Fulfilling the Dream


It's great to be here in Florida. I bet I'm the first out-of-state visitor in awhile who hasn't asked for your vote!

My esteemed predecessor at HUD, Senator Mel Martinez, thank you for coming today. I truly appreciate your leadership in the Senate on FHA reform.

Floyd Robinson, thank you for the tour of this fabulous center. And to all the employees here, thank you for your hard work, patience, and spirit.

You know, Oscar Wilde had a famous definition for a cynic. "The cynic," he said, "knows the price of everything and the value of nothing."

So true-especially when it comes to homeownership. The cynics can tell you the price of the current housing slump. Eleven straight months of falling home prices. Billions of dollars written off by lenders. Billions more in subprime interest rate resets.

What the cynics won't tell you is the value of homeownership.

Homeownership remains one of the surest paths toward independence and wealth creation. Owning a home contributes to the health, safety, and stability of families, communities, and the nation.

And we must never let the subprime mess, costly as it is, blind us to the real and lasting value of owning a home.

That is why HUD's central goal remains promoting sustainable homeownership. And that is why the work you do here is so important to the cause.

You had a vision of the future that few others had. You saw value where others didn't. Where others saw a declining market share for FHA loans, Bank of America saw a safe, secure, affordable, and, yes, attractive product that would prove its strength over time.

In 2006, B of A's Allen Jones put it this way: "At a time when most in the industry moved away from government lending..., Bank of America went the other way."

Smart move. Your volume of FHA and VA loans nearly doubled between 2006 and 2007.

You now have 300 employees here in Jacksonville. And you've had to open a second loan fulfillment center in Dallas to handle the demand.

Well, I hate to tell you, but you might have to open up a few more if HUD has its way!

We are eager to introduce more Americans to the safety and security of an FHA loan.

So last year, President Bush announced the FHASecure program. It is targeted to families with subprime loans who have good credit and payment histories who want to refinance before their reset rate hits.

For the first time, even if they're delinquent, these families are now able to qualify for an FHA loan.

In just five months, FHA has helped more than 75,000 people refinance who are current or past due on their home loans. That includes nearly 3,000 here in Florida. By year's end, we expect more than 300,000 families to qualify nationwide.

If Congress would complete its work on the FHA modernization bill that Sen. Martinez introduced, we could reach even more.

The FHA has done a great job. But it's 74 years old. A number of its regulations are outdated, pricing it out of many housing markets.

For two years, the President and I have urged Congress to act. Despite overwhelming bipartisan support, a final bill has not reached the President's desk.

Every day of delay puts more families at risk of foreclosure. It's time to act.

Much of the credit for FHA's success is due to my friend, Assistant Secretary for Housing and Federal Housing Commissioner Brian Montgomery. He visited this center in 2006. And he has ably led our internal reform efforts.

For years, he and I expressed concerns about the rise of exotic subprime loans. Many were pushed on families without regard to whether they could handle them.

You know the horror stories-what New York Times economics columnist David Leonhardt called "wishful thinking loans"-or what some cynical lenders called "NINJA" loans-that stands for "No Income, No Job, No Assets."

The days of "wishful thinking" are over. More than 1.8 million subprime loans are scheduled to reset by the end of next year.

Many families simply cannot pay their reset rate. Those who fail to renegotiate may find themselves "underwater"-owing more than the home is worth. Ultimately, they may face foreclosure.

According to RealtyTrac, more than one percent of U.S. homes were in some phase of foreclosure in 2007, double the rate of 2006. In Florida, that figure is two percent-double the U.S. rate. In Jacksonville, some reports show six hundred families evicted every month.

Foreclosure often-too often-comes as a surprise. Surveys show that about half of the families being foreclosed upon did not discuss it beforehand with their mortgage counselor or servicer.

Communication is a two-way street, however.

Many mortgages are sold, resold, chopped up and repackaged, so it's hard to tell who's in charge or even what number to call.

Of course, as long as housing prices were climbing, the phone rarely rang. Few people worried about the downside. Now that they're falling, we see the downside every day.

Houses-and sometimes, tragically, even pets-are abandoned by their owners. Property values fall, affecting schools, hospitals, communities-all of us.

