OPERATION HOPE CENTER, LOS ANGELES, CALIFORNIA WEDNESDAY, MARCH 5, 2008
Thank you, John (Hope Bryant). Thank you for your good work. You have really made a positive contribution with this organization, helping so many people.
Ladies and gentlemen, thank you all for coming. Together you are a formidable brain trust, and I want you to share your thoughts and experiences.
I want to particularly thank Heather Peters for representing Governor (Arnold) Schwarzenegger.
I want to thank him for his aggressive work on the housing crisis. I also want to thank the Mayor (Antonio Villaraigosa) for coming. Mr. Mayor, it is an honor to have you here.
The housing crisis is one of the most decisive events in our nation’s history.
It is often talked about in terms of money, property values, foreclosure rates, or annual comparisons. But you and I know this crisis is about people…people we know…people who need our help…people who need to know that we care, and that we will do something.
The big numbers have their place, of course. We know that, this month, foreclosures in Southern California in January were up by 433 percent over the same month last year…nearby Riverside County was the hardest hit in the state. We also know that homes sales fell by 38 percent in January for the Los Angeles area.
The median home price also fell by 18 percent for Los Angeles last month.
Dire news…shocking statistics! But this crisis is more obvious and personal when a foreclosure notice is delivered to a neighbor. Or when a bank repossesses the house next door. Or when that same house sits on the market for months on end.
I say all this because we must be mindful of the human side of this crisis if we are to recognize its deep and varied causes – there is no single cause.
This crisis will not be solved by a silver bullet; one person does not hold the key. There will be no instant, eye-popping Hollywood-ending. But we will have a successful, and positive, ending.
Like all things worth having, it will take cooperation, good judgment, and outreach on a vast scale.
Each one of us can play a part, make a valuable contribution. And if we get enough people involved, with the right programs, then we can reverse the bad news, and help more and more people find homes they can afford in mortgages that offer no surprises.
For one thing, we need to expand the use of housing counselors, which is why the President is fighting for more money ($65 million) for housing counseling. We know housing counseling works. For agencies participating in HUD’s housing counseling program, we found that 96 percent of households counseled avoided foreclosure. Another action is called FHASecure. We need to expand the use of Federal Housing Administration (FHA) loans.
We have done as much as we can on our own. Already more than 100,000 homeowners have been able to refinance with FHA. Here in California, we are starting to see some effect. For example, in the last three months, we have doubled the number of California households who are in FHA-backed loans.
By the end of the year, we think we can reach as many as 300,000 people nationwide…many of them in California. We need to make FHA competitive to increase these numbers, which will require Congress to complete its work on FHA modernization. It is vital that FHA’s loan limits be raised permanently so FHA can be competitive with other loans.
For example, last month the median price of an existing home in California was $430,000. Unless FHA is modernized, homeowners in many states cannot finance backed by FHA and the full faith and credit of the government.
For example, modernization could help as many as 250,000 households nationwide, many of whom are in California. FHA has mailed letters to hundreds of thousands of at-risk homeowners to urge them to refinance with safer, more affordable FHA-backed mortgages.
These letters are being sent to homeowners who already have or soon will confront the first reset of their adjustable rate mortgage. More than 54,000 of these letters have already been sent to California residents. We will be sending these letters out to about 850,000 at-risk homeowners nationwide by year’s end. We need industry cooperation with government and homeowners. That is happening with the Hope Now Alliance.
The outreach efforts by the industry have been very helpful. The hotline has received more than 4,000 a day. The last round of letters sent to homeowners in trouble reached a 26 percent response rate. Through the second half of 2007, industry assisted more than 869,000 homeowners, both through loan modifications and formal repayment plans. We need to help potential homeowners become more informed. We need to do all of this and more.
I’ve come here primarily to listen to you. You are here in the community…you know what people are up against. You know what people need here…what will work.
I met with the Governor last week, and I’ve benefited from his thoughts. If we are going to successfully address this crisis, we will have to work together as a community, providing on-point solutions for each of the many causes of our present downturn.
I want to hear from you, and then do whatever I can to give you the resources and help you need, both here in Los Angeles and throughout California.
Again, thank you for coming.
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