The White House

Office of the Press Secretary

Press Briefing by Press Secretary Jay Carney and Secretary of Housing and Urban Development Shaun Donovan, 2/1/12

James S. Brady Press Briefing Room

1:22 P.M. EST

        MR. CARNEY:  Thank you all for being here, ladies and gentlemen.  Today, as you probably noticed when you closely watched the President's remarks earlier, is all about the initiatives he's put forward to help responsible homeowners.  I have with me here today the Secretary of Housing and Urban Development, Shaun Donovan, who is spearheading these initiatives for the President and can describe them to you in detail and take your questions about them.

        And with that, I turn it over to the Secretary.

        SECRETARY DONOVAN:  Thanks, Jay.

        Obviously we'll just be brief here and leave plenty of time for your questions about the specifics.  There were a number of pieces to what the President talked about today, but most importantly, he talked about middle-class families who have been playing by the rules, doing everything right, paying their mortgages on time, and have not been able to benefit from record-low interest rates.

        Through strong administrative action, as part of our We Can't Wait efforts across the administration, last fall we took very important steps to open up refinancing for Fannie Mae and Freddie Mac borrowers who are underwater.  But today we still have too many families who may live next door to a family that, just like them, is paying their bills on time with their mortgage, and only because they have a Fannie Mae or a Freddie Mac or an FHA mortgage, they've been able to lower their bills by an average of $3,000, and as a result help not only themselves, their neighborhood, but also the economy more broadly.  And yet we have other families who are in exactly the same position, been responsible, and yet because they don't have a Fannie Mae or a Freddie Mac or an FHA mortgage, have been unable to benefit from the lowest interest rates in half a century.

        As the President said in his State of the Union, we need to get back to American values that are about everybody being responsible, playing by the same set of rules, and everybody having a fair shake if they're doing the right thing and being responsible.  That's what fundamentally this announcement was about today -- was making sure that those families, any family that's doing the right thing, can benefit from the record-low interest rates that we have today.

        The second main point that he made was about needing strong, clear rules of the road for how our mortgage system is going to operate going forward.  And so he announced a Homeowner Bill of Rights that will make sure that when a family is making the single-most important economic decision of their lives, purchasing a home, that they will get fair, simple, transparent treatment.  No hidden fees; clear explanation on a single, short form of what they are signing up for, without conflicts of interest.  And not only when they buy their home but as they pay their mortgage over time, as a mortgage is what we call serviced by an institution after they bought that home, that they can expect to be treated fairly and transparently as well.  

        No more lost paperwork while they are trying to get help.  No more getting a foreclosure notice while they’re negotiating with their servicer because they’ve lost their job or had a medical emergency, and a very clear right of appeal where they may be going through a foreclosure if they’ve been treated wrongly or wrongly foreclosed on.

        Those are the simple, straightforward principles that were in that Homeowner Bill of Rights, and that was the other major piece of what the President talked about this morning.

        He also mentioned that there are other pieces, but I will leave those to any questions or comments you may have.

        MR. CARNEY:  So let’s take questions for Shaun.  


        Q    Thank you.  Is there anything in the plan that the President outlined today that actually requires the banks that hold these loans to go along with this?  Or is the administration just hoping that by sort of creating these more favorable conditions that they’ll be compelled to do that?

        SECRETARY DONOVAN:  Well, in the end -- and this was very important -- what the President wants to do is give families the choice, to put the power in their hands to make a decision.  A family that’s holding a loan that isn’t a Fannie Mae or Freddie Mac loan or an FHA loan has the choice to pre-pay that loan.  They could pay off that loan.  But they can’t refinance today.  So the bank will have nothing -- will have no ability to say no to homeowners.  If we get this bill passed, if we get this program established, families would have the power in their own hands to get a new loan and therefore pay off their existing loan, and servicers could not say no to that.  There’s no way that they could stop that family from being able to refinance.

        Q    That would apply to all banks?

        SECRETARY DONOVAN:  That’s correct.  What is holding back those families from refinancing is they don’t have an option to refinance their loan today because they are underwater.  And by giving them that option, by giving them that path, it would allow them to do that.  And banks could not stop that, because loans are prepayable.  Every family has the ability, if they can pay off a loan, to do that.

        Q    I wanted to ask about the FHA, which is already facing record losses.  Running this program, would it require some movement of government resources to sort of bolster the FHA to make that possible?

        SECRETARY DONOVAN:  Let me take that question on two levels. First of all, there is broad recognition, economists on all sides of the political spectrum have recognized that a broad-scale refinancing effort is one of the most important things that we can do not only for families and for the housing market but also for the economy more broadly -- that for the average family, $3,000 more a year in their pocket every year they pay their mortgage is like a significant tax cut and would boost consumer spending.  

