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LISC Home Ownership Summit 2002

Remarks as prepared for delivery
by Secretary Mel Martinez

Washington, DC
Thursday, November 21, 2002

Good afternoon.

Thank you, Dwight [ROBINSON], for your very generous introduction. I also want to thank Hal Wilson for the invitation to meet with you this afternoon. President Bush and I feel strongly that we must commit ourselves as a nation to helping more families know the many benefits of homeownership - especially minority families. I appreciate the opportunity to come here and tell you what our Administration is doing to make that happen.

The LISC Home Ownership Center is doing important work to promote the value of homeownership to communities, and spark innovative homeownership opportunities on the local level. Your technical assistance programs and workshops, annual summits like this one, and efforts such as your focus on rural housing are making a difference to families seeking a home of their own.

Earlier this year, the President reminded us that a cornerstone of America is the fact that someone - regardless of who they are or where they were born - can say, "I own this home, it is my piece of property, it is my part of the American experience."

America places a high value on the benefits of homeownership, and for good reason. Homeownership creates community stakeholders who tend to be rooted participants in their communities. Homeownership offers children a stable living environment that influences their personal development in many positive, measurable ways at home and in school.

Equally striking is homeownership's potential to create and spread wealth. It is an engine of social mobility and the path to prosperity for the vast majority of families. By a large margin, Americans see a home as a safe investment, and they are right. Last year, Americans took $80 billion out of the wealth they had accumulated in their homes to make investments in education, consumer goods, and new businesses.

However, many Americans have yet to enjoy these benefits. We see a wide disparity in the homeownership rates of non-Hispanic whites and minorities.

HUD recently announced that the overall homeownership rate rose to 68 percent during the third quarter of 2002. Hispanic and African-American homeownership was also up. But while the trend is in the right direction, we still have a long way to go: while three quarters of white Americans are homeowners, less than half of Hispanic and African-Americans own a home of their own.

President Bush says this homeownership gap is a "signal that something might be wrong in the land of plenty," and he has vowed to close it. In June, he issued a challenge to his Administration and to every segment of the housing industry - public, private, and non-profit - to close the gap by helping 5.5 million more minority families own homes by the end of the decade. When he gathered us together last month for the first-ever White House Conference on Increasing Minority Homeownership, he had a simple message. He said, "We want everybody in America to own their own home."

We call our response to the President's challenge "the Blueprint for the American Dream Partnership." Our partnership is unprecedented in scope, and sets out to close the minority homeownership gap by harnessing the resources of the federal government to those of the housing industry. I am pleased that so many of our partners are actively involved in this homeownership summit. We are grateful for your contributions, your energy, and your commitment to achieving the President's goal.

The Blueprint partners are focused on four key areas. The first is education.

It is important that families looking to purchase a home are educated about the homebuying process. They also need reliable, understandable information about their options for financing.

The vocabulary of mortgage lending and the process of buying a home are confusing and complex for even the experts; imagine how difficult they must be for a first-time homebuyer, or someone for whom English is a second language. The fact that there are some unscrupulous people who want to take advantage of the system adds to the problem.

We are working to provide consumer education, particularly to immigrants and minorities who are not familiar with the homebuying system, to make them more comfortable entering into the largest and most important financial transaction of their lives.

Our "Homebuyer Bill of Rights" will simplify the homebuying process and make it less confusing and costly. And we are committed to enforcing the law to stop predatory lenders from doing business. The Administration is targeting unscrupulous lenders by pooling the resources of the federal government and helping us work across agency lines. As a result, we are becoming much more effective in tracking down lenders who target first-time homebuyers, senior citizens, and minorities for predatory practices.

We are also deeply committed to educating the housing industry about its legal responsibility to prevent discrimination and the need for our partners to take responsibility for educating future homebuyers about their legal rights.

A study we released last week points out how crucial this is.

We found that discrimination based on race and ethnicity has declined 25 percent among African-American and Hispanic homebuyers during the past decade. That is welcome news, and represents a tremendous decline.

But the results make it clear that our work is far from over, because too many Americans are still being denied the opportunity to live in the home of their choice. One in five minority homebuyers still experiences discrimination. The problem is nearly as bad for minority renters. In fact, Hispanics face rental discrimination at the same levels they faced more than a decade ago.

In this land of opportunity, no one should be denied housing because of the color of his or her skin or their ethnic heritage. Our Administration will continue working to end housing discrimination.

Of course, it is hard to buy a home when there is no affordable housing to be found. In some limited parts of the United States - and particularly in our nation's inner cities - the average working family cannot find a house on the market that is within their price range. In spite of overwhelming need, very little new construction of single-family homes occurs today in lower-income neighborhoods. The most common cause is that the cost of developing such housing in an economically distressed area would exceed the property's market value.