I want homeowners to realize that the key to recovery is in their hands. Foreclosure is not inevitable.

HUD has held foreclosure prevention workshops all across the country-including one in Palm Beach County tomorrow.

In these workshops, industry leaders meet with families face-to-face. Our HUD-approved housing counselors learn their stories so they can offer to help. Families leave knowing that we're in their corner, eager to find a solution-to trade silence and shame for hope.

I'm proud of our counselors. President Bush has increased funding for housing counselors by 150 percent since 2001.

They're building lasting relationships of trust at the community level. I don't have to tell you how important that is.

Now we need your help to get the word out. A survey this week by Freddie Mac found that more than half of delinquent homeowners didn't know that free counseling exists for them. That must change!

Last year, Treasury Secretary Paulson and I called on lenders, loan servicers, mortgage counselors, and investors to work together to help struggling homeowners.

The result was the HOPE NOW Alliance.

Nearly half a million letters to delinquent homeowners have been sent out under the HOPE NOW banner. Their hotline-888-995-HOPE-receivesabout 4,000 calls per day.

We want to improve lines of communication so that the only time a homeowner is surprised is on his or her birthday!

HOPE NOW recently announced a three-part mortgage relief plan.

The first option is to refinance an existing loan into a new private mortgage. The second option is to move homeowners into an FHA loan under FHASecure.

And the third involves freezing the current interest rate for five years-the so-called "Teaser Freezer."

We estimate that 1.2 million Americans could be eligible for relief under these options over the next two years.

I also want prospective homeowners to understand their rights and responsibilities before they sign on the dotted line.

It's the same old story, isn't it? The benefits are bannered on page one while the costs are buried in the fine print.

I'm reminded of the old joke: "Why is it you can always read a doctor's bill, but you can never read his prescription?"

Last month, President Bush signed an executive order creating the Advisory Council on Financial Literacy. HUD is playing a leading role.

Our new brochure, called "Home Economics," details the five steps to become financially literate and prepared to own a home.

We have versions in both English and Spanish. We're in the process of sending out four million copies.

Finally, forty years after the passage of the Fair Housing Act, we must hold predatory lenders accountable for their actions.

Our new Fair Lending Division is up and running, investigating complaints of predatory and discriminatory behavior.

I'm talking about situations where lenders refused to make loans, refused to provide the same information regarding loans, or imposed different terms or conditions on a loan because of a person's race or national origin.

The vast majority of lenders are fair and above-board. But I've seen the damage that discrimination can do. I saw the redlining that was rampant before we passed laws curbing it.

I strongly believe the only thing that should determine if a person gets a home loan is their credit history and ability to make payments, not their ethnicity, spoken accent, or skin color.

We know it will take time for the housing market to recover. And we know there will be pain in the meantime. But organizations like yours are helping families see the value in pushing forward.

I'm impressed by what your customers have to say. Customers like military veteran Terry Crawford. "These women," he wrote, speaking of your employees, "were relentless in their efforts to get my mortgage application approved." He added, "If your company has any type of employee recognition or award for excellence in customer satisfaction or customer service, I wish to not only nominate them but to ensure and guarantee their winning."

Terry, please stand up and be recognized.

Then there's the case of Amanda Perez, a young single mom whose mother, Lilly, had died of breast cancer. B of A approved an FHA loan for a $91,000 house for Amanda, which brought both her and her grandmother to tears.

Let's have a round of applause for all the people who worked on those two loans.

You can bet Amanda and her grandma know the value of homeownership.

And you can bet the people in this room know the core values that are the foundation of homeownership-values such as doing the right thing, trust and teamwork, and leadership.

The same values you see in the eyes of the hardworking mom or dad sitting across the kitchen table from you.

Loan Officer Lucy Cullum lived those values. And she inspired her customers and colleagues to live them, too.

Tragically, she never got to see this marvelous facility, dedicated in her name. But her legacy lives on-both here and at HUD, through her husband, my colleague, Jim Beavers.

At a time when the cynics say the American Dream of homeownership has become a mirage, simply not worth the trouble of chasing it, you are happily proving them wrong, one satisfied customer at a time. All I have to say is, keep on Fulfilling the Dream. Thank you.

NOTE: To read the Press Release, visit

Content Archived: January 19, 2012