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HUD Secretary announces more Ohioans turning to affordable, government-backed mortgages

HUD Secretary announces more Ohioans turning to affordable, government-backed mortgages

COLUMBUS, OH – February 21, 2008 – Thousands of Ohioans are turning to HUD’s Federal Housing Administration (FHA) to find an affordable mortgage refinancing solution, and many more could be helped by bipartisan legislation awaiting final approval by Congress, U.S. Housing and Urban Development Secretary Alphonso Jackson announced today. While participating in a roundtable discussion with Ohio Congressman Pat Tiberi (OH-12), Columbus-area realtors and local community stakeholders, Jackson said Ohio families refinancing with FHA more than doubled in December 2007, compared one year earlier.

“We are here to help the families of Ohio avoid foreclosure and keep their homes. We are committed to finding solutions that can sustain families through times of uncertainty as we push toward renewed economic vibrancy,” Jackson said during the roundtable discussion.

In January 2007, 632 Ohio families refinanced into the FHA. One year later, in January 2008, more than twice as many did, 1,400, which represents a 122 percent increase, and is a direct result of HUD’s FHASecure refinancing product. FHASecure refinances mortgages that are current or past due because of an interest rate reset. Since September 2007, the program has been able to assist over 94,000 Americans, including 4,400 families in Ohio. FHASecure will help 300,000 families nationwide by the end of this year.

More than 90 percent of borrowers who refinanced from the subprime market into FHA now have 30-year fixed rate loans with much lower monthly mortgages. Nationwide, FHA has seen a dramatic increase in business from homeowners trying to refinance out of their high-cost, high-risk subprime loans. FHA more than tripled its refinancing business (216 percent) in December 2007 compared to the same month one year earlier.

“We must help people in distress right now. That means giving them an avenue to refinance from subprimes into safe, affordable mortgages from HUD’s Federal Housing Administration. This is one reason why President Bush and Congress worked so hard to pass the economic stimulus plan. I want to thank Congressman Tiberi for his strong support. Those rebate checks can be used to help pay off overdue mortgage payments or other essential bills,” Jackson added.

To encourage more families to consider FHA as an affordable mortgage-insurance alternative, HUD is sending letters to 850,000 Americans with resetting rates who might qualify for more affordable FHA loans. More than 15,000 letters were sent last week to Ohioans.

“But there is another piece of the puzzle, one more ‘root solution.’ Two years ago, we introduced an FHA modernization bill to Congress. It would provide flexible down payment requirements and higher loan limits. The bill also would enable FHA to fairly price premiums, taking risk into account. We believe FHA modernization could help a quarter million families this year alone, including in Ohio. It passed the House and Senate in bipartisan fashion. Now we need to get it to the President’s desk,” Jackson said.

To combat predatory lending, HUD’s created a Fair Lending Division. This unit is investigating complaints and questionable practices. Recently, HUD awarded grants totaling about $1 million to agencies in Ohio and other high-foreclosure states to develop new strategies to stop lending discrimination. These “best practices” will be made available to all 50 states.

Jackson also highlighted the HOPE NOW Alliance, an industry effort to help families avoid foreclosure. The Alliance, which represents 90 percent of the subprime market, has a plan that could help one million homeowners avoid foreclosure over the next two years by:

  1. Refinancing existing loans;
  2. Moving borrowers into FHASecure loans; and
  3. Implementing a five-year freeze on reset interest rates for subprime loans.

HOPE NOW has also contacted more than half a million homeowners. Their hotline (888) 995-HOPE-receives about 4,000 calls per day. Last week, HOPE NOW Alliance members launched Project Lifeline – a targeted outreach to seriously delinquent homeowners (90 days or more late) who are facing the greatest risk of losing their home. This effort could allow services to “pause” the foreclosure process, for up to 30 days while a possible loan modification is created.

NOTE: To read the Prepared Remarks for Secretary Jackson, visit: www.hud.gov/news/speeches/2008-02-21.cfm

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HUD is the nation’s housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development, and enforces the nation’s fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov. For more information about FHA products, please visit www.fha.gov.

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U.S. Department of Housing and Urban Development (HUD) is the nation’s housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development, and enforces the nation’s fair housing laws.

Contact:

Brian Sullivan
(202) 708-0685