Expanding our Nation’s Housing Market Recovery
HUD’s commitment to increasing Black homeownership
The following is adapted from a speech I gave on August 14, 2016 at the National Association of Real Estate Brokers (NAREB) Conference.
Real estate plays such an integral role in our economy. It’s about much more than GDP growth and quarterly investment figures. At its most basic, real estate is about dreams coming true. It’s about milestones being reached. About new chapters and new beginnings for folks at every stage of their lives.
Back in 1947 when NAREB was founded, Black families didn’t just have to save and put away money for a down payment. They also had to confront redlining and racially restrictive covenants. Even when a Black family’s credit was stellar, banks still wouldn’t lend to them. And for the heroic families that saved and did manage to secure a loan — often at higher interest rates than White families received — they were forced to buy in neighborhoods where public services just weren’t as reliable, where the air wasn’t as clean, where too often you couldn’t find good schools.
I wish I could say that shameful history was completely in the past.
HUD will not stand on the sidelines when Black families are discriminated against.
- As long as any lender tries to force Black borrowers to take on higher interest rates even when they qualify for better loan conditions, HUD will act.
- As long as any bank disproportionately rejects qualified Black families from securing mortgages, HUD will act.
- As long as agents show Black families fewer or different listings than they show to White homebuyers, HUD will act.
HUD will act whenever, and wherever, we find housing discrimination. Period. The costs of doing anything less are too high.
Black families historically have had a higher share of their wealth tied up in their home equity than other Americans. That’s meant owning a home has been about more than simply having a place to stay — it’s also helped many Black families send their children to college, start their own businesses, and invest in their communities. So when Black families are discriminated against when they look to buy a home, it doesn’t just affect them — it affects future generations, too.
That’s just one reason why NAREB’s new initiative to help two million more African Americans become homeowners is so important. We’ve seen a sharp decline in the number of Black families who own their homes since the Great Recession. In fact, Black homeownership is near its lowest level in a generation. NAREB is working to turn that around — and HUD will be a strong partner every step of the way.
First, we’ll continue helping more responsible Americans successfully enter the housing market. That includes making it more affordable for folks to buy a home.
Last year I directed the Federal Housing Administration to cut mortgage insurance premiums, making home loans less expensive and opening the door for more families to buy or refinance a home. We received a lot of criticism. Some even said we were paving the way for a second housing market crash. But it was a good call, and the right thing to do.
So far, 1.5 million families have taken advantage of these lower mortgage costs. That includes more than 160,000 African American families. In fact, the FHA insures nearly 60 percent of all home loans to African American borrowers.
That’s a remarkable turnaround from the days when the FHA was part of the problem — explicitly refusing to back loans to African Americans, or even other people who lived near African Americans. The shameful history of redlining destroyed the possibility of investment for countless Black neighborhoods.
Today FHA is part of the solution, with a majority of its loans going to Black families, including many first-time homebuyers. More than 80 percent of FHA-insured mortgages this past May went to folks opening the door to their first home.
And we’re not just helping to lower costs for these families, we’re also expanding HUD’s housing counseling network so that they’re armed with the tools to hold on to their dream long after they shake their realtist’s hand.
We’re also working to make sure our credit market works for the folks who need it most. That includes making it easier for lenders to do business with HUD. As part of our “Blueprint for Access” initiative, for example, we’ve overhauled our “Single Family Housing Policy Handbook,” improving the compliance process and bringing together over 900 mortgagee letters into a single document.
We also know that one of the best ways to help Americans save for that first home is by making sure they can find a place to rent that fits within their budget. So HUD is investing in affordable housing through the National Housing Trust Fund. And we’re expanding a program that helps builders of Low-Income Housing Tax Credit projects get those projects approved faster.
While we work to help more folks become homeowners, we also have to make sure we don’t forget about the families who managed to hold on to their piece of the American Dream during the Great Recession.
There’s no question that our nation’s housing market has improved. Real residential investment has grown by more than 8 percent for six straight quarters. Sales of existing homes have climbed to their highest level in more than nine years. And American homeowners’ equity is now nearly $7 trillion higher than when President Obama took office.
But what’s also clear is that too many Americans, including many Black families, haven’t shared in our nation’s economic good news.
The housing crisis hit African American homeowners especially hard. Black families saw some of the worst losses in their home values, and majority Black neighborhoods have been slower to bounce back since the recovery took hold.
In fact, majority Black zip codes are more than twice as likely as White zip codes to have homes now worth less than in 2004.