        It also has the effect of making it easier, obviously, for families to pay their mortgages and therefore reduces defaults, reduces foreclosures and helps to lift house prices as a result.
        And so there’s broad recognition that this would be good for the housing market and good for the economy.  

        And by the way, Fannie Mae and Freddie Mac and FHA, because of the scale of their portfolios that we already hold, improvements in the housing market would be dramatically good for the taxpayer as well, because it improves the value of all the investments that we already have.  So on a broad basis, the primary reason we’ve proposed this is because this is smart economic and housing policy.

        Specifically, though, as I’ve said before, the President just doesn’t think it’s right that a family that is doing the right thing arbitrarily -- because they happen to have a mortgage that isn’t a Fannie Mae or Freddie Mac or an FHA mortgage -- doesn’t have the ability to benefit.  And so what we have designed here is a smart, cost-effective plan to be able to give those families access.

        And I want to give you three specific ways that we would ensure that this would not harm the FHA or taxpayers.  First of all, this is only available to homeowners that are current on their mortgages.  So these are families -- just think about it, the crisis that we’ve been through, these are families that are underwater, and yet through all of that have done the right thing and paid their bills.  So first of all, these are safe homeowners.  Second, you reduce their payments by up to $3,000 a year.  They become even safer homeowners.

        Second, we’ve proposed a source to fully pay for any potential defaults that we believe would come.  We believe the total net cost is about $5 to $10 billion in total, which would be offset by the bank fee that the President has proposed.  And frankly, we believe, as he said this morning, those who are responsible for this crisis should also be responsible for making sure that the damage is repaired.  And the very institutions that made many of these mortgages that caused much of the damage that we’re trying to repair ought to participate in helping to solve it, and we think the bank fee is a good source to do that.

        And then third, and finally, we’ve designed this in a way to make sure that FHA would be protected by proposing a completely separate insurance fund, separate from all of the other loans that FHA has made.  It would be a standalone, firewalled off from the reserves for the other portion of FHA, and designed in a way that the very riskiest mortgages, the most deeply underwater, those with the riskiest borrowers would not be able to come into the program without actions by the institutions that currently hold them to make them safer loans.   

        So all of those give me confidence that not only we would protect the FHA, but, frankly, this would be good for taxpayers broadly because it would help to improve the value of current investments of FHA and the GSEs.

        MR. CARNEY:  Jake.

        Q    Mr. Secretary, wasn’t it two years ago that the administration first proposed a bank fee?  Am I right about that? January 2010?

        SECRETARY DONOVAN:  I believe that’s correct.  

        Q    This is the same type of bank fee that you’re talking about?

        SECRETARY DONOVAN:  As you will see in the budget, it continues to be a proposal that the President believes is the right thing to do.  I think, broadly speaking, we believe this is the right housing policy.  If Congress believes that there are other ways that we should look at paying for this, I think we would be open to discussions -- as the President has done in other situations, we are open to having a discussion with Congress about the best way to make sure the cost of this is covered.  

        What we will ensure, though -- and that’s the principle of the bank fee -- is that there should be a contribution from those who have contributed to this crisis to make sure that the cost of this is fully covered.

        Q    I just wonder if you couldn’t get it through a Democratic House and Senate why you think now it would be more -- it would have a better chance of making it through Congress.

        SECRETARY DONOVAN:  I’m the housing secretary; I’m going to leave the politics and the discussions about what’s possible in Congress on that to others.

        MR. CARNEY:  Norah.

        Q    Why not let the housing market run its course and hit bottom, as some have suggested?

        SECRETARY DONOVAN:  Well, put yourself in the shoes of a family that the President described this morning.  You’ve done everything right, you’ve paid your mortgage -- whether you’re in Florida or Nevada, California, or right there in Falls Church, Virginia.  You’ve done everything right, and because of the irresponsibility of others -- financial institutions, investors, others -- you’ve seen the value of your major financial asset drop by 25 percent, to take Falls Church -- by two-thirds or 75 percent, to take Las Vegas.  And you know that if somebody else loses their home next door to you, as soon as that foreclosure sign goes up, your own home loses $5,000 to $10,000 in value.  

        And so what we've seen is, particularly in the hardest-hit communities, a spiral of declining prices because of the number of properties that are coming onto the market.  And there's no question, if you look at the fundamental economics in the housing market, by all standard measures, we've reached a level of prices that is supported by the fundamental economics.  And so the great risk here for families, for neighborhoods, is that we let that spiral continue and continue to harm families and neighborhoods in a dramatic way.     

        The second thing I would say is we should not sit on our hands when we know we can help those families to be able to refinance, to do better and to help the economy, and we have evidence that things that we have done have actually made a difference.  And one of the things I would point to in the President's proposal today, we have efforts that we call neighborhood stabilization and others that we announced today that try to take this shadow inventory, the number of homes that are sitting vacant in neighborhoods that have been hard hit that are dragging down everybody's property values -- we want to make sure that there are options for those homes to be renovated and to be returned to use, oftentimes as rental housing.  Because in many of these markets, it's a smarter thing for the market and for the neighborhood to convert those to rental housing.

