Help for those struggling with mortgage crisis
Shaun Donovan, Secretary of the U.S. Department of Housing and Urban Development offers more than just hope but modes of help for those struggling in the wake of the mortgage crisis.
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For much of American history, the dream of prosperity has primarily been home-grown, literally. Home ownership has been the key to developing and sustaining wealth for generations of Americans. Over the course of the better part of the 20th century, minorities and lower-income American made huge strides in sharing in that dream. But, for a growing number of Americans, the home mortgage bust and deep recession have turned the dream into a nightmare.
When asked of lessons learned from the current situation, Shaun Donovan, Secretary of the U.S. Department of Housing and Urban Development, says, "We have two very important lessons we've learned. One is that we've got a lot of work to do on our regulatory system to make sure that this never happens again. Frankly, the fact that we had a regulatory system that allowed lenders to make loans that they knew people couldn't afford, simply can't happen again.
"So, that is why the President, last week, rolled out a comprehensive proposal to create, for the first time in the nation's history, a single, central regulator that would focus on protecting consumers; not on regulating banks, not on all of the other pieces here, but specifically focused on making sure that consumers, average consumers are protected, in terms of all financial products, not just mortgages.
"The other thing that we've learned that I think is very important, is that we can't just have a national housing policy that is about home ownership. Home ownership is very important, it continues to be the American dream, and for many families, it is crucially important. But, we also know that rental housing is a very, very important part of an overall conversation we need to have about housing policy. And, in particular, for the lowest-income Americans, as well as for young people getting out of school, seniors, our rental housing is a critical part of the solution. For too long, we've lost that part of the conversation in our country."
Donovan himself witnessed certain products, like sub-prime mortgages, were focused more on communities of color. "I watched, as in 2006, in Jamaica, Queens, a model, middle-class, African-American community--60% of the loans in that community during that year were sub-prime loans. A large number of those folks had good credit scores and track records that should have qualified them for prime loans. I saw this very directly in terms of the way these products were targeted to African-American communities."
As for the future of providing economically sustainable housing for low-income people, Donovan says that his department has been able to accomplish this by "Making sure that a loan and a home was affordable to the family. And the other key part of this is making sure that there is counseling available both before purchase for low-income Americans, as well as post-purchase."
Donovan's department in Washington asked for a larger budget in the upcoming year in order to provide more counseling. Of his staff, he says, "They are helping to avoid foreclosure right now, but there are also key resources to make sure that when a low-income person wants to buy a home, that they get the right advice and access to the right kind of mortgage products that will help them not just get into the home, but stay in the home long-term."
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