The federal government can play a role in boosting the supply of affordable housing by helping to bridge the gap between the cost of development and the value of single-family homes. Our Administration has proposed establishing a single-family affordable housing tax credit that would pump $1.7 billion over the next five years into affordable housing development in high-priced urban areas. The credit would be available to developers through a competitive program administered at the state level. We estimate that enacting it would spur the creation of 200,000 new units available for homeownership.

The proposal is modeled after the very successful Low-Income Housing Tax Credit. Representative Bob Portman of Ohio is sponsoring the legislation in the House, while Senators Gordon Smith, Orrin Hatch, and Rick Santorum have agreed to carry the bill in the Senate. We hope lawmakers will make this a priority when the 108th Congress convenes in January.

Ultimately, the decisions that have the greatest impact on housing affordability are not made in Washington. They are made on the state and local levels, and come in the form of building and growth controls that can add thousands of dollars to the cost of land and construction. These regulatory barriers include restrictive and exclusionary zoning, rent controls, environmental regulations, high impact fees, and burdensome permitting and approval requirements.

It is no accident that many of the cities facing affordable housing shortages also have the tightest restrictions on growth.

HUD wants to help communities break down these barriers. Today, I am unveiling a new tool they can use. The Regulatory Barriers Clearinghouse gathers housing knowledge from across the country into a single website. By giving builders and developers a place to share ideas and solutions for overcoming state and local regulatory barriers, we think we can help to spur more affordable housing opportunities.

You can visit the Clearinghouse at www.regbarriers.org.

The Blueprint partners are also focused on helping families who have qualified to buy a home, but come up short on the down payment. If a buyer is in every other way an outstanding candidate for homeownership, they should not be blocked from buying a home by the high cost of a down payment.

President Bush proposed the American Dream Downpayment Fund to help 200,000 low-income families make the move into homeownership over the next four years. We are also expanding an innovative homeownership program that eases the transition from renting to owning for low-income families. The program provides them with vouchers they can use for a down payment or mortgage payments.

The final focus of the President's homeownership challenge is helping minority homebuyers - especially low-income families shopping for their first home - to have better access to capital and more financing options. I am proud to say that our partners in the real estate, mortgage finance, and nonprofit sectors have stepped forward with many invaluable contributions.

Our partners are creating new mortgage products to combat predatory lending and meet the needs of immigrants. They are increasing their investments in minority markets by nearly $500 billion. They are expanding consumer information and homeownership counseling. And they are engaging in faith-based and community housing partnerships.

These investments and initiatives will reap tremendous benefits for individual families and for the nation as a whole. We studied the potential economic benefit of adding 5.5 million first-time minority homebuyers by 2010 and found that it totaled a staggering $256 billion. An increase in minority homeownership creates more jobs, increases consumer spending and the economic security of neighborhoods, and most importantly, is a "capital engine" for working families.

Boosting homeownership among minorities is the right thing to do and now is the right time to do it.

While we are passionate about increasing the ranks of America's homeowners, our agenda is broad and covers every aspect of housing and urban development.

Along with promoting homeownership, we continue to provide those who rent with affordable, safe, and decent housing opportunities. Three-quarters of the HUD budget - or about $23 billion next year - is dedicated to supporting the rental costs of low-income individuals and families. Our rental assistance programs collectively help more than four million rental households.

Along with help for renters, we continue to help communities meet housing and other needs through HUD's Community Development Block Grants and our HOME program. And our Administration is deeply engaged in pursuing solutions to homelessness. I have issued a challenge to end chronic homelessness within the next ten years. At my urging, President Bush reactivated the Interagency Council on Homelessness. And he doubled its funding. The Council's job is to better coordinate the efforts of the many federal departments that fund homeless services.

That is a very broad outline of what we do at HUD.

My job at HUD may not be the most visible in the Cabinet, but it is certainly one of the most enjoyable and rewarding. Because like you, I understand what it means to help a family up - to give them the kinds of opportunities that come with homeownership.

As we transform America socially through homeownership, we will also be bridging the gap that exists between our majority and minority communities, a gap that I believe is economic more than anything else.

And as we create more homeowners among our minority ranks, we will empower communities of people with the kinds of economic opportunity, economic well-being, and independence that come with homeownership, which is how middle-class America has been able to create wealth from one generation to the next. And I believe that will be a very healthy and positive thing for our country.

So I hope you have a very successful conference. I encourage you to keep up your good work, because it is profound. It is life changing. I know it changed my life when we became homeowners in America, and I know it can do that for so many other American families. So thank you for what you are doing. And thank you for allowing me to be a part of your day.

Thank you very much.

Content Archived: March 16, 2010

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