DR. BEN CARSON
SECRETARY OF HOUSING AND URBAN DEVELOPMENT
NATIONAL COUNCIL OF STATE HOUSING AGENCIES LEGISLATIVE CONFERENCE
March 5th, 2018
As prepared for delivery. The speaker may add or subtract comments during his presentation.
Hello everyone! It's wonderful to be here.
I'd like to thank your President, Grant Whitaker, for that kind introduction.
And I want to give my congratulations to your new, permanent Executive Director, Stockton Williams. I'm sure he'll do an amazing job.
I'd also like to recognize the many HFA executive directors in the room today, and all the talented men and women who helped make this conference possible.
You've gathered a brilliant group of lawmakers from both parties and policy experts to discuss one of the great challenges of our time.
When you're at an agency as big as HUD, you quickly get a sense of how every undertaking, from this conference to a cabinet meeting, takes a lot of cooperation by dedicated people to work out every interconnected detail.
The same is true of housing in America.
It involves buildings-but it is not simply an issue for builders. It involves health-but it is not just the concern of doctors. It involves economics-but it is not merely a matter of money.
In fact, our access to housing is influenced by countless areas in our lives, from education to employment to environment.
Good schooling, stable families, and abundant economic opportunities not only serve to pull folks out of housing uncertainty but can prevent men and women from falling into it.
And where we live influences all those pieces of our lives in turn.
This means that our efforts in housing must be holistic; we cannot just place someone in an apartment and declare our job finished.
Our efforts to achieve safe, fair, and affordable housing for all Americans will only have permanent results if there is an economy for people to join, a community to embrace them, and a culture that supports families.
By working together, HUD, our fellow agencies, and the Legislative branch have made great strides toward these goals in the last year.
One of the biggest was tax reform.
The President's priorities in tax reform were to lower rates for low- and middle-income families; simplify the tax code; and make American businesses more competitive globally.
An average family of four earning $73,000 in household income will see a savings of about $2,000. That could be the deciding factor for that family to be able to afford to purchase a home.
Because of the Tax Cuts and Jobs Act, more than two million American workers have already received bonuses from their employers, and more businesses are employing more people.
The unemployment rate is at an 18-year low, and unemployment in African American and Hispanic communities are the lowest since we started recording them.
The standard deduction and the child tax credit are doubled, which make a big difference for families at all income levels. Families are also now able to use their 529 College Savings Plans to cover K-12 education expenses.
Now, in order to pay for the massive tax relief on the individual and corporate side, certain deductions were trimmed back.
This includes the mortgage interest deduction, which was previously available on loans up to $1 million and is now capped at $750,000.
From our perspective at HUD, this makes sense. We focus on low and moderate-income households, the homeless, and those who qualify as “severely burdened” by paying a large portion of their income to rent.
In addition, state and local tax (SALT) deductions for local sales, income, and real estate taxes are now capped at $10,000, where they were not capped previously. However, the increased standard deductions will mitigate the impact of this provision on most homeowners.
Tax reform also retained the Low-Income Housing Tax Credit (LIHTC) in its entirety, which has been key to the development of affordable housing.
Of course, housing is deeply tied to infrastructure-and, like you, I was very pleased that Congress preserved the tax status of interest generated by private activity bonds. These bonds are key to financing activities that benefit the public such as hospitals and affordable housing, and they are also a critical component of many infrastructure projects.
Still, some critics believe that affordable housing development as we know it will be reduced as the result of the reduction in the corporate tax rate from 35 percent to 21 percent. I do not subscribe to these predictions.
The pricing of housing tax credits is unpredictable, but investor demand continues to be relatively strong. What is certain is that we should not ignore the creativity of the private sector entities that specialize in affordable housing finance. In addition, we must recognize that a lower corporate tax burden should free up resources for developers and investors to reduce rents and make additional investments in affordable housing.
One final provision I'm very excited about is the creation of opportunity zones. Today, if an investor sells an investment with an unrealized capital gain and reinvests the proceeds in a recognized opportunity zone, the capital gains tax can be deferred or reduced.
The zones are low-income areas, designated by Census Tract, and selected by Governors, who may select up to 25 percent of the economically distressed tracts in their respective states to benefit from this provision. More than $2 trillion in capital gains could be unlocked for investments in these zones, and affordable housing stands to be a major recipient of this private capital.
Advocates for affordable housing and strong communities have a lot to celebrate, and more Americans are going home every day keeping more of their hard-earned pay.
At HUD, we've been making strides of our own.
