancing for homeowners with loans backed by Fannie and Freddie.

To ensure more families can refinance with a better deal, the Responsible Homeowner Refinancing Act creates competition between lenders and removes other hurdles like unnecessary appraisals, which will help in slower markets.

We also need to ensure homeowners can rebuild equity.

Indeed, of all the eye-popping statistics we've seen during these past few years, perhaps the most striking is that Latino families lost two-thirds of their median household wealth between 2005 and 2009.

To me, that's an absolute tragedy -- particularly given how many of these families were just starting to enter the middle class after decades of hard work.

After all, savings in our homes is the single biggest source of how we send our kids to college. It's how entrepreneurs get the capital they need to start a small business -- and how people save for their retirements.

That's why Senator Merkley's Rebuilding Equity Act is so important -- giving underwater homeowners the chance to apply savings from refinancing to rebuild equity in their homes.

If they do, the majority of those families could get back above water in five years or less. That's not only good for them -- it's also good for our economy.

And it's why this Administration supports the Project Rebuild Act introduced by Senator Jack Reed, which would create 200,000 jobs in communities across the country -- providing a boost to our construction industry, which provides good paying jobs to nearly 3 million Latinos.

Just as importantly, Project Rebuild would help stabilize home values in the hardest-hit places.

This audience knows that the second a single foreclosure sign goes up on your block, your home value drops by as much as $10,000. Well, homeowners in places like Las Vegas often live near as many as a dozen homes with those signs.

But with tools like HUD's Neighborhood Stabilization Program, we've been pushing back.

Not only is NSP on track to create nearly 90,000 jobs and address 95,000 vacant properties across the country, in hard-hit places like Hernando County, Florida, it's helping families like Sandy and Socorro Beiro move in to once-foreclosed homes.

Several NCLR affiliates here today are NSP partners. Thank you for your work. Indeed the $140 million to Chicanos Por La Causa to revitalize neighborhoods in 8 states and the District of Columbia is the single largest federal grant ever given to a Latino network.

But the reason we need Project Rebuild is that these efforts don't just create jobs and transform neighborhoods -- they also boost home values. Indeed, recent data shows that three-quarters of places that received targeted investments through the first two rounds of NSP showed increased home prices.

In fact, in places like the La Puente community, a predominately Hispanic suburb outside Los Angeles, NSP efforts have helped increase home prices by nearly 15 percent.

Project Rebuild would build on all this progress -- presenting a real opportunity for so many of the nonprofit partners here in this audience to take the work they've already done through NSP to the next level.

Rebuilding Faith in the American Dream

When I think about how far we've come during this crisis--and the challenges that still lie ahead--I think of families like the Vallejos.

Like so many families throughout this crisis, the Tom and Tamera Hewlett-Vallejo had spent years trying to work with their bank to save their home to no avail.

As they said the day their Sacramento home was about to be auctioned off, "we literally went to church on Sunday praying for help."

Well, because of the servicing settlement, their prayers were answered. Through the settlement, the Vallejos were able to reduce both their mortgage balance and their interest rate, not only saving them nearly $7,000 per year -- but giving this hard-working family the help they needed to keep their home.

That's why, whether the issue is helping families avoid foreclosure or refinance, these efforts aren't only about rebuilding the wealth we've lost during this crisis -- they're also about rebuilding our faith in the American Dream.

I'm proud to live in a country that recognizes when families like Tom and Tamera Hewett-Vallejo almost have that dream taken from them, we have a responsibility to stand up for them.

And I'm just as proud to work for a President who recognizes that the American Dream is about so much more than simply taking out a mortgage -- that it's also about the opportunity to raise your children in a safe community, to send them to good schools, and to have the security to be able to retire with dignity.

And if this crisis has taught us anything about the American Dream, it's that if you can't be protected from predatory lending and unscrupulous servicers…if you can't move to get a new job because your home is so deeply underwater…or if you can't even buy a home in the first place--no matter how hard you've worked--then that's no dream at all.

But restoring our faith in the American Dream isn't just the right thing to do for families.

With Hispanic purchasing power expected to rise by another 50 percent over the next four years--and with Hispanic homeownership accounting for more than half the total growth in homeownership in the country-- it's also the right thing to do for the future of this country.

Put simply, an economy built to last must be built on the hopes and aspirations of the Latino community.

But we can't do it alone. We need your help to make the case that the job's not done -- that we can't afford to return to the days when minority homeownership was seen as just a vehicle for profits on Wall Street or when a family could be penalized for nothing more than having faith in the American Dream.

That's not right. That's not the country I want for my children -- or you want for yours.

President Obama, Director Cordray and I want to build a country where that faith is rewarded. Where hard work is a pathway to opportunity once again. Where we have an economy built on the values and virtues of the families and communities that represent the future of America in the 21st century.

That's a dream worth fighting for. And in the weeks and months to come, I know we will together. Thank you so much.


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