Prepared Remarks of Secretary Shaun Donovan at the NAHREP Latino Real Estate and
Thursday, March 22, 2012
Thank you, Jason, for that kind introduction. And I’d like to thank Carmen Mercado and the leadership of NAHREP for the extraordinary work you’ve done on behalf of Latino families, particularly in the wake of this economic crisis.
I’m proud to say that in the Obama Administration, HUD has been your partner every step of the way, particularly on fair housing issues.
In communities across the country, from Miami, to Roswell, Georgia, to Las Vegas to Los Angeles, we’ve partnered with you to conduct fair housing and foreclosure prevention workshops in multiple languages, as well as ensuring that new immigrants know their rights under the Fair Housing Act -- and housing providers know their responsibilities.
And I want to thank our Assistant Secretary for Fair Housing and Equal Opportunity John Trasviña for his work to make that happen -- work that has never been more critical than it is right now.
This crisis touched the lives of every American family -- but with 1.3 million Latino families losing their homes, let’s be clear:
No one has been hit harder by this crisis than the Latino community.
To anyone who cares about an equitable, fair, and inclusive America, those statistics aren’t just troubling.
They are completely unacceptable -- to me, to President Obama, to anyone who is working to lift up our families, rebuild our communities, and grow our economy.
But you also know that there’s a big opportunity here. Because with your purchasing power expected to rise by almost half in the next five years, and Latinos accounting for two-thirds of the nation’s population growth over the next four decades, Latinos are not simply important to the future of this country -- you’re absolutely essential to it.
That’s why the Obama Administration has partnered with groups like NAHREP to push back against the crisis -- and while we still have more to do, it’s clear we’ve made real progress.
With HUD-approved housing counselors having assisted nearly 8 million families over the last three years, we’ve cut foreclosure notices in half since the President took office.
Because we provided $7 billion in Neighborhood Stabilization funds to communities struggling with concentrated foreclosures, in areas with targeted investments we’ve have seen vacancy rates go down and property values go up.
Because we provided critical support to the FHA, we preserved homeownership opportunities for minority families. In fact, since the President took office more than half a million Hispanic families have bought or refinanced their home using an FHA-backed loan.
And most important of all, our economy has created more than 3.9 million jobs overall.
But for all that we’ve been able to accomplish together, we can’t take our foot off the gas.
We have to keep working not just to maintain our progress, but to speed it -- and knock down the remaining barriers to a stronger housing market, and a stronger economy.
So today, I’d like to talk to you about what this Administration is doing lay the foundation for opportunity.
I want to discuss what we need to do to keep families in their homes, and rebuild Latino communities around the country.
And I’d like to talk to you about the work that lies ahead to ensure a future of sustainable homeownership -- so that every family has a fair shot at the American Dream.
Relief for Latino Families
Of course, the first thing we need to do to speed our recovery is keep more families in their homes.
While giving families the opportunity to reduce their monthly payments is important for every struggling homeowner, it’s absolutely essential to undoing the damage the crisis to Latino families.
Indeed, of all the eye-popping statistics we’ve seen during these past few years, perhaps the most striking is that Latino families lost two-thirds of their median household wealth between 2005 and 2009.
To me, that’s not only stunning -- particularly given how many of these families were just starting to enter the middle class after decades of hard work, it’s an absolute tragedy.
That’s why the Obama Administration is refusing to stand still, aggressively working to provide new tools that will give thousands of families a real chance at relief.
Indeed, last fall, the President announced critical changes that will help more families with loans backed by Fannie Mae and Freddie Mac to refinance.
Thanks to this work, about 300,000 families have already filed applications for refinancing and stand to save on average $2,500 per year -- the equivalent of a good-sized tax cut.
And according to data hot off the presses from the Mortgage Bankers Association, refinancing last month was up by 49 percent in Florida, 61 percent in Arizona and 71 percent in Nevada compared to the month before.
Similarly, we’ve also been taking steps to make FHA Streamline Refinance available to more borrowers who have FHA loans -- allowing families to pay minimum fees to refinance into a new FHA-insured loan at today’s record low interest rates and helping them reduce their monthly mortgage payments.
Still, millions of homeowners who have done the right thing and paid their bills can’t refinance because they’re underwater.
