Briefing for the
Council of Urban Professionals and the
Network Professionals Association


Thank you, Lucas (Boyce). I am pleased to join you to talk about minority homeownership.

On September 22nd, 145 years ago, in 1862, President Lincoln met with his cabinet very close to this room. He presented them with the preliminary draft of the Emancipation Proclamation, which included the promise that all former slaves would be "forever free."

There wasn't unanimous agreement...there was dissent. And public outcry followed. And I have often thought of Mr. Lincoln, sitting in the Oval Office, determined, courageous, and often alone.

But Lincoln prevailed. As he said at Gettysburg, the Emancipation Proclamation gave the nation "a new birth of freedom."

This document is sacred to me. It is the promise of a nation that Black Americans and all Americans deserve, and must have: the full rights of citizenship and equal opportunity. One aspect of our freedom is housing. Homeownership empowers, it gives one a stake in the community. It is a source of wealth and of pride.

As you know, President Bush committed this nation to expanding minority homeownership. It is part of his effort to make America an "ownership society," with homeownership at its core. Nearly 70 percent of all American families own a home. That's our national figure. But something interesting happens when you break out those numbers by race. No more than 50 percent of Black American families own a home, and only about 60 percent of Hispanic Americans and Asian American families are homeowners. Compare this figure to non-minorities, where the homeownership rate is 74 percent.

So we have to find the ways and means to increase minority homeownership.

However, many first time and minority homebuyers face significant challenges when trying to purchase a home. According to one study, 40 percent of African Americans and 23 percent of Hispanics pay an interest rate three percent higher than the market rate. The Center for Responsible Lending reports that 51 percent of refinancing transitions in Black American neighborhoods are sub-prime loans. The loan denial rate is as much as twice as high for minority applicants than white households.

If we can overcome these disparities, then we can change the face of homeownership in America. One study found that we can close the gap by half in the next ten years if we get fair loans to those with income.

That is why the President has made a public commitment to increasing minority homeownership. President Bush has committed this country to five-and-a-half million new minority homeowners by the end of the decade, and we have made substantial progress. We are more than half-way there with 3 million new minority homeowners.

But with the subprime difficulties and other problems, we have to aggressively work to expand minority homeownership.

First, we must end predatory lending. There is no place for it in American housing or lending practices - no place at all!!! Predatory lenders have targeted homebuyers - especially minorities -- and successfully manipulated many into unwarranted, illegal, or unethical loans. HUD and the Justice Department are working together to prosecute predatory lenders. There has been much more attention to this problem on the state and local levels, too. We must keep up the heat, even turn it up.

Second, we must urge prospective homeowners, particularly members of our minority communities, to use housing counselors. Consumers must be educated. Our citizens need to be empowered with the tools to know when to spot a sham. Often homeowners don't carefully read their contracts; some don't read them at all. The key is to be able to read and understand the fine print, and also to know when to ask for help. At a summit I convened earlier this year, there was testimony that half of all homeowners facing foreclosure were afraid to contact their lender for help. That's right - instead of picking up the phone and asking for help, people are willing lose their house. We also learned that, while most people facing foreclosure are afraid of their banks, they are much more open to talking to a local non-profit counseling agency about their problems.

Third, we must increase financial literacy. The President has directed several agencies, including HUD and the Department of Education, to work together to enhance financial literacy.

Fourth, we must continue to help minority citizens take that first step through the President's "Downpayment Initiative." Tens of thousands of minority homeowners have received assistance with their down payment. This is a valuable program that we must continue to support.

Fifth, we need Federal Housing Administration (FHA) Modernization. The President wants FHA to return to its original role, which was to help bring stability to the real estate market. This will help break the cycle of foreclosure and price depreciation, and bring much-needed liquidity to a mortgage market that has quickly become constricted.

FHA has already pro-actively helped many borrowers this year. Many of these loans were to members of our minority communities. FHA has always been a good friend to Black Americans and other minority groups, with disproportionately higher rates of participation.

The President has also announced a new initiative called "FHASecure." Under "FHASecure," borrowers who are otherwise creditworthy, but who have recently become delinquent on their mortgage, would now be able to participate. So, families with an otherwise strong credit history, but find themselves in default because of the reset in their mortgage rate, will receive some help.

The President's action is a positive step that is being immediately implemented. Through "FHA Secure," we estimate we can help an additional 80,000 delinquent yet credit-worthy borrowers re-finance into a safer FHA loan. This is in addition to the 160,000 non-delinquent borrowers we already expect to help next year, as the sub-prime market continues to unwind. This would bring the total of new borrowers assisted through FHA's existing re-finance program and "FHA Secure" to 240,000 next year.

But we need more than our own administrative actions...we need legislation to help even more people. So, the President has also pushed Congress for FHA Modernization. The House of Representatives recently passed a version of his request.

Finally, we must continue to maintain and expand affordable housing for those who rent. This is our largest fiscal commitment at HUD. It is a daily challenge. We confront efforts to sell housing complexes for remodeling into higher-priced apartments. We are rebuilding housing units in the Gulf Coast after Hurricanes Katrina and Rita. Through our block grants and efforts to revitalize cities, we are in the "affordable housing business."

A couple of week ago, I went to Chicago for the opening of a revitalized business area connected to affordable housing. This was the site of the old Robert Taylor and Stateway Gardens housing complex, one of the worst in the country. But through our work with the City of Chicago, those crime-ridden, drug-infested units are gone. They have been replaced by a mix-income neighborhood, where doctors live next to teachers, lawyers next to fire fighters. And this is what we want...affordable housing that is livable, decent, healthy, and safe. If it can be done there, then any city with the will can accomplish the same transformation.

You see, I believe that, together, we can shatter any barrier, overcome any difficulty. We can change opinions, patterns, and traditions. In partnership, we can make a profound difference.

Almost 70 years after the Emancipation Proclamation, in 1934, the year FHA was created, a remarkable man began teaching at Howard University, just a few blocks from here: Dr. Benjamin Elijah Mays. He was the Dean of the School of Religion. And you know that he later became the president of Morehouse College, where Martin Luther King was his pupil and friend. Dr. Mays preached a powerful message, a message of hope, empowerment, and achievement. He once wrote, "The central questions confronting every black man are what he can do to enlarge his freedom, to create in himself a sense of his inherent worth and dignity, and to develop economic and political security." He said these were questions that all Americans confront.

Well, one answer to all those questions is simple: homeownership. And with each new homeowner we see that answer at work: more freedom, greater dignity, more economic security. And Dr. Mays urged each of use to make this "a time for greatness." I believe we can do that as we continue to strive to become an "ownership society."

Thank you.


Content Archived: December 27, 2011