I will never forget the uncertainty that loomed over our nation five years ago, when a financial collapse on Wall Street spurred the worst economic crisis since the Great Depression. At the time, I was serving as a commissioner in New York City. I vividly remember being in City Hall when Congress voted down the first TARP (Troubled Asset Relief Program) bill. Afterward, Mayor Bloomberg said something I’ll never forget: “The world is coming to an end.”
By the end of 2008, the economy was shrinking at a rate of more than 8 percent and shedding 800,000 jobs a month. Banks had stopped lending to families and small businesses. The housing market was on the brink of collapse.
These were the extraordinary challenges facing our country when President Obama took office in 2009. In response, he took swift, bold action, and five years later, we have fought our way back from the brink. Over the months, American businesses have created 7.5 million jobs, including 1.2 million jobs added this year alone — with housing serving as one of the building blocks of this recovery.
We all know that this market was hit particularly hard by the crisis, but it’s on the rebound because of the president’s decisive actions. Within a month of taking office, the president launched a series of housing initiatives to help millions of responsible homeowners stay in their homes or transition into sustainable housing opportunities.
To provide struggling families with direct mortgage relief and assistance, the administration created the Making Home Affordable Program, which has helped 7 million homeowners get government or private mortgage refinances and modifications.
HUD’s Federal Housing Administration (FHA) also adopted a streamlined refinancing option that allows borrowers who are current on their FHA-insured loan to refinance into a new FHA-insured loan at today’s low interest rates without requiring additional underwriting, helping to provide economic relief and savings to thousands of families.
HUD’s Neighborhood Stabilization Program (NSP) has allocated $7 billion to thousands of neighborhoods to address foreclosed and abandoned homes, helping to bring price and occupancy stabilization to areas that were hardest hit. NSP is projected to support close to 90,000 jobs and treat over 100,000 properties — including those with affordable rental and homeownership units — creating a positive ripple effect throughout communities. NSP is working: 75 percent of neighborhoods with concentrated NSP investments have seen vacancies decline, and 72 percent have seen home prices increase compared to similarly distressed neighborhoods without the NSP investment.
HUD also launched the Office of Housing Counseling to help families and individuals who are preparing to enter the housing market. Working with HUD-approved housing counselors, the office has helped roughly 9 million families make the best possible economic decisions.
In addition, the president and I understood that a large percentage of the housing market crisis was due to the predatory lending and servicing practices that were offered by lending institutions. For years, responsible families facing foreclosure were short-changed, their mortgage servicer lost paperwork, didn’t bother to check the legitimacy of their foreclosure, or didn’t even respond to calls. We had to hold them accountable, and we did.
The landmark National Mortgage Settlement announced last year was an important milestone in protecting homeowners and cracking down on abusive lending practices. In fact, in August we announced that the settlement has made a major impact for close to 644,000 borrowers who have benefited from some type of consumer relief totaling roughly $5 billion, which, on the average, represents nearly $80,000 per borrower.
As a result of these and other efforts, the housing market is coming back. Foreclosures are down to the lowest levels since 2006, and home sales are up by double digits, putting us on pace for over 5 million home sales in 2013 alone. In the larger picture, thanks to the grit and resilience of the American people, businesses and manufacturers are creating jobs again, health care costs are falling, and the deficit is half of what it was when the president took office.
But there’s more to do, and we need to build on this progress. President Obama and I are doing just that by focusing on the cornerstones of a strong, secure middle-class life: a good job, a quality education, a home of your own, affordable health care when you need it, and a secure retirement.