        And when we step back and look creatively at what we could do, what we realized is that between just FHA, Fannie Mae and Freddie Mac, we control close to half of all the bank-owned properties in the country, and that we could be more creative working with local communities, working with for-profit companies, working with local officials, to try to make sure that those homes aren’t contributing to the problem, aren’t sitting on the market vacant, but could be converted to rental, could be renovated, could put construction workers back to work.

        All of those things are steps that have been effective already.  On average, where we’ve made those investments, we’ve seen 75 percent of those neighborhoods, we’ve seen the vacancy rates decline.  And two-thirds of those neighborhoods we’ve seen the house prices rise relative to surrounding communities.

        So we have tools that we know work, and we’re not going to sit on our hands watching middle-class homeowners who’ve done the right thing and played by the rules get hurt by a strategy that says simply we’re going to stand by and watch them suffer.

        Q    But you may be asked -- you may have to sit on your hands because Congress has said that this plan is dead on arrival.  You couldn’t get a bank levy passed, as Jake pointed out, two years ago when Democrats controlled the House and the Senate.  Why shouldn’t this proposal today, in an election year, not look like just an effort, a politically motivated effort to reach out to homeowners in key battleground states that just also happen to have big mortgage foreclosure issues, like Nevada, Arizona, Florida, et cetera?

        SECRETARY DONOVAN:  I’m going to leave the election-year politics to others.  Let me talk about the facts here and the economics and the housing issues --

        Q    If you don’t want to talk about the politics, then what’s to say that any of this is actually going to help anybody when Congress is not going to approve it?

        SECRETARY DONOVAN:  So that’s the question I was going to try to answer.  When the President, last fall, said that there were steps that we needed to take to help Fannie Mae and Freddie Mac borrowers refinance, there was bipartisan support in Congress to do that.  Senators Boxer and Isaacson introduced a bill, and I think you will see broad support across the political spectrum to do this.  And just look at the community of economists and other housing analysts, from Mark Zandi and Martin Feldstein on the right to a whole range of economists that are more on the left -- this is one of the things that folks believe is the most important step that we can take.  

        And, by the way, we’re not just depending on Congress.  Most of the steps that the President discussed today, whether it’s the steps with properties -- the REO properties that I talked about in the shadow inventory -- those are steps that we can take on our own.  The steps that we’ve already taken to help Fannie Mae and Freddie Mac borrowers refinance, steps that we will take as part of this to help FHA borrowers refinance, the Homeowner Bill of Rights -- and I could go on -- all of these are steps that we can take and we are taking, because we can’t wait for Congress on these.

        Q    Okay, sorry, last one.  And then the President held up a sheet of paper today and said, this is what a form should look like.  When is that going to happen when someone gets a mortgage, they can just fill out one sheet of paper?  Or is that an empty promise?

        SECRETARY DONOVAN:  Well, now that the CFPB has a director and has taken on its full powers, it is moving forward quickly to issue those forms.  And let me be clear about this --

        Q    -- can get a mortgage with one sheet of paper?

        SECRETARY DONOVAN:  Miraculous, isn’t it?  Look, I have -- one of the things I recognize -- and this is an important thing about the CFPB that I think has been missed in all the discussion -- before the CFPB, there were eight different federal agencies, including HUD, that had authority over the home-buying process and the mortgage process.  By consolidating those -- and specifically both HUD and the Fed had control over those forms that you sign, and there were conflicting rules that we had, and that’s one of the things that led to these forms being far more complicated than they should be.  

        The CFPB is simplifying and making more understandable this process, partly by consolidating the authority of conflicting agencies into a single entity.  And I think this is one of those things that is good for homeowners, but it’s also good for lenders.  And it is one of those things that brings together a broad spectrum on the right and the left for things that we can do to simplify and improve the mortgage process.

        Q    Mr. Secretary, to follow up on Norah’s point, in October, the We Can’t Wait stuff -- how many homeowners have you helped, then, with Fannie and Freddie mortgages since October when the President said he was going to move?

        SECRETARY DONOVAN:  So, in total, since -- and the program is called HARP -- since it was first introduced in 2009, it’s helped close to a million homeowners refinance.  The changes that the President called for and that were then implemented later in -- or there were specific details released later in the fall, those changes began to go into effect just in December.

        Q    The ones from October of 2011?

        SECRETARY DONOVAN:  That’s right, the ones -- so to be clear, he gave his jobs speech and called on his administration to work with Fannie Mae and Freddie Mac to make changes.  We worked on those through the fall and they were implemented, started in December.  And so already there are tens of thousands of homeowners that have closed on those loans.  But again, they’ve only been in place for a few weeks at this point where folks can actually get those loans.