Indeed, according to a recent survey by the Pew Hispanic Center, nearly a third of Latino homeowners owe more on their mortgages than their homes are worth.
These families are stuck paying higher interest rates that cost them thousands of dollars more a year.
That’s why in his State of the Union address, President Obama announced that he would be sending Congress a plan that will give every responsible homeowner in America the chance to refinance at today’s record-low interest rates and save thousands of dollars every year.
This plan will help millions of responsible homeowners who make their payments on time but find themselves trapped under falling home values or tangled up in red tape.
It will not only help keep families in their homes, but will be critical to helping them start to rebuild the wealth they lost in the economic crisis.
If Congress acts on the President’s proposal, every Latino homeowner will have an opportunity to rebuild -- not just the wealth they lost, but their faith in the American Dream.
Reducing Foreclosed Properties in Latino Neighborhoods
But as this audience knows better than anyone, the economic crisis didn’t just harm families -- it devastated communities.
That was particularly true for neighborhoods of color, many of which saw decades of gains wiped out in a matter of months -- particularly in cities like Phoenix and Las Vegas that were in so many ways “ground zero” for the housing crisis.
Indeed, in many Latino communities, families saw their home prices collapse through no fault of their own -- watching the value of their homes fall by $5,000 to $10,000 simply because they live on a block with a foreclosure sign.
That’s not right. And as you understand, reducing the glut of foreclosed properties isn’t just about helping families restore their home values -- but also speeding our economic recovery.
And with the rental market recovering faster--and about a quarter of a million foreclosed properties now owned by HUD, Fannie and Freddie--we have a real opportunity to be creative about how we revitalize foreclosed properties.
That’s why last summer HUD and Treasury joined with FHFA--which regulates Fannie and Freddie--to seek new ideas for absorbing excess inventory and stabilizing prices.
Just last month, Fannie announced the first major pilot sale of foreclosed properties to be transformed into rental housing. This marks the first of a series of steps that the FHFA and the Administration will take to develop a smart national program to help manage REO properties that put pressure not only on the housing market, but on our hardest-hit communities.
Of course, while expanding REO-to-Rental is a critical tool, in the hardest-hit markets where prices have dropped most and the most vacant and abandoned buildings are found, more needs to be done to jumpstart construction and reduce vacancies.
Already, under the leadership of Assistant Secretary of Community Planning and Development Mercedes Marquez, HUD’s Neighborhood Stabilization funding is on track to create nearly 90,000 jobs and address 95,000 vacant properties.
And I’m proud that through NSP, we awarded nearly $140 million to Chicanos Por La Causa to revitalize neighborhoods in 8 states and the District of Columbia -- the single largest federal grant given to a Latino network in history.
And you can see that commitment not just in that grant -- but in community after community.
You can see it in Hernando County, Florida, where NSP investments have not only helped families like Sandy and Socorro Beiro move in to foreclosed homes in hard-hit places.
Just as importantly, they’ve helped keep construction workers on the job and given real estate agents--like so many of you--the opportunity to show and sell homes once again.
You can see it in the La Puente community, a predominately Hispanic suburb outside Los Angeles, where these efforts have helped increase home prices by nearly 15 percent.
And you can see it with the innovative “First Look” partnership, where we’re collaborating with NCLR and the Urban League to ensure Neighborhood Stabilization funds are strategically targeted to places with the greatest need.
In fact, even though Congressional Hispanic Caucus districts make up less than 5 percent of congressional districts, they received almost 10 percent of NSP dollars.
But as proud as I am of that progress, we all know it’s not just abandoned homes that can drag down an entire neighborhood -- but vacant commercial properties, as well.
That’s why President Obama proposed “Project Rebuild.”
Building on our neighborhood stabilization work, Project Rebuild would create 200,000 jobs in communities across the country -- providing a boost to our construction industry, which provides good paying jobs to nearly 3 million Latinos.
And by allowing commercial redevelopment essential to neighborhood revitalization to be funded directly, Project Rebuild will attack blight and foreclosures from all sides -- revitalizing neighborhoods and providing the spark entrepreneurs need to start small businesses and create jobs.
