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HUD Secretary Mel
Martinez Speech to NAMB 2001 Legislative and Regulatory Conference
Live Link
to HUD:
http://www.hud.gov/news/speeches/namblc.cfm
Monday, April 2, 2001
Remarks prepared for delivery by HUD Secretary Mel Martinez
Thank you
Kay Kinney for your kind introduction and thank you for inviting me to talk
about the issues that are vital to the National
Association of Mortgage Brokers, to the housing industry, and to the
Department. I appreciate the opportunity to tell you where I'd like to lead
the Department in the coming years, and how we all can do a better job for
the American people.
As you
may know, I'm new to Washington. My family and I
moved here from Florida in January. It's
been a slightly ironic experience - for the past few months a good part of
what I've been doing has been analyzing affordable housing and home
ownership policies, talking with groups like yours about home ownership and
affordable housing - and here I was - the new HUD Secretary - living in a
tiny apartment because my wife Kitty and I hadn't found a house we felt we
could afford!
While
that's over - last week, we became the proud owners of a home here in Virginia - I have a deeper
understanding of the problems faced by so many other families who try to
match a monthly paycheck with the cost of a safe and decent home.
I know
you understand the problem, too. Today in America, mortgage brokers
play a key role in the homebuying/home lending
industry, originating over half of the mortgages made each year. You
provide an important service and you help make the dream of home-ownership
a reality for millions of American families.
Home-ownership
is the core mission of the Department of Housing and Urban Development.
Home-ownership builds wealth, pride, and prosperity for families and
communities. It's the key to the American Dream, and President Bush and I
are committed to making that dream an affordable reality for many, many
more Americans.
The
nation has seen ten years of economic growth, and the overall
home-ownership rate in this country is nearly 70 percent. However,
home-ownership rates for African Americans and Hispanics are under 50
percent, and that's not acceptable.
We can do
a better job, and must work - and work hard - to close that gap.
That's
one reason why President Bush has proposed the "American Dream Down
Payment Fund" as part of his budget. It helps 130,000 families clear
the most significant hurdle to home-ownership - putting together a
down-payment.
It's been
easy for people in the past to talk about making home-ownership a reality,
but make no mistake, President Bush is doing
something about it.
President
Bush has also proposed his "Renewing the Dream Tax Credit." This
investor-based tax credit will encourage developers and non-profit
organizations to build new single-family affordable houses or rehabilitate
already existing ones.
It will
help bridge the gap between development costs and market prices and expand
opportunities for low-income home-buyers. We estimate that within 5 years,
at least 100,000 homes will be built or rehabilitated under this plan and
be available for purchase by low-income households.
As I
mentioned earlier, my wife Kitty and I are proud new homeowners. But it's
been a while since we last bought a house, so we were reminded about the
amount of paperwork that was involved in the process.
The
process is simply too long. It involves too many forms. I would like to see
those few forms that are required under RESPA simplified so that
home-buyers can better understand the closing costs. You should not have to
be a lawyer and the Secretary of HUD to figure out this process!
I am
currently in the process of reviewing the report on mortgage reform that
HUD and the Federal Reserve released in 1998. I am also eager to see what
kind of consensus members of Congress reach regarding mortgage reform.
I know
that Congressmen Bob Barr and Bob Ney, two senior
members of the House Financial Services Committee, are speaking to you
today as well. I want to work with both of these men and others in Congress
to enact meaningful mortgage reform.
In the
process of working on reform, I pledge to work with the NAMB and other
industry and consumer groups. . . .
Let me
take a minute to talk about another aspect of the mortgage process that is
hurting some men and women who desperately want to pay their bills and keep
their homes. . . . I'm talking about predatory lending.
I realize
that all of you are dedicated professionals who want to help Americans
achieve the dream of home-ownership. However, there are a small number in the
lending industry who choose to prey on the most
vulnerable in our society. They make loans- unaffordable loans - with the
terms stacked against the borrower. Tragically, these loans may ultimately
lead to foreclosure.