        Q    Well, when the President announced that first plan in February of 2009, three years ago this month, he promised I think it was up to 9 million people to stave off foreclosure.  You just said he's helped up to 1 million people.  So why should the American people have confidence that this is now the fourth or fifth plan you've had, this one is actually going to work?

        SECRETARY DONOVAN:  So to be clear, the HARP portion of it, the hope was that it would help 4 million to 5 million homeowners.  That was one portion of it.  And as the President said this morning, while we've made significant steps, we've made real progress.  Just to take one example, nearly 5 million families have had their mortgages modified since the President took office.  Foreclosures are down by almost 50 percent, the number of people entering foreclosure down by almost 50 percent. So we've made progress.

        But as the President also said this morning, we're not satisfied.  We've been disappointed that we've haven’t been able to reach more people.  And frankly, specifically on this refinancing program, what we found after we rolled it out is that there were many barriers out in the market to more people being able to participate.  We fixed the problems on their first liens, but many of them had second loans, and frankly, lenders were unwilling to let those families refinance because of the second lien.  So we went out and negotiated with those lenders and we got their approval to automatically resubordinate those loans.  That was an important step.

        Mortgage insurers that were standing in the way of those families being able to -- so there's a whole series of barriers out in the market.  And I would just say, frankly, one of the problems we had is our mortgage system got so complex, there were so many different players, that that very complexity that led to the crash also made it harder to fix.  We went out and negotiated with all those, we made steps, and they've all agreed to make changes to allow more families to refinance.  

        And what that means is that there are now about 11 million additional families just with Fannie Mae or Freddie Mac mortgages who will have the opportunity, if they choose to, to refinance.

        Q    Just a quick -- you were saying at the top that basically to make the President's plan work you're going to tell financial institutions that they can't say no to refinancing.  How do you actually -- how does the federal government tell private institutions, you can't say no?

        SECRETARY DONOVAN:  You misunderstood.  

        Q    Okay.

        SECRETARY DONOVAN:  Single-family loans in this country are prepayable, so any homeowner already has the right, even if they're -- if you owe $300,000 on your house and it's a $250,000 house and you have $300,000, you can go and pay off your mortgage today -- right?  The issue is they can't get a new $300,000 loan.  
        So what this plan would do, the way it breaks through this barrier for these families is to allow them to refinance that loan, to get a new loan that allows them to pay off their existing loan.  There's nothing the existing lender can do today -- we're not changing this at all -- the existing lender today can't stand in the way of a family paying off their existing loan.

        Q    You're saying if they have $300,000 laying around to pay it off -- or how do they do that?  I don't understand.

        SECRETARY DONOVAN:  They're going to go get a new loan, and that new loan for --

        Q    -- the lender is okay with that, is just going to say, this is the rate you're at right now, it's fine if you just want to change it?

        SECRETARY DONOVAN:  No.  What they would do is they would refinance into a new FHA loan and that would allow them to pay off their old loan.  That's what this plan would do.

        Q    Some analysts in the housing industry have expressed concern that the announcement that the Justice Department is going to set up a residential mortgage-backed securities working group -- seems like a task force -- could actually wind up making banks more skittish.  Is there any concern about that?

        SECRETARY DONOVAN:  Well, what I would say -- and I would draw an analogy to the work that we've been doing in the servicing arena -- the sort of status quo, if you will, is that we have federal enforcement agencies including HUD, state attorneys general, local agencies, private investors all pursuing in disparate, disconnected ways their enforcement actions against the institutions.  And just like on servicing, where the potential outcome is that we could have ended up with 50 different sets of rules in different states around the foreclosure process, these enforcement actions dragging on for a decade or more, what we're trying to do with this task force is to bring together the various pieces that are key to the securitization problems and to coordinate and improve information-sharing across those so that we could get to coordinated solutions.

        So while I believe it will help us reach more significant justice for homeowners and for communities that were harmed, I also think it would have the potential, as the President said in the State of the Union, to turn the page on this era of recklessness faster because of this coordinated action.  

        That's exactly what I think we have been working to achieve in the servicing settlement that we've been discussing.  And in that sense, it will bring certainty and clarity -- to lift the cloud of uncertainty from the market that is holding back lending today -- will help to contribute to lifting that cloud as well by this coordination.

        Q    I understand that would be the impact on the market, but in terms of the impact on the banks and how they're approaching loans, is there any concern that it might have a negative impact or a negative effect?

        SECRETARY DONOVAN:  Well, look, clearly, there needs to be accountability for mistakes that were made.  Where mistakes were made there will be penalties, there will be restitution that needs to be paid to homeowners that were harmed.  There is no question about that.

        But again, on the other side, having a disparate set of actions that are pursued independently, just as they were by the state attorneys general on foreclosure in a disconnected way, leaves a cloud of uncertainty on these institutions.  And we need more clarity.  We need the clear, simple rules of the road to help us here.

