Prepared Remarks of Secretary Shaun Donovan at the Refinancing Avail with Senator Menendez
Home of Ellen Kovac, Elizabeth, NJ
Friday, September 21, 2012
Thank you all for coming out. Senator Menendez and I just had a great conversation with three New Jersey homeowners about refinancing. And I want to thank Ellen Kovac for hosting us.
Across the country, countless families are doing the right thing -- paying their bills on time and current on their mortgage. Yet too often, because they owe more on their mortgage than their home is worth, they’ve been unable to refinance and take advantage of historically low interest rates.
That not only hurts them -- it hurts our economy.
That’s why the President announced changes last winter to help more folks with loans backed by Fannie and Freddie refinance. Since that time, more than a million families have filed applications so far and stand to save $3,000 per year -- and more than half have closed.
In New Jersey, refi applications have increased 80 percent since these changes were first put into place.
Despite this progress, the Senator and I just heard from three homeowners who still can’t refinance.
Ellen Kovac, Vartan Petoian and Bob Koffler are responsible, middle class homeowners.
Ellen has a graduate degree, but because she lost her full time job during the recession, she now works three part-time jobs.
Vartan is a small business owner in the hard-hit travel industry. The father of a new baby, he saw his family’s income cut in half by the recession.
And Bob was a long-time business executive who lost his job at the height of the economic crisis.
Being hard hit by this economy isn’t all that these families share in common.
They’ve also been locked out of refinancing -- despite never having missed a single payment on their mortgages.
For Ellen, that’s because the costs associated with refinancing are so prohibitively high.
For Vartan, it’s not only because of costs -- it’s also because he can’t shop around for a better rate.
And Bob is locked out because his mortgage isn’t backed by government -- and despite a great credit rating and savings for his retirement that allow him to continue making his payments on time, he’s unemployed.
Homeowners like these are why President Obama is pushing Congress to act on 4 bills.
The first is the Senator’s Responsible Homeowner Refinancing Act. For families like Ellen and Vartan’s, Senator Menendez’sbillwould bea godsend -- lowering costs for consumers by creating competition between lenders, and removing burdensome fees.
And I want to thank Senator Menendez, who has been a champion throughout this crisis -- for responsible homeowners here in New Jersey and all over the country.
He understands that with 90 percent of underwater homeowners current on their mortgage-paying their bills on time, we have an obligation to help.
But of course, he also understands that we need to help the millions of families like Bob’s whose loans aren’t backed by government.
That’s why we also need to pass Senator Feinstein’s bill -- the Expanding Refinancing Opportunities Act.
To qualify, all families need is to be current on their mortgage, meet a minimum credit score, and a loan that meets FHA requirements in their region.
Lastly, Senator Menendez and I are strongly pushing two additional proposals that would help families not just refinance -- but rebuild what they lost during this crisis.
The firstwould encourage homeowners to apply the savings they get from refinancing to rebuild equity -- which remains the single biggest source of how we send our kids to college, get capital to start a small business and save for our retirements.
The second would create a new Project Rebuild, which would create up to 2,000 jobs in New Jersey and dramatically scale up the Neighborhood Stabilization Program, which has a proven track record of lifting home prices in hard-hit communities around the country.
President Obama has described an economy built to last -- where everybody gets a fair shot, everybody does their fair share, and everyone plays by the same set of rules.
Nowhere is that challenge clearer than refinancing -- and no one knows that better than families here in New Jersey like Ellen’s, Vartan’s, and Bob’s.
And so our message is clear: these families have lived up to their obligations -- it’s time Congress lived up to theirs and passed these bills.
That’s why I’m so proud to stand here with the Senator today. Thank you. And with that I’d love to take some questions.