These
dishonorable practices have a vicious effect on our society. They deprive
hard-working people of the most important possession in their lives. . . . and dash their dreams. And they sap the wealth out of
communities and neighborhoods that are in desperate need of stability,
equity, and capital.
Let me
assure you - I know that there is a legitimate role for the sub-prime
lender. Clearly there are Americans who have less-than-satisfactory credit,
but who nevertheless need access to credit to realize the dream of
home-ownership. For those individuals, the sub-prime market is a necessity
to open the doors of opportunity.
But
sub-prime lending is not predatory lending. . . .
I am
aware of the recommendations in last year's study on predatory lending by
HUD and the Treasury Department. I want to work with HUD's partners on a
comprehensive approach that strikes at the heart of the problem of
predatory lending.
For
instance, I would like to see initiatives that focus on consumer education
so that citizens, particularly in distressed communities, have the
information that will allow them to avoid being victimized by unscrupulous
lenders.
Above
all, I want to make sure that we do not put any additional hurdles in the
way of hard-working Americans who are striving mightily to maintain their
standing as homeowners and obtain much-needed credit.
The
President has shown great confidence in the Department of Housing and Urban
Development by increasing our budget by almost 7 percent this year. But
with this comes the responsibility to manage our money wisely. HUD must -
and will - become a good steward of its resources. As HUD Secretary, I have
made improving the management of this Department a top priority of my first
year.
HUD must get
its own house in order.
Candidly,
HUD too often has suffered from mismanagement and a loss of focus. It has
experienced a "mission creep" over the past decades that ballooned the number of programs from 50 to over 300!
Providing
overlapping or redundant services does nothing more than add another layer
of bureaucracy. It does very little to solve the
problems faced by low- and moderate-income families and struggling
neighborhoods. This is a waste of taxpayer dollars, as well as a waste of
the time and energy of our employees.
Back when
I was the County Executive of Orange County, Florida, I was a consumer of
HUD services. I know that mismanagement and a lack of responsiveness
prevented HUD from realizing its full potential in helping more families in
need. This needs to change.
For
instance, if we are to do something about the crisis in affordable housing,
this Department needs to be more responsive to developers seeking to build
multi-family projects. We need to be quick with an answer, instead of being
quick to pile on more red tape. . . .
Once we
have put our house in order, we can more effectively implement our agenda
at HUD and make the Department a better partner to mortgage brokers and
other groups and organizations who share our mission.
While I'm
here, let me also put in a plug for the President's tax plan. Tax relief is
simple common sense. It rewards hard work, instead of punishing it. Tax
relief will give the economy a much-needed jump start.
Under the
President's plan, everyone who pays taxes is going to receive a tax break.
The
President's tax relief plan will allow American families to keep more of
their money to meet their priorities. That means that the average American
family will get to keep 1,600 dollars more each year. This is money that
can be put toward the down payment on a new home.
We hear a
lot about how tax relief will benefit the wealthy, but let me tell you how
this tax benefits working families. The current tax code punishes those who
are working hard and struggling to make it into the middle class.
Under the
President's plan, the bottom tax rate will be cut from 15 percent to 10
percent and the per-child tax credit will be doubled. In effect this means
that 6 million taxpaying families will be taken off the tax rolls.
Now is
the time for tax relief. The President firmly believes that Americans need
tax relief and Americans deserve tax relief. And most Americans agree with
him.
You know,
it's only fair that we let families keep more of their own money. After
all, it was their hard work that created the budget surplus in the first
place.
Let me
assure you that as Secretary I will be responsive to the people this
Department serves-whether they be home buyers or lenders, tenants or
developers. We will keep you updated and informed about changes that affect
your business.
I want to
hear your ideas and work together with you and all of the other
organizations out there that are working to expand home-ownership
opportunities for American families.
I
recognize and applaud the role that mortgage brokers play in making the
promise of the American Dream a reality for all Americans. And in the
coming years I hope to continue and strengthen our relationship with you.
Thank you.
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