        And again, this is part of what the Homeowner Bill of Rights that the President announced today is really aimed at.  No more race to the bottom.  No more institutions falling through the cracks because there are multiple different regulators that have different rules.  A single, clear set of rules about how mortgages are serviced, who's responsible.  

        And frankly, that will not only be good for homeowners and the housing market more broadly, it will also be good for investors because they will now have clarity where they own a mortgage who's in charge on making decisions when a homeowner gets in trouble, what can they expect.  Those clear rules of the road are good for homeowners and communities, but they're also good for investors and markets and institutions.

        MR. CARNEY:  Margaret.

        Q    So there's a provision in this package that is asking banks to write down 140 percent of LTV loans.  Can you explain how that would work and why banks would agree to that when they haven't been ready to jump on principal write-downs to date?  And in terms of the robo-signing agreement, can you tell us what day it will be finalized and whether California will participate?

        SECRETARY DONOVAN:  I'm not going to comment on the specifics that you asked about on the servicing settlement.  All I would say is that we are making good progress there.  I think you know that documents have been shared with the attorneys general.  They are making decisions as we speak.  A number of them have already announced support for it and it will be finalized, I would expect, in the coming days.

        To go to your other question, I mentioned earlier that we want to make sure that we're instituting protections so that the very riskiest loans, institutions need to take responsibility for those and to bear some of the cost of those.  

        In situations where you have a deeply underwater loan, where the house may be worth only half of what the mortgage is, there's increasing evidence that it makes good economic sense for those loans to be written down because it lowers the likelihood of default substantially.  And so in that case, we would work with Congress to set limits like the 140 percent limitation that we've specified that would ensure that we're not taking -- that we are minimizing risk to FHA when we take those loans when they would be refinanced.

        Q    Congress would need to agree to regulate that, essentially. You can't do it administratively and you don't think it will work voluntarily -- it would take an act of Congress?

        SECRETARY DONOVAN:  Well, Congress could give us -- could pass legislation that would give us the ability to set that limit, obviously.  But that is one of the ways that we are looking to make sure that we are protecting the FHA fund in terms of the design of the program.

        The only other thing I would just say is that there are other options for principal reduction as part of this effort that are very important.  One of the things that the record-low interest rates that we have today -- one of the sort of powers that that creates is the ability for a homeowner to choose either -- when they refinance -- to take their savings in lower payments, but also to take their savings and plow it back into paying off their mortgage more quickly.  And almost any homeowner that's below that 140 percent loan-to-value level, if they choose to take their savings and put it into reducing their principal by shortening the length of their loan, almost every one of them, with today's low interest rates, can get back above water, can rebuild their equity in five years.  And that's something that we would want to encourage with this plan.  

        So what we would do -- what we're proposing is that the closing costs for those refinancings would be eliminated where a homeowner chooses to plow their savings back into reducing equity [sic].  And we think that that could be an important part, using the power of the low interest rates today, to help families get back above water more quickly, because, as I said, there is mounting evidence that that principal reduction is an important element of helping there be fewer foreclosures and to help the housing market recover.

        Q    I didn’t understand your answer to Norah’s question.  Can the CFPB create a one-page mortgage on their own in the next few months, or did you say what the timetable would be for that?

        SECRETARY DONOVAN:  You’d have to ask Richard Cordray exactly what the timeline is.  I know -- and our teams have been coordinating -- I know that they’ve already begun work on it.  Obviously the President showed a sample form today in his speech, so they’re well along in working on this.  Elizabeth Warren began work on this even before she left the agency.  So it is well on its way.  I don’t have an exact date for you on when it will be completed.

        MR. CARNEY:  Laura.

        Q    Hi.  Taking sort of a step back, obviously there have been several ideas put forward to try to deal with this problem over the last three years.  And there have been a couple, even, both in this administration and the last administration, that tried to use FHA to refinance people.  And none of them have really worked that well.  So I’m just wondering what is sort of fundamentally different about this program, even if you could get it through Congress, that would suggest this would work when every other effort has had just sort of minimal success?

        SECRETARY DONOVAN:  Well -- and I talked earlier about the fact that while many of these efforts have not reached as many people as we had originally hoped, if you go to talk to any of those more than a million families who’ve had their FHA mortgages modified, for example, through lost mitigation efforts and have been able to stay in their homes, the remaining number of the almost 5 million families that have had them modified through other efforts, if you talk to the 60 percent of African American or Latino homeowners who were able to buy a home last year because of an FHA mortgage, I think it’s fair to say that without FHA, without the programs that we’ve had and the impact that we’ve had, this housing crisis would have been much, much worse.

        We did -- we were successful in pulling this housing market back from the precipice, from 30 straight months of house price declines to house prices actually rising in the first year that the President was in office.  So we have made a real impact, and FHA has been an important part of that and has reached millions of homeowners.  

