Opening Remarks at the Housing Roundtable
PREPARED REMARKS FOR
ALPHONSO JACKSON, SECRETARY OF HOUSING AND URBAN DEVELOPMENT
GIVEN TO THE COLUMBUS BOARD OF REALTORS
THURSDAY, FEBRUARY 21, 2008
Thank you all for coming out today.
Congressman Pat Tiberi [R-OH], thank you for your commitment to the people of the 12th District, and your leadership in Congress, especially on FHA reform. You understand the housing market from all perspectives, and you know what it takes to bring it back to health.
I want to thank the Ohio Association of Realtors for joining us and the Columbus Board of Realtors for hosting this roundtable.
And to Kim Zurz, thank you for leading the Governor's Foreclosure Prevention Task Force. We recognize that solutions often come from the States themselves.
The spirit of discovery and opportunity is strong in Ohio, and in this town named after Christopher Columbus.
Two hundred years ago, this was America's frontier. Families came west, with a little push from Washington, to build their homes and lives right here. Ever since, the state has been known by many as the "heart of America."
Today, our hearts break as we see more and more Ohio homeowners go into default and foreclosure. It hurts to see families pack away their dreams and memories into boxes.
And it hurts to see the indirect victims of foreclosure-renters forced out, neighborhoods blighted, sometimes even pets left behind.
We are here to help the families of Ohio avoid foreclosure and keep their homes. And we are here to boldly reassert that the American Dream of homeownership is alive and well. We are committed to finding solutions that can sustain families through good times and bad.
But before we can solve a problem, we must first diagnose it.
Housing markets are not all created equal. In the Sunbelt, speculators tried to take advantage of the booming housing market by "flipping" properties. Here in Ohio, it's a little different. As income levels have gone down, foreclosure rates have gone up, rising 88 percent in 2007.
Many of these homeowners chose adjustable rate mortgages that are now resetting, leaving them with mortgages they cannot afford.
Now, we do not have a magic wand. We cannot turn the housing market around overnight.
We cannot tell buyers to pay more for a home. And we cannot dictate what sellers charge. I'm sure they would agree!
But if some root causes of the housing crunch are out of our control, the root solutions are not.
First, we must help people in distress right now.
That means giving them some relief to get back on their feet.
This is why President Bush and Congress worked so hard to pass the economic stimulus plan. Those rebate checks will no doubt be used by many to help pay off overdue mortgage payments or bills. I want to thank Congressman Tiberi for his strong support.
Second, families in distress must have an avenue to refinance from subprimes into safe, affordable mortgages, such as those provided by HUD's Federal Housing Administration.
The stimulus bill contains temporary help for families in high-cost housing markets to do just that.
A more permanent solution is called FHASecure.
It is helping families with good credit and payment histories who will be or have been hit hard by interest rate resets. For the first time, these delinquent families can now qualify for an FHA loan.
The President and I introduced FHASecure last August. As of this week, we've helped more than 94,000 homeowners. We expect to assist over 300,000 by year's end.
Let me tell you something: In January 2007, 632 Ohio families refinanced into the FHA. One year later, in January 2008, more than twice as many did, 1,400. That's a 122 percent increase. And a direct result of FHASecure.
Now, many of you know that the FHA had fallen out of fashion. Subprime loans were all the rage. Many subprimes were sound when issued, and still are.
But many first-time homebuyers, including low-income and minority families, found themselves steered into low "teaser" rate loans that hid the devastating true costs.
In some cases, buyers didn't even have to reveal their income or pay a downpayment to qualify. One lender even bragged about his NINJA loans: "No Income, No Job, No Assets" required.
This threatened to give the entire real estate industry a bad name. But now we're back to basics. Blocking and tackling. Savings and credit ratings. Fewer shortcuts.
As one newspaper wrote, "The FHA is a little old-fashioned in some respects. Be prepared to document your income, assets and debts." You're darn right!
And so we're letting the American people know the FHA is back. We're sending letters out to 850,000 Americans with resetting rates who might qualify for more affordable FHA loans. More than 15,000 letters have been sent already to Ohioans.
Recently, the Federal Reserve passed a series of Truth-in-Lending reforms, including a ban on so-called liar loans. This is good news. Our message is getting through.
But we cannot do it alone. Last year, Treasury Secretary Paulson and I also called on the industry to help struggling homeowners. The result was the Hope Now Alliance. The Alliance, which represents 90 percent of the subprime market, has a plan that could help one million homeowners avoid foreclosure over the next two years.
They've already contacted more than half a million homeowners. Their hotline-888-995-HOPE-now receivesabout 4,000 calls per day.
Last week, Alliance members launched Project Lifeline. It won't just identify families who need help. It will halt the foreclosure process for 30 days so delinquent families can work with lenders to modify their loans.
This is not a "Band-Aid" approach. This is the very heart of our challenge.
Communication and education is so important to this effort. Families that communicate with their lenders have a far better chance of saving their homes.
About half of homeowners in foreclosure did not discuss it beforehand with a counselor or servicer, at any stage of the process. Some lenders are even disguising their letters like wedding invitations to get a response!
Since our reforms, the number of homeowners who have contacted their lender has risen from about two percent to sixteen percent. Still low, but going in the right direction.
We've found that homeowners are much more likely to respond to a grassroots or community group than a mortgage company. They need to know there are thousands of housing counseling agencies out there, ready to help.
President Bush has increased the Budget for housing counseling by 150 percent since 2001. This year we've requested $65 million, and another $180 million for our non-profit partner NeighborWorks. It's money well spent.
Homeowners also need to know that we're on their side. We find predatory lending unacceptable. HUD created a new Fair Lending Division to investigate complaints and questionable practices.
Recently, HUD awarded grants totaling about $1 million to agencies in Ohio and other high-foreclosure states to develop new strategies to stop lending discrimination. These "best practices" will be made available to all 50 states.
We're on the right track. And we're seeing results. Applications for home loans are rising. Interest rates are falling. In Ohio, foreclosure filings fell 26 percent in December compared to one year earlier. The Columbus Board of Realtors called 2007 the "best year on record for buyers."
But there is another piece of the puzzle, one more "root solution" we need to try.
The FHA has served us well, but it is showing its age-74 years, to be exact. Two years ago, we introduced an FHA modernization bill to Congress. It would provide flexible downpayment requirements and higher loan limits. It also would enable FHA to fairly price premiums, taking risk into account.
We believe FHA modernization could help a quarter million families this year alone. It passed the House and Senate in bipartisan fashion. Now we need to get it to the President's desk.
I like to say that HUD is in the business of building dreams, including the American dream of homeownership. Owning a home remains one of the surest paths toward independence and wealth creation. That has not changed. And these reforms will help keep it that way.
Homeownership rates remain at near-record levels. Now we must sustain our gains. We're asking Ohio's homeowners not to run and hide, but to confront this challenge directly so it can be solved. HUD is practicing what we preach.
And so, with the help of the people in this room, it's time for Washington to give another little push to keep the American dream alive in the heart of America. Thank you.
NOTE: To read the Press Release, visit: