It wasn’t that long ago that our housing market was in a free-fall – in fact, most of us know somebody in our family or circle of friends who was in danger of losing a home, were foreclosed on, or who had to do a short sale on their property.
In the African American community, those impacts were extremely painful. From 2005 to 2009, inflation-adjusted median wealth fell by 53% among black households. African American families also took on more unsecured debt during the economic downturn, with the median level rising by 27%; and, the percentage of homeownership decreased between 2005 and 2011 from 46% to 43%.
Today, the housing market is recovering, and we have come a long way thanks the leadership of President Obama. Shortly after taking office, the President took immediate action to stabilize our housing market and protect the middle class. Thanks to programs like the Home Affordable Refinance Program (HARP) (and the Home Affordable Modification Program (HAMP), we have been able to work with millions of middle class families to help them stay in their homes, save money on their mortgages, and turn their communities around. HUD has also invested $7 billion through the Neighborhood Stabilization Program to increase affordable housing and stabilize neighborhoods hardest hit by foreclosures, many of which are neighborhoods of color.
Since the President took office in 2009, more than 353,000 African American households have purchased a home using a Federal Housing Administration (FHA) guaranteed mortgage, and over 205,000 thousand have refinanced, in many cases dramatically reducing their monthly payment or getting out of a risky adjustable rate loan.
To build on this progress, yesterday, the President Obama laid out his ideas to help more responsible homeowners refinance, to cut red tape, to help the hardest hit communities rebuild, and to ensure those who rent have decent and affordable options.
The President made clear that going back to the same bubble-and-bust housing system that caused the financial crisis is not acceptable. We need a rock-solid foundation for financing homeownership with a bigger role for the private sector, where taxpayers aren’t on the hook for the irresponsible behavior or bad decisions of financial institutions. He also declared that it is time we finally put an end to the era where Fannie Mae and Freddie Mac could expect a bailout for risky behavior in pursuit of profits. Finally, he announced an initiative through FHA , which would give well-qualified Americans who lost their jobs during the crisis a fair chance to get a loan if they’ve worked hard to repair their credit and meet all the requirements for a loan insured by FHA.
Though we’ve made progress there is still a lot more work to do. Several months ago, President Obama nominated Congressman Mel Watt, who has served as the House Financial Services and Judiciary Committee for over twenty years. A distinguished member of Congress and the Congressional Black Caucus, Congressman Watt has a proven track record of fighting against predatory mortgage lending and protecting consumers from financially abusive practices. His confirmation would provide certainty and strong leadership at FHFA while it plays a critical role in winding down Fannie Mae and Freddie Mac and bringing back private capital toward a safer housing finance system. As we continue to provide a better bargain for the Middle Class, we must also move forward a leader like Mel Watt, who has bipartisan support, and dedicated his life to creating ladders of opportunity for families from all communities.
The President understands that homeownership is an important ladder of opportunity into the middle class, and the equity in a home is often the way that many families put their children through college, retire, or even open a small business. The President’s proposals announced today, along with the work being done at HUD, will help build on the progress we’ve made over the last four years. Together, we can make owning a home a symbol of responsibility and a source of security for generations to come.