National Association of Home Builders Board of Directors

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NATIONAL ASSOCIATION OF HOME BUILDERS BOARD OF DIRECTORS
Washington, DC
Remarks prepared for delivery by
Secretary Mel Martinez

June 9, 2001

Thank you, Bill Nolan, for that very kind introduction. It is nice to see my good friend from Orange County, Florida, here today. And a special thank you to your president - Bruce Smith - for inviting me to speak with you this afternoon. I want to welcome all of you to Washington… or as a very wise individual once said, the only city in the world where sound moves faster than light.

At the Department of Housing and Urban Development, we have tremendous respect and appreciation for the work of America's homebuilders. As I travel across this great country, I talk a lot about the "American Dream," and when I do, I am talking about homeownership, of course. But without homebuilders, the American Dream would be nothing more than that… a dream.

Just two days ago, I was at the United Nations, speaking to the delegates of 170 nations about the importance of homeownership and what it means to be a homeowner here in the United States. It is something you and I take for granted, but in many places - including the country where I was born and spent the first 15 years of my life - citizens are denied what we consider such a fundamental opportunity.

So there was a lot of interest among the delegates in what makes our system of housing so successful… and how the lessons we have learned here can be applied elsewhere.

Homeownership is such an important part of American life that we mark one week every year as National Homeownership Week. It happens to be this week, of course. We celebrate homeownership because we understand that owning a home means more than just having a roof over your head. Yes, homeownership comes with challenges and responsibilities - and more than a few trips to the local hardware store, as most of us have learned - but it brings great opportunities as well.

When a family buys a new home, they are helping to build financial and psychological security… and they are helping to build their neighborhoods, too. A homeowner is more likely to be involved in civic affairs, whether it is coaching Little League, joining the PTA, or volunteering at church. Homeownership plays a vital role in creating strong neighborhoods by building pride… by turning short-term tenants into long-term community stakeholders.

And of course, it builds financial security. A home is the most expensive purchase most Americans will ever make, but it becomes a tangible asset that can be passed down… giving our heirs a head start you and I did not necessarily enjoy.

No matter where they live, no matter their income, everyone should have the opportunity to experience the fruits of homeownership. The National Association of Home Builders is helping more Americans live the dream… and for that, you have our thanks. At HUD, we are committed to working with you to help provide an affordable, safe, and decent home for everyone.

Thanks to the prosperity we have enjoyed over the past decade, more Americans own their homes today than at any time in our history. You know the numbers as well as I do. But in spite of all the progress, homeownership rates remain unacceptably low for Hispanic- and African Americans.

With the strong support of President Bush, a reinvigorated HUD is working to expand the opportunities for homeownership. In fact, our budget for the coming fiscal year is built around what Washington Post real estate columnist Ken Harney calls "the most far-reaching combination of new federal home-buying incentives of any administration in more than two decades."

We are doing this by easing the strain of high downpayments… offering new opportunities for Americans to move from public housing into their own homes… making mortgages more affordable… and encouraging the construction and rehabilitation of single-family homes.

As you know all too well, the cost of downpayments remains the biggest single barrier to homeownership, especially for low- to moderate-income households. That is why we have proposed the "American Dream Down Payment Fund" as an important piece of the HUD budget. The fund provides $200 million in matching assistance to help more than 130,000 low-income families purchase homes.

This week, I announced a plan to give another two million low-income Americans the opportunity to move into their own home with the help of HUD's Section 8 Housing Choice Voucher Program. This new effort allows local housing officials to provide families with up to one-year's worth of housing vouchers… vouchers those families can put toward the downpayment on a home. Prospective homebuyers would have the choice of using their vouchers for downpayment assistance or mortgage expenses.

And the $1.7 billion "Single Family Housing Tax Credit" will support the rehabilitation or new construction of at least 100,000 homes for purchase by low-income families over the next five years. This is modeled after our very successful low-income tax credit for rental housing.

To help reduce the cost of homebuying, we recently announced that all homebuyers who closed FHA mortgages after January 1, 2001, will no longer have to pay mortgage insurance premiums when their equity stakes reach 22 percent of the original sale price of the house.

This is a good deal for the American homebuyer who relies on an FHA mortgage… and will mean monthly savings of as much as $70 for most families. Of course, we recognize that homeownership is not an option for everyone. Today, more than 4 million households rely on a variety of HUD programs to help them meet the high costs of rental housing. The new HUD budget preserves - and expands - our commitment to helping low-income families afford the high costs of rental housing.

The federal government provides subsidies to more than four million households nationwide through a variety of programs, including the Section 8 programs and public housing. The Administration's 2002 housing budget renews all expiring rental subsidy contracts - thereby protecting current families - and provides 34,000 additional low-income families with housing vouchers. These vouchers reduce the amount paid by low-income families in rent to approximately 30 percent of their income… helping those who struggle most with their monthly rent checks.

I know how strongly your Association supports another of our important initiatives: our plan to increase the limits for FHA multifamily insurance by 25 percent. We need to spur the construction and rehabilitation of affordable rental housing in high-cost areas. The limits have not been increased since 1992, and doing so is a critical step. As you all know, the FHA multifamily insurance program was shut down in April because the agency ran out of its credit subsidy. This has stopped the construction of some 30,000 rental units throughout the country.

To address this problem, HUD is asking Congress to appropriate $40 million in additional credit subsidy funds so that HUD can continue to insure mortgages on multi-family housing through the FHA. This will help increase the production of more affordable housing.

