I'm proud to stand here with so many good people, dedicated to one mission: helping people keep their homes, so we can keep the American Dream alive.
I learned a lot about housing while living and working in Dallas. But I learned more about human nature.
Growing up here, I watched my dad work three jobs so we could have a home of our own. He taught me that hard work, good habits, and a quality education could overcome hardship.
At the Dallas Housing Authority, I also learned that no one succeeds by themselves. You're always part of a team.
Years later, we face a new challenge, the growing wave of foreclosures. But the solutions still rely on those ancient truths.
And I am so impressed with this fine team, the Texas Foreclosure Prevention Task Force, which has been created to help families keep their homes.
The first step is to face your problem honestly.
It's human nature to deny it, to avoid the letters and the phone calls. But if you pick up that phone, if you answer that letter, the odds of keeping your home go up dramatically. It's that simple.
So let me start with a phone number: 1-888-995-HOPE. I'm going to repeat that: 1-888-995-4673, or HOPE.
The HUD-approved housing counselors at the other end of the line have the training, tools, and know-how to help you keep your home.
Now, some might hear the term “housing counseling” and think, well, that's just talk. Listen to this. In the first three quarters of 2007, 96 percent of households that completed a HUD-approved counseling program avoided foreclosure. That's not just talking the talk, that's walking the walk.
We strongly support housing counseling. President Bush has increased federal funding for it by 150 percent since 2001.
This year, we've asked for another $65 million. We also budgeted $180 million for our non-profit partner NeighborWorks, one of the members of this Task Force.
We understand that solutions will come from people like them—from the community up, not from Washington down.
I also urge homeowners in trouble to attend one of our many Foreclosure Prevention Workshops. On Saturday, HUD participated in one in Fort Worth.
They bring together families, counselors, banks and lenders to find solutions. I've been to many of these workshops. And every time, I see denial replaced with hope.
One of the things counselors do is help consumers understand the process, to know the terms before they sign on the dotted line. Too often, potential homebuyers do not understand or even read their prospectus.
Usually, the benefits are in boldface, while the bad news is buried. I'm reminded of the old joke: “Why is it you can never read a doctor's prescription, but you can always read his bill?”
On Friday, we announced a change to simplify the homebuying process. It's a reform to a 34-year-old law called the Real Estate Settlement Procedures Act, or RESPA. Not many people know about it. But it governs what you do when you sit down to close on a home.
Our reform will streamline closing costs and require a standard “Good Faith Estimate” that means what it says, so buyers aren't shocked again by unexpected fees.
RESPA reform will cut down on paperwork and save the average homebuyer an estimated $700. But the honesty and transparency it promotes are priceless.
The vast majority of lenders and brokers are honest. But during the housing boom, the gimmick artists had their day.
Many families were steered into low quality, high-cost loans, regardless of their ability to pay. Low “teaser” rates hid the true costs. In the hunt for a sale, sometimes income levels were not even verified.
One lender even bragged about his “NINJA loan”—that stands for “No Income, No Job and No Assets.”
Those days are coming to an end. We are back to the basics. Healthy downpayments. Good credit ratings. Solid debt-to-income ratios. And for that, the industry deserves a lot of credit. They do not want foreclosure, either. They want to help.
So, I wish to thank Wells Fargo and the other private sector members of the Task Force for responding to our call for change.
One of the best examples has been the new Hope Now Alliance. Representing 90 percent of the subprime market, the Alliance is reaching out to all homeowners with adjustable rate mortgages that are scheduled to reset at higher rates.
About 1.8 million subprime ARMs will reset by the end of next year. So there's no time to wait.
In December, the Alliance agreed to offer qualified homeowners one of three options. One, refinance their loan. Two, move into a loan backed by HUD's Federal Housing Administration. Or three, freeze their current rate for five years—the so-called “teaser freezer.”
For homeowners 90 days delinquent or more, the Alliance offered Project Lifeline. It “pauses” the foreclosure process for 30 days so lenders and counselors can work on modifying the loan.
The bottom line? More than one million mortgages have been reworked by the industry since July.
One of the driving forces of this change has been the FHA. The FHA has provided safe, affordable mortgages since 1934. And it's now helping to restore stability to the housing market.
We want more families to benefit from an FHA loan.
Last month, President signed the economic stimulus bill into law. It raised FHA's loan limits so we could penetrate higher-cost markets where families were shut out. Here in Dallas, the loan limit is going up from $200,160 to $271,050.
Unfortunately, it expires in December—less than a year from now.
We need a permanent solution. Two years ago, before the downturn, we introduced a bill to modernize the FHA.
It would provide higher loan limits and more flexible downpayment requirements—permanently. It would also enable FHA to fairly price premiums so that the marketplace can make rational decisions.
In Texas, more than a thousand families a month could be helped. Congress must act now.
We haven't waited around. Last summer, we announced the FHASecure program. It permits homeowners who are delinquent because of reset rates to refinance into the FHA. This is a first. Owners in the process of foreclosure may also qualify—another first.
FHASecure has helped more than 120,000 current and delinquent homeowners nationwide. We expect to reach 300,000 by year's end.
Here in Texas, the number of conventional mortgages refinanced by FHA nearly tripled between January of 2007 and 2008. It's making a difference.
We understand that foreclosure affects everyone—buyers, sellers, and neighbors.
That is why we are committed to finding a solution, together. If you're a homeowner in distress, if you feel alone, just remember—we are on your side. We're on the same team. And we agree on the same truths.
One of those is that the journey of a thousand miles begins with a single step.
That first step is to pick up the phone, and call 1-888-995-HOPE. You'll be glad you did.