Something is going on in America right now – something very big. It’s grown out from the pain and frustration of the Great Recession. It’s grown out of the anger at the Wall Street and political elite that were complicit in the collapse of the economy. We see this change in the polling that shows increasing support of the American people for the ideas expressed in the Occupy Wall Street movement. We see it in the polls that say Americans think that even the President, but especially the congressional Republicans, favor the rich over the middle class.
We’re going to dig deep into this trend later with our panel, but this anxiety, this developing sea-change, was forced to the surface by an economy marked by tragically high unemployment and a disaster in the housing market; millions of people losing their homes; millions seeing the value of their homes and their wealth disappear, especially in the Black community. Some 53 percent [of] Black wealth wiped out as a result of the home foreclosure crisis.
HUD Sec. Shaun Donovan joined Roland Martin on Washington Watch “Washington Watch” to discuss the the White House’s program to help struggling homeowners and more.
MR. MARTIN: Big announcement this week by Pres. Barack Obama in terms of attacking the home foreclosure crisis. This has been an albatross around this country’s neck, and so what will this announcement this week actually do to help those homeowners who have been desperate for some kind of relief?
SEC’Y. DONOVAN: Well, Roland, we’ve got millions of families around the country that have been paying their mortgages. They’re doing everything right, and we[‘ve] got record low interest rates, but they’re still stuck at 6, 7 percent interests rates, ‘cause they haven’t been able to refinance. Why? Because home values in their communities have gone down, and they’re underwater.
So, what we did this week was to announce new opportunity for those folks to refinance. And think about this. For the average family, this is more than $2500 a year, so this is like a big tax cut for them – but it’s not just one time. If you have a 30-year mortgage, you get it for 30 years. So, it’s a big benefit to those families; it’s going to help them stay in their homes, but it’s also a benefit to the economy more broadly because it puts more money in consumers’ pockets, which helps everybody, helps the economy recover.
MR. MARTIN: How is this program different from the previous program? Because, of course, the Inspector General released a report saying that the 4 to $6 billion forcl- — home foreclosure program wasn’t really helping as many people as it should. So, what’s the big difference?
SEC’Y. DONOVAN: Well, let’s be clear about what we have done. When the President walked into o- — office, home – home prices had fallen for 30 straight months. H- — foreclosures were at record highs. Today, we[‘ve] got 40 percent fewer folks in foreclosure and losing their homes than we did a year ago. So, we are making progress. The programs are making a difference, but the President’s been clear. We haven’t done enough; we[‘ve] got to do more, and that’s why we announced this this week.
But let’s be clear, too. Congress has got to do their job – right? I mean the President wanted to force banks to write down mortgages by changing the bankruptcy laws. Congress stood in the way, and – and he’s not saying that this refinancing proposal is enough. It’s a piece of a broader puzzle. And I – I’ll give you an example. In the American Jobs Act, we have a Project Rebuild that would put 200,000 construction workers back to work, would help to fix up 150,000 vacant and foreclosed homes around the country. You know that if you live next door to a vacant house, your own house loses value – right? This will reverse that trend, but Congress is standing in the way. Even though the president was George W. Bush when the first part of this program, Neighborhood Stabilization, was put in place, Republicans voted for it in Congress. They’re standing in the way now. So, we’re not saying this refinancing is enough, that we’re going to stop here, but we need Congress to do its job, too: pass the American Jobs Act and get money going into stabile- — stabilize neighborhoods [and] put construction workers back to work.
MR. MARTIN: How many homeowners do you believe that you’ll be able to assist in the next 12 months as a result of this plan?
SEC’Y. DONOVAN: Well, just on the refinancing, there’re 4 to 5 million homeowners that are underwater, have Fannie Mae and Freddie Mac mortgages that can benefit, but here – here’s the thing, Roland. There are lots of homeowners that have equity in their homes that haven’t been able to refinance, that could benefit thousands of dollars a year. And so these changes that we’re looking at – the things that I talked about: lowering fees for those consumers, resubordinating mortgagers – all of those things will streamline refinancing and could benefit a lot more folks as well.
But – but again, this alone is not enough. We[‘ve] got to keep doing – going and – a- — and do more as well to make sure that we deal with this entire crisis. We[‘ve] got a lot to do here. The President inher[it]ed a huge hole in the housing market. We’re making progress, but we[‘ve] got farther to go yet.
MR. MARTIN: Whe- — when you see thousands of folks protesting all across this country – they’re talking about Wall Street; they’re talking about “occupy Wall Street” – they’re really talking about the banks as well. And how do you ensure, though, that these banks are going to follow through? Because we’ve seen time and time again where they’ve offered pushback, saying, “Wait a minute. We can’t sit here and help some taxpayers when other people who’re doing the right thing” – yet, of course, many of them also had terrible business practices, and they wanted all the help as well. And so how do you let the people know, watching, to give them confidence that you’re going to be as tough on these banks to follow through on their word?
SEC’Y. DONOVAN: Roland, you know, one of the things that’s interesting about this is the protestors, more broadly, raising their voices about their anger and their frustration, has actually, I think, made a difference in showing banks, showing the folks that were part of the problem that they[‘ve] got to do something about it. We’ve been negotiating side by side with 50 state attorneys general to hold the banks accountable for all of just egregious practices: the robo-signing – all of the things that happened in the way that they serviced mortgages. And we have made real progress in those discussions a- — as a result of a growing recognition around the country that they have to step up and – and take responsibility for their actions.
But the thing we have to do as well is remember the President fought hard to get Dodd-Frank in place. He – he fought hard to get the first ever Consumer Financial Protection Bureau. We now have an agency in Washington that’s sole responsibility is protecting consumers. You and I know that this wasn’t, you know, just the practices that were targeted everywhere. It was particularly targeted at low-income communities, African- —
MR. MARTIN: Right.
SEC’Y. DONOVAN: — -ing- — -American and — and Latino communities, and what we’ve seen i- — you get a foreclosure next door, your own home goes down in value. So, this is dragging down everybody in neighborhoods, but if we can start to reverse this cycle – this Project Rebuild that’s in the American Jobs Act – we’ve seen the average neighborhood where we’ve put money like this in, 75 percent have seen their vacancy rates go down. Two thirds have seen their property values come up relative to surrounding communities.
MR. MARTIN: Well, we’re looking forward to seeing some changes. Secretary Donovan –
SEC’Y. DONOVAN: Good to see you.
MR. MARTIN: — thanks a bunch.
SEC’Y. DONOVAN: Great to see you.
MR. MARTIN: All right.