Financial Literacy Campaign Kickoff
Neighborhood Housing Services Visit
REMARKS PREPARED FOR
STEVE PRESTON, SECRETARY OF HOUSING AND URBAN DEVELOPMENT
NEW YORK, NY
WEDNESDAY, JANUARY 14, 2009
Thank you, Mr. Mayor (Michael Bloomberg). And thank you Sarah Gerecke. Good morning, ladies and gentlemen. Thank you all for coming.
For the past two years the foreclosure crisis has hammered the American economy. American families have lost their homes. As a result, there are hundreds of thousands of vacant and abandoned homes throughout the country. Unfortunately, many are in New York City. And the situation would have been more dire except for the aggressive, quick actions of the Mayor. His leadership has prevented a bad situation from becoming much worse. I'm glad he is here.
Foreclosures are an unexpected, costly challenge to local government. Vacant buildings are easily vandalized. Neighborhoods are transformed when people lose their homes.
Lives and families are disrupted. Tax revenues are lost. And the companies and banks that hold the mortgages lose money and jobs.
Four months ago, the President and the Congress established the Neighborhood Stabilization Program to offer nearly $4 billion in relief to cities hard-hit by this crisis. The Department of Housing and Urban Development (HUD) has worked quickly to distribute this funding.
Today I am pleased to announce that HUD is awarding $24.2 million to New York City for purchase, renovation, or development of vacant or abandoned homes. This money may be used to help resell a home, turn the home into affordable rental housing, or to create more facilities for people who are homeless. This funding should be an energizing catalyst for the City's efforts to address the devastation of the foreclosure crisis.
Abandoned and vacant homes are just one aspect of this crisis. In the past few months the federal government has implemented laws and regulatory changes that cover much of the mortgage process, providing a comprehensive continuum of actions.
There are many reasons for the crisis�reasons and causes that appear throughout the process of buying a home and funding a mortgage. But many of these problems could have been avoided if borrowers had been more aware of the terms of their mortgages.
Greater emphasis on financial literacy could have helped avoid much of the foreclosure disaster. People need the right mortgage for their home and circumstances�an affordable mortgage with no surprises, no mystery add-ons, no unexpected adjustments or balloon payments. Financial security comes with information, understanding, and responsible actions. Borrowers need to be empowered with clear and better knowledge of the mortgage process.
Housing counsellors are vital to the process. I have just toured the facilities of Neighborhood Housing Services. I am very impressed with the outreach activities here, their work to advise potential homeowners, and their efforts to help distressed homeowners refinance into a more affordable mortgage.
I would advise any prospective homeowner to consult with any of the 2600 HUD-approved housing counsellor, such as those found here. I would also strongly suggest that anyone facing foreclosure approach a housing counsellor and also look into refinancing with our Federal Housing Administration (FHA).
Today I am announcing a new effort by HUD to help empower borrowers. We are initiating a financial literacy campaign called "Keep Your Home. Know Your Loan." This campaign is designed to encourage the use of housing counsellors. It is a call to action for families at risk of losing their homes.
We want people to pick up the phone and call a HUD-approved housing counselor before they reach a point of no return. Many troubled homeowners seek help too late in their financial crisis. This limits their loan modification options.
Our campaign will target homeowners who are facing a reset on their adjustable-rate mortgage, or are experiencing a family crisis such as unemployment or skyrocketing health care costs.
Keeping their home may be as easy as dialing 877-HUD-1515.
My department is providing marketing and outreach materials to help inform and educate Americans, especially those hoping to refinance a current mortgage and save their home. Specifically, we will provide print, radio, and TV Public Service Announcements (PSAs) to support community, non-profit agencies that provide housing services.
In each PSA, consumers are directed to call HUD's toll-free counseling hotline to arrange free face-to-face meetings with a counselor near them.
Our PSAs here will encourage New Yorkers to call the City's 311customer service center to find a housing counsellor in their area. I know the Mayor has been aggressively working to address this crisis, and I want to thank him for his many efforts.
Housing counselling works. It is an easy, common sense way to determine the right mortgage for each borrower. A recent HUD study shows that HUD-approved housing counseling is effective to prevent foreclosure for most families.
This report also finds that in the years leading up to the current crisis, many families, especially those with low-incomes seeking to buy their first home, did not undertake pre-purchase counseling. This absence of counseling left them unprepared to make one of the biggest financial commitments of their lives. It may have � probably did -- contributed to some of today's high rates of default and foreclosure.
I would urge those in trouble to seek help NOW, especially if you have a subprime loan that will reset in 2009. We know that almost 900,000 mortgages will reset this year. Sadly, we know that many people in trouble do not seek help; many don't even call their mortgage company. The housing counselling is free. So don't wait. Call now!
We are also fortunate to have the services, the voice, and the credibility of the great Ruby Dee, who is a trusted and beloved figure in America.
Ruby couldn't be here, but she personally expressed to me her desire to urge people to get the help they need.
We need others to step forward, too. Our campaign is not solely limited to partnership with housing counsellors. We will also be working with homeowner associations, real estate brokers, and other members of the industry, urging them to take a pro-active role.
The campaign will initially be targeting those groups most at risk in six cities: New York, Miami, Chicago, Detroit, Los Angeles, and Phoenix.
The foreclosure crisis has been a stunning blow to the economy and to families across the country. But we can set in place a stronger foundation for future economic growth and homeownership.
We can provide a stability and smoothness that will help avoid a foreclosure crisis in the years to come. And perhaps the most important way to do this is through financial literacy. This campaign will be of great value to the American people�literally helping people avoid the pain of foreclosure.
Again, thank you for coming. Now, let's play a few of the PSAs.