        So I think it’s fair to say that while not all of those efforts have been successful or reached the families we had hoped, there has been a real impact, and you could go talk to those families about that impact.

        Specifically on this effort, what we’ve seen is that refinancing is something that middle-class homeowners who’ve been paying their bills, have been doing the right thing, fundamentally believe is a choice they want to make -- whether it’s the million homeowners in HARP that have already participated, or the hundreds of thousands of FHA homeowners who have already refinanced their mortgages through our streamlined refinancing program that we haven’t even talked about today.

        So we believe there is great demand -- and frankly, it’s a fundamental fairness issue for families that have played by the rules, done the right thing, paid their bills, to be able to refinance.  And that incentive, being able to save $3,000 a year, on average, is something that we believe families will choose.

        Q    There was great demand for the other programs, and I’m not disputing that the people who did benefit from them were in fact greatly benefited.  But as you’ve said, as the President has said, they did not have the kind of impact that was anticipated. So what I’m trying to understand is should we basically expect similar results this time and it will be maybe modest, but the people it helps, it will be very, very helpful, or do you think it will be bigger?

        SECRETARY DONOVAN:  The barriers that we have run into have been resistance from banks, market barriers.  I talked about a number of them before -- on second liens, on private mortgage insurance.  Those are the types of barriers that have stopped programs from reaching as many homeowners as they could have reached before.

        And again, families will choose and it is up to families to say they want to refinance.  But they can be confident that today, because of the work that this administration has done, working with and pushing the private sector, second liens will be automatically resubordinated.  Private mortgage insurance -- there has been an agreement to transfer that mortgage insurance. That was a major barrier before.  Another barrier was the fees and costs of refinancing, getting an appraisal, for example.  The vast majority of these now could use an automated system for appraisal, which eliminates the cost of a full appraisal.  

        And so, many, many of the barriers that have stood in the way before have been knocked down through the hard work of my staff and many others across the administration to remove those barriers that were there before.

        Q    -- with this proposal.

        SECRETARY DONOVAN:  For this and for the changes that we announced without Congress acting to the HARP program that will allow more Fannie Mae and Freddie Mac borrowers to refinance.

        MR. CARNEY:  Let’s do a couple more and then --

        Q    Chris Arnold, National Public Radio.  To pick that up, I think you had said 11 million homeowners are now potentially eligible for HARP 2, I guess.  When HARP 2 was announced, FHFA was sort of adamant about saying this is only going to reach a million more borrowers.  Are you saying enough of those roadblocks have now been removed without legislation that your estimate is it could be 11 million?

        SECRETARY DONOVAN:  No, to be clear, what we’re talking about is two different things.  How many homeowners are underwater and because of their interest rates could potentially benefit -- that’s the sort of pool of eligible borrowers, versus how many will actually choose to refinance.  Those are two very different things.

        Q    Well, who can actually make it through the system to refinance --

        SECRETARY DONOVAN:  That ultimately choose and get it  refinanced?  So the changes that have already been announced to HARP that have been done through administrative actions as part of our We Can’t Wait efforts would reach -- would make eligible a significant portion of those 11 million.  But there remain additional barriers.  And to be clear, those 11 million are Fannie Mae or Freddie Mac borrowers that are underwater and could benefit from a refinancing.

        There are some additional barriers, particularly for those homeowners that are above water, for example.  They didn’t get some of the same changes that were done for underwater borrowers. We believe that we ought to clear away those remaining barriers to allow that full group of the 11 million at least to be eligible.  That’s one step.  

        But then there are about 3.5 million borrowers who don’t have a Fannie Mae or Freddie Mac or FHA mortgage who, because simply, as I said before, they happen not to have a loan that’s insured or guaranteed by one of those entities they have no ability to refinance today.  And those 3.5 million would be the additional ones that, creating a new pathway, the proposal the President made today would open up as well.

        Q    Do you have an updated estimate of -- if we were saying a million through HARP 2 several months ago, currently, with the changes that have been made, is there an estimate for how many people might be reached now?

        SECRETARY DONOVAN:  This is -- one of the things that was very important to the President in this is the American people, they value choice, they want to be able to choose to refinance their mortgage; they’re stopped from doing that today.  Ultimately, they’re going to make an individual personal decision.  

        Whether they even hear about this program and call their lender, we can’t control completely those choices.  And so what I don’t want to get into is speculation about exactly how many of those homeowners are going to choose to refinance, for whatever their personal reasons may be.

        What I can tell you is what I’ve said earlier, which is here’s the eligible universe that we think ought to have the opportunity -- the President believes ought to have the opportunity.  Because they’ve been playing by the rules, they ought to have the chance to choose that option, and they don’t have that today.  That’s what the legislation would open up.

