Will the housing market ever recover?
HUD Secretary Shaun Donovan on record mortgage settlement
- Duration 8:58
- Date Mar 5, 2012
HUD Secretary Shaun Donovan on record mortgage settlement
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-- rates is certainly near record lows of thirty year fixed rate mortgage now on track for its fourteenth straight week below.
Let's leave it well under that way.
But despite all of these rates falling housing just keep struggling and struggling to the man trying to change that Shaun Donovan is the secretary.
Development secretary good and it's been with him what changes the Clinton's.
Well it's three key things we have to do one is.
Get fewer people falling into foreclosure help folks whether it's finding jobs other things get -- current on their mortgages second is we get too many property sitting vacant.
Dragging down prices if you live next door to a house that goes into -- -- you're doing everything right your own house loses five or 101000 dollars.
As soon as that foreclosure sign goes up.
The third thing is we've got too much uncertainty about making new loans we think there ten to 20% of buyers out there who were good risks.
Or just finding it hard to get credit so those three things in the big barriers that we -- it.
Just seeing a -- supply of homes that the market.
Is his right great depressed.
Many were dutifully paying their mortgages.
Are wondering why.
Is my neighbor or my colleague and my friend getting a break for not making good on his mortgage commitment.
When I'm getting burned for doing just that.
You know the truth is the vast majority of Americans who are under water are paying their mortgage about 90% right.
And the president has taken a number of steps over the last six months to help them.
We have is you said the -- hat we've got record low interest rates that would usually do a huge.
Boost for the economy but we haven't seen that come through because people can't -- finance.
So we've put in place a series of steps to help.
More than ten million Americans who are currently we're doing the right thing and paying.
To refinance on -- -- who has their loan and other words it wasn't an original -- -- -- you -- these things are -- right -- result.
-- -- -- ticket -- so we've done that where we can with Fannie and Freddie and FHA what's left is about three million homeowners doing the right thing in paying.
Who haven't been able to refinance the president wants to work with congress to open up that that option on average it's about 3000 dollars a year it's like that.
Good -- tax -- for them every single at this point six billion dollar plan -- -- -- -- it's -- the banks for the robo signings and everything else.
To that and it's so early but any.
Is -- moving to -- little.
Well look we just signed -- a few weeks ago it'll be registered in court this week so it's too early to see.
Big results yet from what I can tell you -- it's.
A big cloud that was hanging over the market it is the nightmare scenario -- there was.
We could have had 1015 years of fifty different states suing going in different directions.
Instead what we got was one single clear set of standards on how youth service alone how you foreclosed.
When was why Fannie and Freddie were kept out of actually Fannie and Freddie agreed to these standards while they were they when they where -- -- -- -- -- they were partly we have but they agreed to these standards because everybody has something -- -- From doing this and and by the way when was the last time you saw 49 state attorneys general Republican Democrat agree on -- -- secretary just want to be confusing about that deal.
For those who were robo signed out of their homes for example yet I think -- get a 15100 to 2000 dollar check for for what they want.
But it applies I guess to everyone who was forced out there so how do you distinguish people hearing -- are saying what he did it.
That's not you know I'm I'm glad you asked -- -- there's been some real confusion about -- We did a lot of investigations here and most of what we found was that.
Somebody had their paperwork lost and they had to pay an extra month and maybe to have some fees charged they shouldn't have.
Most of the damage was.
Not people lost their homes because they shouldn't have it was.
Something that might cost them 15102000.
So we set up a process it was like a class action where you come in.
Not a lot of people work but I did not resist you that you believe that you didn't discern a difference right I mean didn't everyone end up getting or will get it what did that's in the settlement there's a separate process the regulators to set up where if -- damage really was you lost your home you can come in.
Prove what the damage was and get whatever the amount is that it was done to their debts just leads me to -- secretary no offense to that they're really just as a stimulus for.
-- -- let's recognize that there was real damage done here.
Let's say that what's that -- there wasn't many agree.
But in the end what is that 15102000.
Dollars editor in it unless it just puts more money into the economy which might trying to be a fine thing to do.
But in the and that's what this -- but at other mortgage -- reverence for example.
Have not done much to change it to the default rate or people who just are making bad all over again.
Well look at again.
This the punishment fits the crime.
In the sense that the damage that was done to them was was adamant if it was worse they have other recourse that they can get.
To fully compensate them for the damage to the real thing here is.
Is this a response look.
You -- a lot of families who've done the right thing paid my bills.
They live next to somebody who was wrongly foreclosed there was damage done to them and so we wanted to provide help refinancing for homeowners that are current on their -- There other ways that this settlement will help homeowners.
But see the punishment fits the crime in the sense that.
There were millions of people hurt.
By these actions of the banks and -- really egregious some of the things that we.
That we found -- and it wasn't just the homeowners who lost their homes that were harmed it was everybody in the neighborhood where but kind of in Florida.
I mean that's that's just as a business that I'm looking at it secretary of saying all right -- money.
Six billion or so that the banks are responsible to to make this right and and and get everything address you address.
What still encourage them.
To increase lending or loosen their lending standards to not be so tough on people use it would otherwise and dutifully qualify for mortgages.
When they've just been slapped with a 26 billion dollar -- -- night.
What's going to be moved them to be -- Let's look -- first of all we should hold them accountable for where they've made mistakes and they did here but.
Again the nightmare scenario not just.
For the housing market but for the banks themselves as they -- had fifty different lawsuits from different states dragging on over ten or fifteen years so.
Well they got it right they bit that bullet because it was a better bulletin fifty different massive bullets I understand is that what you see but I'd say you know what would -- -- -- to.
To keep lending if they know.
This is a big fine they've been paying -- -- that they're gonna have to address in the in Europe.
They don't want to get -- Chinese -- hot -- again but again if we can turn the page on this if weakened.
Unit is orange the -- -- -- it turns the page on the servicing in the foreclosure standards and ended and the problems that we had.
It it doesn't turn the page on everything but we didn't investigate it everything what we what we're turning the page on is the issues that we investigated.
Resolve those get help to homeowners immediately and by the way.
-- everybody's gonna benefit if we can get more confidence in the housing market resolve these issues take away that uncertainty.
Lending is going to be is gonna come back and frankly homeowners will be more confident about on what do you think that that this.
Points a finger let's say the banks of arguments and -- horrible wretched human beings who have nothing of interest but the bottom line.
Did that individuals are to blame as well that they signed documents -- -- well -- no duck race.
They signed on to their documents they knew they couldn't afford that -- they -- yet and and it every one is a victim but the acts.
That's why we set up of a a program that tries to compensate people for the actual harm done.
We're not saying everyone lost their house wrongly we said there's a set -- what this shows no discretion.
Actually they're they're two different ways they can get compensated one is they can come in just quickly and yet -- small payment.
And that's what most of the damage -- There's also this separate process for them where where you really lost your house comment you've got to demonstrate it.
You gotta do a full full review of it that's the other way that a homeowner can can be helped and so it really does fit.
That the remedy to what happened look.
It the end of the day there's plenty of blame to go around what what I'm focused on.
-- how do we move past this how do we get to a place where we can help homeowners recover but also help the housing market recover and I think.
This service is that there's there's a reason why we -- 49 state attorneys general sent on 24 Republican point five Democrat because there was a sense that this was not only good.
For homeowners it was good for the housing market were brought.
What's -- very closely the secretary of it seeing it good to say thank.