HUD chief: Congress must fix housing
The federal official in charge of efforts to revitalize the housing market said Monday in Reno that the Obama administration has done as much as it can and that the ball is now in Congress’s court.
Secretary Shaun Donovan, head of the Housing and Urban Development Department, said that in good part because of those efforts, applications for loan refinancing have tripled and, in just the last quarter, the number of completed home refinancings has doubled.
“Nevada no longer has the dubious distinction of having the highest foreclosure rate in the nation,” Donovan said, adding that the state is now third.
He conceded, however, that probably half the reduction in Nevada’s foreclosure rate is from a state law requiring banks to prove they own the home before foreclosing.
Donovan said, however, that some of the reduction came before that Nevada law took effect.
Donovan made the comments Monday at a roundtable briefing organized by state Treasurer Kate Marshall at the Nevada Association of Realtors office in Reno.
More than one of the Realtors attending that session said they still believe a big part of the problem is the reluctance of big banks to release some of the money they’ve been sitting on and make more loans.
Marshall said one problem there is that so many applications have been filed to refinance at, for example, Wells Fargo, that the bank is struggling to get them all through the process. Some of the Realtors maintain that the big banks need to rehire more people to speed up the process.
Donovan said one good sign is that home prices are stabilizing in Nevada – and even beginning to rise a bit.
A package of legislation now before Congress, he said, would do a lot more to fix the situation.
The first bill, he said, would extend streamlined refinancing to families whose loans are not federally guaranteed.
“It’s a simple matter of fairness,” he said. “It would open (access to refinancing) to families that don’t have government-backed loans.”
The second, Donovan said, is designed to rebuild equity in homes that have lost a large percentage of their value and left the owners owing far more than they could sell for. He said the average refinancing deal saves an owner upward of $3,000 a year. The idea is to get the owner to agree to keep paying what they have been instead of taking the reduced monthly payments and putting the excess into reducing the principal on the loan.
If the owner agrees, he said, the federal government would cover the several-thousand-dollar cost of refinancing.
Another part of the HUD package, called Project Rebuild, would put thousands of construction workers back on the job rebuilding and rehabilitating homes that have been foreclosed and abandoned, not only making those homes much more attractive to buyers but helping the recovery of neighborhoods blighted by foreclosures.
“Your own home loses $5,000-$10,000 when that foreclosure sign goes up next door,” he said.
Finally, he said, Congress has before it another piece of legislation that would improve competition among lenders.
“These are traditionally bipartisan ideas,” Donovan said. “To complete the plan the president has laid out, we do need Congress to act.”