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National Community Reinvestment Coalition
2003 Annual Conference

Remarks as prepared for delivery by
Secretary Mel Martinez

Washington, DC
Wednesday, March 12, 2003

Thank you, John for having me here this evening. I appreciate your generous introduction.

We at HUD greatly appreciate the work that you and your colleagues at NCRC are doing to strengthen RESPA and to fight predatory loans. We also are delighted to be working with NCRC on several projects to identify and build successful community-lender partnerships. And we certainly welcome your support for the President's initiative to increase minority homeownership.

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.

Today, housing continues to lead the way in shoring up our nation's economy. The recent news that sales of existing homes rose in January to a new monthly record is yet another indicator of the ongoing strength of the housing market, and another sign of a rebounding economy.

At HUD, we are committed to increasing homeownership… ensuring an adequate supply of affordable housing for renters… providing better care for homeless individuals and families… and strengthening communities through economic development initiatives.

This Administration wants more families to become homeowners. And we want more of those families to be minorities. A top priority for President Bush is to make homeownership a viable option for every American, especially minorities, who want to own a home.

While the homeownership rate in this country reached a record level last year of 68.3 percent, important gaps still remain for many, including working families, low-income families, women-headed households, urban dwellers, young families and especially minorities. By a significant margin, minority families are less likely to own their own homes. We know that we can do better!

President Bush is committed to closing this homeownership gap. Last year, he set a bold goal of creating an additional 5.5 million minority homeowners by the end of this decade. HUD responded by launching our Blueprint for the American Dream Partnership, and every segment of the housing industry has joined with us to help meet the President's challenge.

The President has asked me to report back to him in June on our progress in carrying out these and other commitments. And I am happy to report that our efforts to increase minority homeownership are beginning to reap rewards.

In fact, HUD had set a national goal of insuring 1.1 million FHA single-family mortgages last year. We far surpassed that goal with nearly 1.3 million actual endorsements. Of those, 419,000 went to minority families, which again was well above our target for the year.

But before we can achieve our goal of 5.5 million new minority homeowners, we must first help minorities overcome significant obstacles. These include a lack of understanding and information about the homebuying process, a lack of capital for the down payment and closing costs, and poor credit histories.

Many barriers, however, are more institutional. Some lenders refuse to do business in African-American or Hispanic neighborhoods, or on American Indian reservations. Also, urban minority neighborhoods typically don't have a local banking branch on the corner. If anything, many of these areas have subprime lenders who charge a great deal more to lend the same amount of money.

And throughout the process of home buying and financing, African Americans, Hispanics and Native Americans often encounter discriminatory treatment. It is HUD's responsibility to ensure that individuals are not discriminated against when seeking housing.

The Fair Housing Act guarantees everyone the right to housing free of discrimination. And HUD's jurisdiction extends to all aspects of housing, including the sale, advertising, financing, rental, design, and construction of almost every unit of housing across America. But my office is working to eliminate these obstacles and we are pursuing a number of affirmative measures to promote homeownership. This is reflected in the President's new budget that we submitted to Congress.

For FY 2004, we are proposing the largest fair housing budget effort ever --$50 million to assist the state and local agencies, and fair housing groups, who help HUD fight housing discrimination and educate people on their fair housing rights. This will help these organizations address barriers to minority homeownership at the local level.

We also are attacking the problem of predatory lending by reforming the Real Estate Settlement Procedures Act. This has been a top priority of mine since coming to HUD and I know that it is a top priority of yours. And we appreciate the feedback that NCRC has been providing to us.

As you know, the mortgage finance process and the costs of closing remain major impediments to homeownership. Every day, Americans enter into mortgage loans - the largest financial obligation most families will undertake - without the clear and useful information they receive with most any other major purchase. This makes them vulnerable to predatory lending practices, especially if the buyer is a member of the minority or elderly populations.

The Bush Administration is committed to streamlining the mortgage finance process, so consumers can shop for mortgages and better understand what will happen at the closing table. This also will make the process less costly.

We have received nearly 43,000 responses while the rule was open for public comment, which was a record for us. And we have spent the 18 weeks since the comment period closed reviewing and cataloguing each submission. And I believe that the Department has developed a well-crafted proposal that can reduce settlement costs by an average of $700 per closing, with an annual savings to consumers as much as $8 billion.

Overall, This kind of savings will have the great benefit of increasing the number of lower-income Americans who will now be able to buy a home. We also expect our proposal to promote innovation in the marketplace and inspire greater public confidence in the mortgage lending industry. Most importantly, our RESPA reforms will restore clarity, transparency, and simplicity to the homebuying process.

Because they ensure greater transparency, our proposed reforms will make it more difficult for unscrupulous lenders to take advantage of borrowers. However, let me be clear that although RESPA reform is an important tool for addressing predatory lending, it will not end predatory lending on its own. And so we are attacking the predatory lending problem while preserving a source of credit for those with less-than-perfect credit histories.

The Administration is targeting unscrupulous lenders in part by pooling the resources of the Federal Government, and helping agencies work together to fight abusive lending practices. As a result, HUD and its partners are becoming much more effective in tracking down lenders who prey upon first-time homebuyers, senior citizens, and minorities.

And the FHA has mounted a vigorous assault on predatory practices. This year, we expect to publish at least 15 new regulations aimed directly at curtailing abusive lending.

Among the other regulations are several that will strengthen FHA's ability to monitor appraisers. These include new rules holding FHA lenders accountable for the quality of appraisals… strengthening the licensing and certification of FHA-approved appraisers… and implementing Appraiser Watch, a fully computerized system for monitoring an appraiser's default rate.

Three additional high-priority regulations are waiting to be finalized, namely improvements to the Credit Watch program that will help us identify problem loans and lenders earlier on; a proposal to limit the number of FHA loans a nonprofit can have at one time; and a rule to prevent future swindles like the 203(k) scam that threatened the availability of affordable housing in New York City.

Before I finish, let me take a minute to tell you a little about what we are doing to increase the supply of affordable housing in America and to help families move from multifamily housing to homeownership.

We have proposed a $113 million increase in funding for the HOME Investment Partnerships program in our 04 budget. Overall, HOME will make $2.2 billion in funds available to state and local grantees to help finance the costs of land acquisition, new construction, rehabilitation, down payments, and rental assistance. This will result in over 1 million units of housing in the next 10 years.

Our new budget also will fully fund the President's American Dream Downpayment Fund, by providing $200 million to help approximately 40,000
low-income families annually make the move into homeownership. And the budget continues to strengthen the ability of public housing authorities to use Section 8 Housing Voucher funds as downpayment assistance for families who are making the transition from renting to owning.

In addition, we are working hard to improve the quality of public and assisted housing, ensure better program accountability, and increasing housing opportunities for the elderly and those with disabilities.

At HUD, we can only do so much. Therefore, we will continue to rely on the expertise of those of you on the front lines of the housing industry and those of you at the local level that best understand your communities.

I look forward to working with all of you toward the goal of opening the American Dream to more families and individuals… and opening up our communities to new opportunities for growth and prosperity.

Thank You and Good Night.


Content Archived: March 16, 2010

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