HUD Secretary highlights Bush Administration’s fight against foreclosure
SAN ANTONIO, TX – January 25, 2008 – More than 18,000 Texas families could be eligible for a safer, more affordable government-insured mortgage that is pending approval by the U.S. Congress, U.S. Housing and Urban Development Secretary Alphonso Jackson announced today. A bipartisan legislative proposal awaiting final Congressional action would help borrowers refinance their existing exotic subprime loans or purchase new homes through HUD’s Federal Housing Administration (FHA).
“This reform package would bring the FHA into the 21st century, and break the vicious cycle of foreclosure and depreciation,” Jacksontold the League of United Latin Americans Citizens (LULAC) National Veterans Summit.
As part of the Bush Administration’s comprehensive plan to help millions of American families keep their homes, the President has called on Congress over the last two years to modernize the FHA by increasing its loan limits in high cost areas, making downpayment requirements more flexible, and introducing fair pricing of insurance. These reforms, which are included as part of The Expanding American Homeownership Act, would qualify 250,000 more low-income families and minorities around the nation for the FHA’s government-backed mortgage product this year.
Jackson also pointed to HUD’s FHASecure product as a positive example of the President’s aggressive efforts to provide immediate relief to families at risk of foreclosures.
“For the first time, people with subprime loans who are behind on payments as a result of reset interest rates can refinance into the FHA. Since President Bush announced FHASecure in August, we’ve helped over 70,000 homeowners who are current or past due on their mortgages stay in their homes. We could help hundreds of thousands more in the coming year. But we cannot do it alone,” Jacksonadded.
FHASecure, which expands the FHA’s ability to offer refinancing to more creditworthy homeowners, is on track to help 300,000 families avoid foreclosure this year. On average, homeowners are saving $400 a month with FHASecure or $30,000 over the life of their new, low-cost federally insured loan. Eligible families must show a history of on-time mortgage payments, have a good debt-to-income ratio, and demonstrate stable employment.
Knowing the mortgage process can be complicated, and Jacksonhighlighted a new private alliance he helped create that is assisting at risk borrowers keep their homes. Made up of companies representing 90 percent of the subprime loan market, the HOPE NOW alliance has contacted more than a half million borrowers. Under their plan, HOPE NOW is working with Americans who could be eligible to refinance their existing loans, be moved into an FHASecure loan, or have their current interest rates frozen for five years.
“The good news is, nobody wants foreclosure – including the mortgage industry. We estimate that 1.2 million Americans could be eligible for relief under one of these options,” Jacksonsaid of the HOPE NOW plan.
As part of the Administration’s campaign to educate Americans about homeownership and help them avoid predatory lenders, this week the President created the Advisory Council on Financial Literacy. Jacksonalso said HUD is distributing 4 million copies of a new bilingual “Home Economics” brochure that details the five steps Americans need to take to become financially literate and prepared to own a home they can afford. Additionally, the President continues to increase funding for HUD’s 2,300 counseling agencies – up 150 percent since 2001.
“Whatever decision you make on a home, the most important thing is to be prepared and informed. That means becoming financially literate…This will help Americans read and understand the fine print before they sign on the dotted line,” Jacksontold the audience of military veterans and mortgage industry representatives.
To combat abusive lending practices, HUD has created a new Fair Lending Division to investigate complaints of predatory lending and called on the mortgage industry to adhere to the highest ethical standards and ensure their business practices are transparent.
“Hispanic homeownership has risen above 50 percent, a record…Of course, even when a family does the right thing, they can still find themselves victimized by predatory lending, Jacksonsaid. A study found that Hispanic-American homebuyers of high income levels are more than twice as likely as high-income whites to be steered into subprime loans.”
“The values our veterans fight for in Iraqare the same values that provide the foundation for homeownership. It contributes to the health, safety, security, and stability of families, our communities, and our country. If that isn’t worth fighting for, then nothing is,” Jackson concluded.
HUD is the nation’s housing agency committed to increasing sustainable homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development, and enforces the nation’s fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov. For more information about FHA products, please visit www.fha.gov.