In order to seek a long-term solution to this problem, we are also increasing the program's mortgage insurance premiums. I realize that we may disagree on this issue, but this move will stabilize the FHA multifamily housing program and make it more self-sufficient. By taking away the uncertainty about credit subsidy levels, these programs will be better able to respond to the demands of the market in the future.

I pledge to you that I will sit down with the Home Builders, representatives of the mortgage industry, and OMB to make sure that we have an accurate measure of the losses so we can determine what the appropriate premiums and credit subsidy rates should be. If this review of credit subsidy rates shows a lower premium in the future, I will not hesitate to lower the premium.

FHA's recent plan to streamline its refinance program is another effort that will leave more dollars in the pockets of homeowners. Hundreds of thousands of homeowners will save money because they can now finance a portion of their closing costs when they refinance their homes. This will help borrowers to reduce their mortgage payments without having any out-of-pocket expenses.

These new changes mean real savings for families on a tight budget.

You know, low-income Americans have the same dreams for their families as anybody else. But they usually have fewer resources to put toward achieving them. So this administration recognizes that if we want to make a powerful difference in lifting up all our citizens, government cannot do it alone.

At the core HUD's refocused mission is an innovative and exciting plan to forge a new partnership between the public and private sectors: the President's faith-based and community initiatives.

In Tampa this week, I saw firsthand what this new partnership will mean for Americans like Johanna Rodriquez. She and her family came to Florida from Puerto Rico in 1993, and today she lives with her mother, sister, brother, and her two young children in a crowded, two-bedroom apartment. But not for long. President Bush and I joined her in helping build the walls of her new Habitat for Humanity home. Soon, she will be a homeowner.

This administration is committed to working with faith-based and self-help groups to lift up the neediest among us, and under our budget, funding for programs like Habitat for Humanity would triple. America's faith-based and community organizations are helping to instill in Americans like Johanna Rodriguez something that government alone cannot: a sense of hope, and a sense of pride… and their good work ought to be encouraged.

The most recent Census confirms that our population growth is stronger than ever. Between 1990 and 2000, the number of people in this country grew by more than 13 percent… the biggest increase in our history. As the surge continues in the future, we will need to build nearly 1.5 million new homes a year in order to house all those people.

I noticed how many ears pricked up at that last statistic.

This administration will do everything it can to make sure we meet the housing needs of American families. But ultimately, it will be up to you - our homebuilders - to keep the dream of homeownership alive for another generation of Americans.

That is why I want to make HUD more responsive to you… and work with you, as partner. And I believe that HUD must become a more active, more engaged partner. To that end, I pledge to grant more direct authority to local HUD offices. It is important that when you call us, you get a real human voice, not a recorded message, not voice mail. And when you have questions, you will get prompt answers. After all, time is money in your business.

HUD has a long history of working with the Home Builders, and I appreciate the relationship we have developed over the years.

We have joined together in our efforts to extend equal access to housing. This issue is deeply important if we are to fulfill our mission of improving housing opportunities for all Americans. At HUD, we are meeting with members of your Association to explore new initiatives aimed at educating and informing homebuilders and other housing industry groups about the requirements of our fair housing laws.

We are also working on a joint partnership agreement with you that will make fair housing regulations clearer, and provide builders with a "safe harbor" for compliance with these laws… while still ensuring greater accessibility to housing. We are working together to find ways to build homes that are both affordable and accessible to the disabled.

HUD and the Home Builders can also work together to help reduce the regulatory barriers that increase the cost of building a home, and make it more difficult to obtain a mortgage. You face these barriers every day… the red tape, the delays, the burdensome regulations. They add an extra 10 to 20 percent to the cost of a new home for consumers.

That is money that comes out of the pockets of new homebuyers. It puts an additional strain on the affordable housing crunch and often puts home buying out of reach of families with limited means. I applaud your efforts in trying to reduce excessive regulation, and I support your attempts to institute an affordability impact analysis when it comes to building code changes.

As we work toward expanding opportunities for affordable housing, I look forward to receiving the report from Congress's Millennial Housing Commission. I commend the Home Builders for your support of the Commission and I want to specifically acknowledge your members - people like Tom Bozzuto and Dennis Penman - who have actively participated in its work. I have already met with Commission co-chairs Susan Molinari and Dick Ravitch, and I am anxious to work with Congress in meeting this nation's housing needs.

At HUD, it is not the reams and reams of statistics that get us excited about coming to the office every day. It is the personal stories that keep us going… the stories of the Americans who never even dreamed of owning a home, or finding an affordable place to rent, before learning that HUD or one of our many partners was there to help.

People like Diane Brown of Mount Vernon, New York. She recently bought her first house with the help of a community-based organization and HUD dollars, when she could not afford a downpayment on her own.

Or the residents of St. Anne's Cooperative Apartments in southwest Detroit. Their homes are the work of a successful faith-based housing program that is funded in part by HUD's Community Development Block Grant program.

In Philadelphia, "Project Home" helps chronically homeless men and women break the cycle of poverty and despair. This has been an incredibly successful effort… touching families and transforming communities.

We need to hear the stories of the lives we touch… and we need to remember that every statistic has an individual behind it. As I continue to remind the employees of HUD, our mission is serving people, not programs. And we look forward to working with you in the coming years in support of a mission that I know we all share. We want to hear your ideas on how together we can combat the problem of ensuring affordable, accessible housing for all Americans.

Remember that a single twig can be easily broken. But tie a hundred twigs together into a bundle and you have created strength through numbers. Working together, we have the power to change lives and build a better, stronger America.

That is our challenge.

Thank you.