Project Rebuild reflects one of this Administration’s core beliefs -- that rebuilding neighborhoods is essential to rebuilding our housing market and economy.
Preserving and Protecting Latino Homeownership
Now, some might think that the depth of the crisis--and the harm that was done to Latino families and communities across the country--would scare this community away from homeownership -- and away from the promise of the American Dream.
But Latino families know that in so many ways, home is family. It is the source of a family’s stability and the building block with which we forge neighborhoods, put down roots and build the communities that are the engines of our economic growth.
Little wonder, then, that national housing surveys show Latinos are more motivated than the general population to buy a home -- that almost 2 out of every 3 Hispanics who rent aspire to buy a home someday.
And as NAHREP’s own report indicates, the explosive growth of young Latinos attending college suggests that this community represents the future of the housing market.
But as important as homeownership is, we can’t afford to go back to the days of “no-doc” loans and predatory subprime practices -- practices that were all too common in the years leading up to the crisis.
Indeed, if we’ve learned anything from this crisis, it’s that the faith of families who have done the right thing and are ready to buy a home should not just be rewarded.
It should be protected.
That’s why one of the most important things we can do to speed our housing recovery is create a path forward for sustainable homeownership in this country -- holding the banks accountable while beginning to turn the page on the era of recklessness that caused the crisis in the first place.
Last month, we took a major step down that path with a historic, $25 billion mortgage servicing settlement reached by the Obama Administration and an unprecedented coalition of attorneys general from 49 states that spanned partisan and geographic lines.
The product of sixteen months of intensive negotiations, the settlement addresses the harm mortgage servicing abuses have done to homeowners and the housing market.
Providing tens of billions in direct relief for struggling homeowners, the settlement will reduce principal balances for homeowners, help families who are underwater refinance their loans -- and provide billions of dollars for critical priorities like housing counseling and anti-blight efforts.
At a time when we had scratch and claw for $45 million in housing counseling funds from Congress, the $2.6 billion the settlement provides directly to states--funds that can be used for counseling or other resources that have proven track records of stopping foreclosures--is absolutely critical.
This audience knows well that counseling not only provides relief to families directly -- it also improves property values and helps speed economic growth.
While needs and requirements vary from state to state, I would urge all of you to make your voices heard -- and let your state attorney general know that support for housing counseling is critical to sustaining Latino homeownership in so many of our communities.
Billions of dollars in relief to homeowners isn’t the only important victory in this settlement. Just as importantly, it provides clear and fairer customer service standards that build upon the new protections introduced when the President announced the Homeowner Bill of Rights.
As President Obama said, we work and save for many years to buy a home. It’s not only where we raise our family.
It’s also the single biggest financial decision we make.
That’s why at the same time the new Consumer Financial Protection Bureau, led by Richard Cordray, is putting in place a single, straightforward set of commonsense rules that families can count on when they’re buying a home, the standards in this settlement will give people the confidence that lenders and servicers are following a long list of rights should they ever lose a job or have a medical emergency that puts their home at risk.
No more lost paperwork. No more runaround. And no more excuses.
Keeping the American Dream Alive
Because this work is about more than programs and policies, as important as those are.
It’s even about more than our shared goals of moving past this crisis, and holding those who are responsible accountable for their behavior.
It’s about something deeper.
It’s about keeping a dream alive -- a dream that has inspired millions of Americans over hundreds of years, whether they were born here or came to these shores hoping for opportunity and a fair shot at a better life.
A dream built on hard work, sacrifice, and a place to call home.
That’s why, even after we’ve fully recovered from this crisis, our work together must continue.
It’s why we still need to continue our partnership to create a robust private system of housing finance and protect the FHA fund for the future -- so that the dream of homeownership is preserved not only for the next few years, but the next few generations.
And it’s why this Administration is moving towards a truly balanced national housing policy -- one that ensures that all Americans have choices in housing that make sense for them and for their families.
That’s the future the Obama Administration is working to build.
But we can’t do it alone. We need allies like you--people who are connected to the hopes and dreams of your communities--to help make that change real on the ground. In people’s lives.
You’ve already done extraordinary work these last few years to drive that change. And I know you’ll keep doing it in the weeks and months to come.
That’s why I’m so proud to be your partner. Thank you all so much.