We can and must do better. And I’m proud that HUD is finally putting its federal muscle into enforcing the Fair Housing Act. That work starts with helping cities, counties, and states develop regional plans that invest in every neighborhood.
We want to make sure that when a community is planning a new transit expansion, it benefits everyone. We want to make sure that when a city council decides where to designate a new business improvement district or commercial corridor, Black families aren’t left out or left behind. And we want to make sure that when we invest in new schools and urban parks, we make those investments when the people who’ve long been the backbone of those neighborhoods still live there, not after they’ve been priced out. HUD isn’t just lending our expertise to help boost opportunity, we’re also spending federal resources to help get this work done.
Last year alone, HUD invested more than $4 billion to lift up traditionally underserved neighborhoods throughout the United States.
That funding is helping cities like Gary, Indiana; Albany, Georgia; and Salisbury, North Carolina establish public-private partnerships that will expand opportunity for families. We’re also providing funding for current homeowners so they can rehabilitate their homes and remove health hazards like lead and mold. And we are continuing to improve HUD’s innovative Distressed Asset Stabilization Program, also known as DASP.
Since its launch in 2012, DASP has helped more than 10,000 families who were on their way to foreclosure remain in their homes. And it has helped another 15,000 homeowners avoid foreclosure altogether. That has had a major stabilizing effect for some of the communities that were hardest hit by the Great Recession.
The improvements we announced last month, including those aimed at encouraging more non-profit investors to join DASP, will help us build on this progress. Many non-profit groups have decades of experience in stabilizing neighborhoods and HUD wants to put that expertise to work on behalf of the homeowners and communities that need it most.
Every American deserves to share fully in the promise of America. At HUD, we’re working as hard as we can to help move our nation closer to the day when a zip code doesn’t determine how far a child goes in life because every zip code will be a neighborhood of opportunity.
Achieving that aim — as well as meeting NAREB’s goal of two million new homeowners — also means that we have to continue investing in an economy that works for the middle class and for folks striving to enter the middle class.
That’s exactly what President Obama’s broad agenda for the economy in this 21st century is helping to do. The President is working to build on the progress of a number of states like California and New York, cities like Seattle and Washington, DC, and companies like Costco and Ben and Jerry’s that are raising America’s minimum wage. He’s also fighting for the investments that are necessary to prepare more Americans to earn good jobs and higher salaries.
- That means investing in education, especially early childhood education.
- That means making college more affordable so that more young people earn degrees without getting burdened with debt.
- It means working with businesses to provide apprenticeships and on-the-job training and other paths into the middle class.
- And it means sharpening our nation’s competitive edge so we can keep creating high-wage jobs for those workers to fill.
Workers who will turn to our nation’s realtists to help them find just the right houses their families will turn into homes. When I think of that day, I don’t just see us reaching NAREB’s goal of creating two million new Black homeowners. I’m also reminded of the progress the United States has made — and must continue to make — so that such an ambitious aim is even possible.
A few days ago, a young lady I’m proud to say is from my home state of Texas, inspired our entire nation when she became the first African American woman to win an individual Olympic gold medal in swimming.
Simone Manuel won four Olympic medals in Rio — two gold and two silver. But she’s done much more than that. Her historic win sparked a national conversation. it got folks to thinking, “Why has it taken so long for a Simone Manuel to stand atop the podium?”
We began to talk about the public pools that really weren’t public at all since they were only built in all-white neighborhoods. We talked about how if Black families finally gained access to a pool, that suddenly the funding to maintain it would dry up.
Did you see the photo of a man pouring acid into a hotel pool rather than allow black children to swim in it?
We know that it wasn’t just the pools though. We know that if Black children weren’t even allowed to have a safe place to swim and play, then they almost certainly weren’t able to go to a good school, or live in a neighborhood that saw their parents’ tax dollars returned in the form of infrastructure and investment.
Simone Manuel was able to stand atop the podium in Rio because of her hard work and sacrifice. But she was also able to stand there because folks just like the people in this room worked, sacrificed and helped create a better nation. A nation that’s fairer and freer.
And it’s because of all you do to build on the legacy that NAREB’s founders began nearly 70 years ago that we’re going to see more Black Olympic champions like Simone Manuel.
We’re going to see more Black doctors, more Black architects, more Black educators, and more Black entrepreneurs. We’re going to see a new generation of Black children who’ll be able to live up to their God-given potential because the barriers that their parents and their grandparents faced will finally be torn down.
That’s the charge before us. That’s the challenge we must meet.
Together, we’ll not only help create two million more Black homeowners, but we’ll also help ensure that the promise of America becomes a reality for every community in our nation.