WORD ON THE STREET: In his State of the Union address, President Obama talked about middle class folks who have done everything right, do their fair share and play by the rules. And he laid out his blueprint for an economy that's built on the same values – on values of fairness and responsibility – an economy that's built to last.
Nowhere did we stray further from those values over the past decade than the housing bubble. The irresponsible actions of some hurt millions of families. They were hurt by lenders who sold loans to people who couldn't afford them, by buyers who knew they couldn't afford them, and by banks that packaged and traded those mortgages to make profits that were nothing more than a mirage.
This behavior triggered the worst housing crisis since the Great Depression. As President Obama said, our housing crisis remains the single biggest drag on our recovery – keeping millions of consumers from spending, leaving hundreds of thousands of construction workers at home waiting for that call and forcing countless families to lose their homes.
Some of the biggest victims of this crisis, though, are homeowners who never missed a payment. There are more than 10 million homeowners across the country right now who – through no fault of their own – owe more on their mortgages than their homes are worth. Now, it will take a while for home prices to rise significantly again. But there are actions we can take, right now, to provide some relief to folks who've been making their payments on time.
Already, we have made real progress. Nearly 14 million homeowners have refinanced their mortgages since 2009, pumping more than $22 billion into our economy every year. But even though mortgage rates are as low as they've been in half a century, falling house prices locked too many families out of the refinancing market. So last year, we took aggressive action that allowed more folks to participate.
We're doing even more by sending Congress a plan that will give every responsible homeowner in America the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates. This plan will help millions of responsible homeowners who make their payments on time but find themselves trapped under falling home values or tangled up in red tape. To move this part of the plan, we need Congress to act. But we're not just going to wait for Congress.
I have joined Attorney General Eric Holder in announcing a task force to investigate the kind of activity banks took when they packaged and sold risky mortgages. We are going to hold people who broke the law accountable and restore confidence in the market. We are going to speed assistance to homeowners. And we are going to turn the page on an era of recklessness that hurt so many hardworking Americans.
We have also announced a Homeowners Bill of Rights – a single, straightforward set of commonsense rules that families can count on when they're shopping for a mortgage. Let me tell you what rights this president believes homeowners should have: the right to no hidden fees or conflicts of interest; the right to fair, simple, transparent treatment; and the right to a new, simple, clear form for new buyers – one that makes people confident they're making the right decision for their future.
Those rights shouldn't end when homeowners get the keys to their new home. If you lose a job or have a medical emergency, you should know that when you call your lender, that call will be answered. You should know that your home won't be sold in foreclosure at the same time you're filling out paperwork to get help.
That is why it was so important we got President Obama's new consumer watchdog agency up and running. As we speak, its new chief, Richard Cordray, is putting in place strong, clear rules that apply to every lender.
And with this bill of rights, they have a head start on that work. That's because the same principles provided the foundation for important protections homeowners will see from the enforcement actions we're taking with state attorneys general to hold servicers accountable for the so-called ‘robo-signing’ violations – violations that rightly outraged so many people and harmed so many more.
None of this is to suggest our housing market will recover overnight. After all, home prices dropped every month for 30 straight months before President Obama even took the oath of office. Nor will any program or policy solve all the problems in our multitrillion-dollar housing market. But we need to do everything in our power to repair the damage from this crisis and make responsible families whole.
Now, some have said that responsible homeowners should sit and wait for the housing market to hit bottom – that ‘we need to let the clearing process work.’ But we can't sit on our hands. We're talking about families' livelihoods. We're talking about the single most important investment families will make in their lifetimes.
And we're talking about people who've done the responsible thing time and time again – every month when that mortgage bill arrives on their doorstep. They haven't walked away from their obligations. We can't walk away from ours.
We urge Congress to act and pass this plan. Help more families. Help more neighborhoods. And help keep the promise alive for the middle class.
Shaun Donovan is secretary of the U.S. Department of Housing and Urban Development. This article is edited and adapted from a recent speech delivered at Triangle Family Services in Raleigh, N.C. The original text is online.