        Q    Speaking about the eligible homeowners, the ones who have made their notes, who have tried to keep up with their payments, isn’t the big part of the problem the ones who can’t do that?  Isn’t that the big drag on the market, the people who maybe can’t keep up with their payments because they’ve lost a job, can’t refinance because they can’t make their payments?  Is there any program beyond what you’ve discussed already to help those folks?  And isn’t that part of the big drag on the market here?

        SECRETARY DONOVAN:  There’s no question that there are significant challenges for folks that haven’t been able to keep up with their mortgage payments.  And increasingly, as this crisis has progressed, the cause has been less they got a terrible loan product to begin with and more and more the unemployment or underemployment.

        And so what I would say about that is two things.  One of the best housing policies is our jobs policy.  The more that we can get the American Jobs Act passed, get the payroll tax extended, all of the steps that the President has been calling for on the jobs front, that will help the housing market.

        Second of all, as I said earlier, we have been able to help close to 5 million families get their mortgages modified.  The number of people falling into foreclosure is down by almost 50 percent today from where it was when the President came into office -- so we are making progress.

        There is more that we can do.  And one of the things that is part of this effort that the President talked about today is another We Can’t Wait action.  Last summer we came out, in FHA and through the HAMP program, and extended the forbearance that we provide.  Basically, if you've got a homeowner who’s lost their job, is looking for a job, obviously paying their mortgage is going to be tough for that stretch while they’re temporarily unemployed.  And so we changed our policies to say we would provide, instead of three or four months of sort of bridge time where we would not require payments, that we were extending that up to 12 months.  

        In fact, today, almost half of unemployment spells are more than six months.  And so it’s a different kind of unemployment we have today.  We had to -- we wanted to adjust our policies.

        What we’ve seen is that we took those executive actions and the rest of the market has followed.  Fannie Mae and Freddie Mac recently announced that they were extending their own forbearance policies to 12 months.  And today, as part of this announcement, Wells Fargo and Bank of America have agreed to extend their forbearance policies to 12 months as well.  That’s an important additional step.

        Second, on Friday, we announced that we were making changes to our modification program to HAMP that would allow more borrowers with secondary debt or credit card or medical bills to participate, and some other changes that would expand the eligibility for that program as well.  

        So we do have efforts -- but I would just come back and -- your question implied that somehow this refinancing issue isn’t a central issue to the problem.  And if you talk to, as I said, economists across the political spectrum, they believe -- and we believe, the President believes -- that broader-scale refinancing is one of the most important steps we can help for these families, to put $3,000 more a year on average into their pockets, but also to help the economy more broadly, because consumer spending is obviously a critical piece of what is going to help accelerate our recovery.

        And so we believe that the announcement today on refinancing is also a critical piece of the puzzle, and in fact is one of the most important things that we can do.

        MR. CARNEY:  Thank you all very much.  I appreciate it.  Thank you, Shaun.

        MR. DONOVAN:  Thank you.

        Q    Jay, you don’t want to take any questions?

        Q    I thought you were going to take questions.

        MR. CARNEY:  Well, you guys can email me.  Real quick, because you have a lot to write about and report on now.


        Q    Can you -- there are reports out about some renovations having to do with the Oval Office.  And can you explain what is true, what is not true?  Is the Oval Office going to have to be vacated for some time?  Does the President, whoever he may be, have to be relocated to the Eisenhower Executive Office Building?

        MR. CARNEY:  Jake, I have a very broad portfolio, but renovations to the campus here are not part of it.  So we refer those questions to the GSA, which handles the renovations and all the work that’s done on the property here.  So I don’t have anything specific for you.  I would just refer you to the GSA.

        Q    Mitt Romney said today that his campaign is not focused on the very poor because they already have an ample safety net.  I guess two things.  One, does the President think that the very poor already have an ample safety net?  And do you have any response more broadly to Romney’s comment?

        MR. CARNEY:  I don’t have a response specifically to any comment like that by a candidate.  The President, for himself, believes that the recession, the great recession, the worst recession since the Great Depression, did harm to Americans of all kinds, and middle-class Americans, lower-income and poor Americans were hit hard by the recession.  And that’s why he’s been focused very aggressively on doing everything he can to grow the economy and create jobs for everyone.  

        But I don’t have anything more on the Republican primary.


        Q    Jay, the Buffett Rule was introduced in the Senate, and I wanted to ask or get you to clarify, does the President believe that the definition of “pay one’s fair share of taxes” is 30 percent of --

        MR. CARNEY:  He said that in the State of the Union.  If you were a -- if you make more than a million dollars --

        Q    If you earned a million dollars or more.

        MR. CARNEY:  As a principle that he would apply to individual tax reform, he believes that the overall principle, as articulated by Warren Buffett, that millionaires, billionaires should not pay a lower effective tax rate than middle-class Americans -- in the case of Mr. Buffett, than his secretary -- and that level, the President believes, as does Mr. Buffett, should be 30 percent.

