Remark Of Congressman Gregory W. Meeks At The Wealth Building in the African American Community Summit

BRAINTRUST SESSION on “Real Estate Recovery:

Opening Remarks by Congressman Gregory W. Meeks

Ladies and gentlemen,

I am delighted to welcome you all to the CBC 44th Annual Legislative Conference.

It is great to see so many distinguished leaders and organizations here that have worked so hard to preserve the value of home ownership in our communities. The National Association of Real Estate Brokers has for the past 60 years fought for equal and fair housing opportunities for all Americans. So I want to first thank NAREB for its continued leadership on this very important issue.

Last year, it was an honor for me to give remarks on the Real Estate Recovery for African Americans, and I very much welcome the opportunity to revisit this topic and address recent developments.

This is an issue I care deeply about— and not only as a senior member of the House Financial Services Committee but also as the representative of a congressional district that suffered one of the worst foreclosure rates. The Fifth Congressional District of New York still has thousands of home owners under water and struggling to keep their homes.

Unfortunately, I have to admit that because the republicans are in the majority in the House of Representatives, and therefore control the chairmanship of the financial services committee, comprehensive housing finance reform has not advanced as we had hoped.

This is truly unfortunate because the foreclosure crisis hit Blacks harder than any other group in America. In 2004, 50 percent of black families owned their homes. Today, the rate is down to 43 percent, the lowest it has been since 1995. The decline in Black homeownership during the Great Recession is the main reason African Americans essentially have lost 18 years of economic progress:

• Hundreds of billions of dollars in wealth lost, which exacerbates other socio-economic problems.
• Families can’t rely on the equity of their homes to send their kids to college?
• Seniors are finding themselves with zero equity in their homes and no savings to fall back on.
• Small minority owned businesses can’t get loans because their home no longer qualify as collateral. Without access to capital their businesses cannot grow, cannot create jobs, and the employment levels in communities of color suffers.

All these consequential effects are evidence a widening wealth gap between blacks and whites, the largest in at least the last three decades, and with inter-generational consequences.

That is why we need to remain steadfast and united in supporting federal programs that support and fund affordable housing programs.

Thanks to President Obama, we now have my good friend and former CBC member, and former colleague on the Financial Services Committee, Mel Watt as the new Director of the Federal Housing Finance Agency.

Director Watt has my support (and several CBC members)on a number of new housing initiatives he recently announced to boost affordable housing and access to credit, including:

1. Making sure that borrowers have access to credit. As required by the Housing and Economic Recovery Act of 2008, the FHFA recently proposed affordable housing goals for Fannie Mae and Freddie Mac for the next three years. The new proposal direct the two firms to provide more support to low-income Americans by:

• Increasing the goal for purchases within low-income areas from the current 11 percent to 14 percent for the next three years; and
• Increasing the percentage of all refinancing targeted for low-income families from the current 20 percent to 27 percent for the next three years.

Former Congressman Watt is absolutely right. Congress still needs to reform Fannie Mae and Freddie Mac. However, until then, these affordable housing goals and programs should be preserved and augmented.

2. There is also the Home Affordable Refinance Program (HARP), which has so far helped 1.5 million families refinance their mortgages. But there are many more consumers left who are not taking advantage of this program.

• 800,000 more families would benefit from HARP if they just applied, with the potential to save a significant amount of money on their payments.

I therefore applaud the Department of Treasury, the Department of Housing and Urban Development and the Ad Council that recently formed a partnership to launch a new series of ads starting this week to let homeowners know about free foreclosure prevention assistance through the Making Home Affordable Program. I also applaud the extension of the program by another year through December 31, 2016.

Another critical agency is the Federal Housing Administration (FHA).For nearly 80 years since its founding, the FHA has assisted more than 40 million families buying homes. 50 percent of all African-American and Latino homebuyers, and 40 percent of all first-time buyers are assisted through FHA programs. And since the crisis, the FHA has helped 7 million families become homeowners or refinance into more affordable loan payment plans.

FHA recently introduced its "Blueprint for Access," which aims to free up more credit for lower-income borrowers; including reduced mortgage insurance premiums to homeowners who complete housing finance counseling.

However, I am concerned that FHA fees may have risen so high that many creditworthy Americans are now being priced out of the market. Furthermore, underwriting standards have become more risk averse making it more difficult for first time buyers to obtain a mortgage without spotless credit.

I find the recent data disconcerting:

• First time home sales made up only 26 percent of overall sales, which is 6 points below the five-year average, and 14 points below the 40 percent benchmark.
• And recent graduates have witnessed some of the greatest barriers when entering the market, considering the higher levels of student debt. This is especially troubling for black college graduates, who according to the CFPB, take on nearly 15 percent more debt than other students, keeping some of our best and brightest young people from the opportunity to own a first home.

We, CBC members on the Financial Services Committee will remain steadfast in supporting the FHA and ensuring that its policies and fees remain accessible to low income and first time buyers.

And to conclude, we must remember that black households’ net worth is more concentrated in homeownership than any other asset class. Homeownership therefore remains and will continue to be the greatest asset for the middle class and for American striving to enter the middle class. So as the housing recovery continues to expand across America, my CBC colleagues and I will remain attentive in defending equal opportunities for Black families.

I would like to thank you for continuing to be active advocates for these initiatives on behalf of the constituents of the Congressional Black Caucus and all Americans.

Thank you!