HUD Secretary Announces Help for Distressed Mortgage Borrowers
November 19, 2008
U.S. Housing and Urban Development Secretary Steve Preston announced new federal efforts to help distressed borrowers refinance their mortgages at a Club luncheon Nov. 19.
Preston said changes to the HOPE for Homeowners program will reduce costs and expand eligibility for consumers and lenders alike. More homeowners will be able to get fixed-rate 40-year mortgages under a simplified progress.
Despite the changes, Preston said, Congress needs to make statutory revisions to help HUD and its Federal Housing Administration help lenders and borrowers deal with the current mortgage crisis.
He commended members of President-elect Barack Obama’s transition team, members of which attended the NPC luncheon, for their cooperation in preparing for a smooth transition next year.
Preston, who headed the Small Business Administration before becoming HUD Secretary in June, also urged lenders to begin using HUD’s new Good Fair Estimate disclosure form before it becomes mandatory in 2010.
He said its use will help borrowers shop for appropriate loans and help restore confidence in lending institutions.
While government needs to do more, Preston said, private lenders need to do more on their own to restructure their distressed mortgage portfolios. He urged them to adopt broad portfolio restructuring rather than one-on-one negotiations with borrowers.
Preston declined to predict when the housing market will start to recover, although earlier signs suggested it would take at least a year.
He noted that there is considerable overbuilding that must be absorbed in addition to mortgage foreclosures.
Changes still needed to help HUD and FHA serve home buyers include increased appropriations from Congress to modernize the agency’s antiquated computer systems, statutory changes to the HOPE for Homeowners program to further reduce costs, and additional resources for housing counseling for borrowers.
"Home ownership should still be part of the American dream,” Preston said. But he warned that it should not be used as a source of money through periodic refinancing to access equity.