        Q    And if the Buffett Rule were enacted -- does that mean the President would no longer seek to eliminate the so-called Bush tax cuts for the wealthy?

        MR. CARNEY:  Well, they’re obviously very related because they have to do with federal income tax.  The President’s approach towards overall individual tax reform would be guided in part by the principle established in the Buffett Rule.  

        He has made clear, for many years now, that he favors extending permanently the middle-class tax cuts while letting expire the upper-income Bush tax cuts -- which, I want to make this point, costs -- adds $800 billion over 10 years to our deficit, just the higher-income tax cuts.

        So what an overall tax reform package would look like and what the overall rates would be would be worked out, but those principles would guide it.  And certainly in the President’s position, it remains, absent any action on individual tax reform, that the higher-end -- upper-income Bush tax cuts should expire.

        Q    Does it mean that if a wealthy income earner were paying in excess of 30 percent of Adjusted Gross Income that they are paying more than their fair share?

        MR. CARNEY:  It’s a floor, not a ceiling.  If that wealthy earner owes more, then obviously the wealthy earner, like everyone, should pay his or her taxes.  The 30 percent is a floor.


        Q    The Egyptian delegation is in Washington.  Among the folks they’re meeting with are some of the national security advisors to the administration.  

        MR. CARNEY:  I think this is a -- not "the" Egyptian delegation, but an Egyptian delegation.

        Q    And so what I want to know is, does the President or the Vice President intend to speak directly with any of them?  And can you give us any update on whether anything concretely, whether the ball has been moved on the sort of diplomatic standoff and where are those discussions about the NGOs?

        MR. CARNEY:  There are no plans to have the President or the Vice President meet with this particular delegation.  The President, as I think we read out, spoke with General Tantawi not that long ago.  And we are very actively engaged diplomatically with the SCAF, Supreme Council of the Armed Forces of Egypt, on the issue of the American citizens who have been told they can’t leave Egypt.  And we continue to work on that, but I don’t any update for you.

        Yes, sir.

        Q    Jay, the Bipartisan Policy Center, collection of Democrats and Republicans -- Chuck Robb and others -- there was a report which talks about the need to, in its view, bolster Gulf allies and undertake Gulf covert activities regarding Iran.  But specifically, it suggests that there be what it calls an increase in rhetoric.  It says, “Through a negotiated settlement, Iran should abandon its nuclear program through negotiations or have its program destroyed militarily by the U.S. or Israel" --  basically suggesting that the "options off the table" statement is not credible.  Do we think that that is a credible --

        MR. CARNEY:  I don’t think it suggests that at all.  I think our President’s policy is very clear.  We are working -- because of the approach he’s taken we have brought together the most comprehensive international consensus that has ever existed with regards to opposing Iran’s refusal to live up to its obligations. It has resulted in the most stringent sanctions regime ever that has had direct and measurable effects on the Iranian economy, and has clearly had an impact on the Iranian regime.

        The President makes clear that he is determined, and it is this administration’s policy that we are determined to prevent Iran from acquiring a nuclear weapon.  He has made clear, and others in the administration including myself have made clear, that we do not exclude any option in ensuring the fulfillment of that policy position.  

        The President strongly believes, as do many of our international partners and allies, that the course we are on is the right course.  It is having significant event, but it should be clear that we do not rule out any options.

        Last one.  Let me go all the way in the back.  Yes, sir.

        Q    A follow-up on the -- about the Situation Room meeting on Afghanistan and Pakistan.  I haven’t seen the readouts for seven months now.  Have that meeting stopped, or you’re not going to --

        MR. CARNEY:  I do apologize, I haven’t looked into that.  There are regular discussions obviously about the implementation of the President’s Afghanistan policy.  I don’t believe for the last several months there has been a President-run AfPak strategy meeting or AfPak implementation meeting, but I will check on that for you.

        Q    There is a report in circulation which says that Pakistan supports the Taliban to come back in power.  What do you have to say about it?

        MR. CARNEY:  I’m sorry, I apologize, I didn’t quite hear.

        Q    There is a report in circulation about -- a NATO and ISAF report which says that Pakistan continues to support Taliban to come back in power.  A BBC report --

        MR. CARNEY:  Well, I don’t really have any comment on that. Obviously we -- and I’m not familiar with the report, frankly.  But the President’s strategy is very clear.  It is driven by the goal to disrupt, dismantle, and ultimately defeat al Qaeda.  It also has its objective to stabilize Afghanistan, to give the Afghan government the breathing room necessary to build up its armed forces, to allow it to gradually take over security lead.  

        We are in the process of that transition as we draw down U.S. forces that were sent in the surge.  That process will result, as articulated by NATO and Lisbon, in the full transfer to Afghan lead by the end of 2014.

        Thank you all very much.

END 2:17 P.M. EST

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