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 Remarks of Secretary Lew at the Making Home Affordable Five-Year Anniversary Summit



As delivered


WASHINGTON - Thank you, Tim, for that kind introduction, and I want to thank you and your staff for organizing this important summit. I also want to thank all of you for coming to Treasury today. This summit has been a great opportunity for those who care about housing and what it means to families, neighborhoods, and our economy to come together and help make our policies and programs more effective.


More than five and a half years ago, a devastating housing crisis helped ignite the worst recession of our lifetimes. By the time the President took office, the housing market was spiraling out of control. Home values were plummeting, construction workers were losing their jobs, the number of Americans behind on their mortgages was at a record high, and foreclosures were mounting.  


To stabilize the market, the President began moving right away to help distressed homeowners. That led to the creation of the Making Home Affordable program. This innovative program has provided relief to homeowners across the country, including more than a million homeowners who have been able to permanently modify their mortgages through HAMP and save roughly $540 a month in mortgage payments.    


The Making Home Affordable program is not just helping families keep their homes, it is giving families peace of mind. And I would like to take a moment to congratulate the men and women who have made this program a lifeline for so many Americans over the past five years. Let me say on behalf of everyone here, thank you for your hard work.  


A home is one of the most important investments a family ever makes. Earlier today, I met with homeowners and housing counselors at the Greater Washington Urban League and discussed with them how our programs are helping Americans get back on their feet.


And they were clear: While our programs are, indeed, having a real impact, very important challenges remain. These homeowners, like many others, remain optimistic but continue to worry about what the future will bring for themselves and their neighbors. The truth is, when you work hard, act responsibly, and play by the rules, you should not have to live in fear that you are going to lose your home.


Now, as we know, our initiatives have not been a silver bullet. But HAMP and our other programs cannot be judged only on what they have done directly for homeowners. Treasury’s housing assistance programs have become a model for the broader housing sector, setting a standard for the mortgage industry on how to restructure loans and help homeowners. In fact, more than 5 million homeowners have been helped by private lenders who in many cases have used a similar framework to the one created by HAMP.


Our work has also triggered new industry norms such as requiring a single point of contact for the homeowner, restricting the pursuit of a foreclosure when working with a family on a modification, and letting unemployed homeowners delay their mortgage payments for at least six months.  


This kind of collaboration and collective action has transformed the way the mortgage industry assists struggling homeowners, spurred the development of new tools to aid communities, and helped reverse the worst housing downturn since the Great Depression.


Now, Making Home Affordable has been just one component of the Administration’s comprehensive effort to heal the housing market. We have taken numerous other steps, including streamlining FHA’s refinancing program to make it easier for homeowners to refinance their mortgages and creating HARP, which has helped more than 3 million people refinance their homes. And even as we have focused on refinancing, we have made strides to give states and communities that are suffering a boost by establishing the Hardest Hit Fund.


In April, I traveled to Detroit, and I witnessed firsthand how the Hardest Hit Fund is making a difference. For the first time under this program, workers were tearing down abandoned buildings to revitalize a community. The fact is, a foreclosed sign in front of one home can pull down the value of every home around it. And an abandoned building can cause a once-stable neighborhood to slip into a downward spiral. On these blocks and in these neighborhoods, the Hardest Hit Fund is providing families with a second chance.


Still, our work is not done. Two weeks ago, in a speech at the New York Economic Club, I highlighted the plight of the long-term unemployed. Construction workers are disproportionately represented within the ranks of the long-term unemployed largely due to the struggling housing market. Middle class families continue to have a difficult time finding affordable housing. And more than 6 million Americans still owe more on their homes than their homes are worth.

That is why we remain focused on providing relief to responsible homeowners, rebuilding hard-hit communities, and reforming our housing finance system.


To that end, I am announcing today that Making Home Affordable will be extended for at least another year. We need to continue to be there for homeowners who are facing foreclosure, those who are struggling with increasing interest rates on their modified mortgages, and those whose homes are caught underwater.


At the same time, we need to develop new solutions for credit-worthy families who want to buy a home but continue to get rejected by lenders. There are still millions of Americans with good credit who cannot get a mortgage. FHFA and FHA have recently announced meaningful steps to help improve lender confidence in making GSE and FHA backed loans, but we have to do more to make sure our markets are effectively serving potential home buyers. This includes fostering the development of a safe and sustainable private market for mortgage lending that can serve alongside government-supported options. The private label securities market has been dormant since the financial crisis.


The fact is, we need to attract more private capital to the housing market, and that is why I have directed my team to bring investors and securitizers together in the months ahead so we can uncover new paths to increase private investment. As part of this effort, we are posting questions on our website today intended to help us better understand what we can do to encourage a well-functioning private securitization market.


As we make it easier for responsible homebuyers to get credit, we also need to make sure families who do not want to buy a home or cannot afford to buy a home have access to affordable rental housing. Renting is the right choice for many Americans, and there is more we can do to support renters.


Today, I can announce that we are taking an important step to increase the availability of affordable rental housing. Under a new partnership between Treasury and HUD, we will help create and preserve quality rental housing by reducing the interest rate for affordable multi-family apartment buildings. We will do this by supporting the Federal Housing Administration’s multifamily mortgage risk-sharing program, which helps drive construction and rehabilitation of rental housing.


The Administration has urged Congress to permit Ginnie Mae to securitize FHA risk-sharing loans. But until Congress takes action on new legislation, I am directing the Federal Financing Bank to use its existing authority to finance these FHA-insured mortgages.


And right now, we are working with the New York City Housing Development Corporation to close the first project under this initiative this fall. With this project, we will help rehabilitate affordable rental housing in Far Rockaway, Queens that was damaged by Superstorm Sandy.


While we remain committed to helping secure affordable and sustainable housing for all Americans, we cannot act alone. Congress needs to extend the Mortgage Forgiveness Debt Relief Act so struggling families that have lost their home to foreclosure or that have sold their home in a short sale in order to move into more affordable housing are not punished with a large tax bill.


At the same time, it is time for Congress to pass housing finance reform. The work in the Senate Banking Committee was an important milestone on the road to reform, but lawmakers need to keep moving forward. We know we can create a better system that provides responsible Americans with mortgage credit while supporting affordable rentals for those who choose not to buy. We can create that system without putting taxpayers at undue risk, but we need Congress to act. Passing legislation is the only way we can achieve meaningful and sustainable housing finance reform.


Before I close, let me say that all of you are here today because the onset of the crisis found the financial industry unprepared to deal with millions of troubled homeowners. As many of you will recall, during the depths of the housing crisis, homeowners were calling lenders looking for help, and lenders did not know what to do with those calls.


But because we have worked together, we have been meeting the needs of distressed homeowners. As we look ahead, we must recognize that eventually Treasury’s direct involvement in the mortgage industry will end. That means we must think about how we can continue to reach borrowers who need assistance. MHA created standards for communicating with delinquent borrowers that the CFPB and others will carry forward, but we will need to make sure our commitment to reaching families who are in trouble lives on.


With that, let me thank you for coming to this summit. We now begin the next chapter of our work together. And I look forward to continuing this conversation and achieving great things with all of you.


Thank you.



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