Transitioning our aging public housing stock to a more sustainable platform is a critical part of our mission. The Rental Assistance Demonstration, or RAD program, continues to be one of our best tools to serve Americans more efficiently. RAD gives public housing authorities the ability to reinvest in public housing stock by shifting toward private investment and Section 8.
The program has produced over $5 billion in construction activity since it began, and stimulated job creation in many different areas of the country. It would have taken public housing authorities 46 years under current budget constraints to raise the funds to complete a similar level of construction.
Ensuring that the Federal Housing Administration's Mutual Mortgage Insurance Fund meets its statutory capital reserve ratio is also critical to preserving access to affordable mortgage credit for first-time and low-to-moderate income homebuyers.
The fund ended the 2017 fiscal year at 2.09 percent, barely over the statutory requirement. But, we did meet the goal, largely because of steps we took to defend the fund, the taxpayers that back it, and the prospective homebuyers that will need it. We will continue to be good stewards of the fund going forward, managing its risk in a way that is transparent and accountable.
In addition, FHA must provide clarity and certainty for those who facilitate its programs for millions of Americans. Modernizing FHA's technology is at the top of our agenda. It underpins everything that FHA does, and is vital to the integrity of its operations and ability to protect taxpayers from losses.
In the short term, FHA is still focused on helping Americans who need relief the most.
For the second time since Hurricane Maria hit Puerto Rico and the U.S. Virgin Islands, FHA is extending its original 180-day foreclosure moratorium for FHA-insured homeowners for another two months, while communities continue to rebuild and restore.
We're instructing lenders and servicers to suspend all foreclosure actions against insured borrowers in these Major Disaster Areas until May 18th.
In the long term, we are also committed to the Administration's goal of housing finance reform.
The details have yet to be written, but because our fundamental housing mission, FHA mortgage insurance program, and Ginnie Mae mortgage-backed security guarantees are large and vital components of the housing finance system, HUD will be an active participant in this critical dialogue.
We're committed to giving future generations a well-functioning housing finance system that expands the role of the private sector and reduces taxpayer exposure.
I'm very proud of my wonderful team at HUD for tackling all these difficult policy issues. They've done an amazing job. But even now, we are waiting for members of the Senate to do their job, before we can fully do ours.
It has been 162 days since Brian Montgomery was originally nominated to be our Assistant Secretary of Housing and Federal Housing Commissioner.
In addition to previously serving as Commissioner under President Bush, he served as President Obama's first FHA Commissioner, where he was asked to stay on due to the financial crisis. He also was asked to serve as Acting Secretary during the transition between Bush and Obama.
His wealth of experience and bipartisan support make him the perfect person to guide HUD in housing matters. I hope that the Senate will soon exercise its authority-and its responsibility to serve the American people-and confirm Brian's nomination.
I look forward to having our whole team in place, cooperating and collaborating, to bring prosperity and freedom to millions of Americans in the coming year.
We're going to continue the fight to end homelessness, which is closely related to the lack of affordable housing.
We will continue to protect our veterans from abusive mortgage churning practices.
We will seek to reform HUD's Rental Assistance programs so that they are sustainable and encourage work, self-sufficiency, family formation, and economic opportunity.
We will empower Section III, so that jobs and training go hand-in-hand with HUD grants in local communities. There is a critical shortage of labor in many areas of our country. Section III can be a vital tool on our workbench to not only develop communities but develop human potential.
And we'll be breaking ground on Envision Centers across the country-hubs of innovation which leverage public/private partnerships to bring education, economic opportunities, and mentorship to our cities, leading more families to achieve self-sufficiency and enjoy their rightful share in the American Dream.
We hope to collaborate extensively with local HFA's in attracting private investment to the Envision Center Initiative, as well as providing homeownership support through financial awareness, credit counselling, mortgage assistance, and home buying assistance.
Before I go, I would like to address one final thing.
Last Friday was my one-year anniversary of being sworn in as HUD Secretary.
Since then, my core convictions have remained the same: that our society has a great responsibility to help those in need, and that the most efficient, compassionate, and effective method is to focus on widening and strengthening their path to self-reliance and prosperity.
But something else has changed for me: getting to meet hundreds-even thousands-of amazing men and women across the country who have dedicated their careers to lifting up their fellow Americans.
In local HFAs, in charities and churches, in government offices, and our own HUD headquarters here in DC, every day I see the generous heart beating at the center of our nation.
It beats so strong, and so regularly, that sometimes we take it for granted, and get distracted by political disagreements or other events around the world.
But still, that heart remains. It gives life to our cities and our countryside. And it stays healthy through the efforts of everyone in this room.
I thank you for everything you do for our communities, and for our nation, and I look forward to accomplishing great things together.