United States. Department of the Treasury. "Remarks of Under Secretary for Domestic Finance Mary Miller at the Governor's Housing Conference on Restoring Communities Across Maryland," Press Releases of the United States Department of the Treasury (October 16, 2012). https://fraser.stlouisfed.org/title/6111/item/591459, accessed on April 6, 2025.

Title: Remarks of Under Secretary for Domestic Finance Mary Miller at the Governor's Housing Conference on Restoring Communities Across Maryland

Date: October 16, 2012
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image-container-0 5/5/2020 Remarks of Under Secretary for Domestic Finance Mary Miller at the Governor's Housing Conference on Restoring Communities Across … U.S. DEPARTMENT OF THE TREASURY Press Center Remarks of Under Secretary for Domestic Finance Mary Miller at the Governor's Housing Conference on Restoring Communities Across Maryland 10/16/2012 As prepared for delivery BALTIMORE, MARYLAND - Good morning. Thank you, Secretary Skinner, for that kind introduction, and thanks for inviting me here today. I’m grateful to have the opportunity to talk about the housing market with you, and in my own hometown no less. Although I now spend most of the week in Washington, I’m proud to call Baltimore my home. I want to acknowledge Governor O’Malley and Secretary Skinner’s tremendous efforts to help homeowners and renters here in Maryland recover from the worst financial and economic crisis since the Great Depression. We have paid close attention to some of the initiatives undertaken in Maryland to aid the housing market. Frankly, I’m not surprised. Baltimore was a leader in some of the country’s most innovative housing programs in the 1970s and 1980s including urban homesteading and better access to rental housing. We only have to look at the neighborhood around this new hotel and our beloved Camden Yards to remember what has been accomplished to restore this area. As Under Secretary for Domestic Finance, I have a broad portfolio of responsibilities. I am deeply involved in financial regulatory reform, monitoring the economy and markets, managing our national debt, and overseeing the wind-down of our TARP investments. Among all of this work, housing is a core focus so that we can help homeowners and strengthen our economy. Today, Treasury plays a large role in shaping housing policy – a role unheard of as recently as five years ago. This is largely due to the financial impact of the housing market crisis and the collapse of Fannie Mae and Freddie Mac, which resulted in their conservatorship in the fall of 2008. To be sure, we work closely with our colleagues at the Department of Housing and Urban Development, the Federal Housing Finance Agency and other government agencies. But Treasury’s involvement reflects the Administration’s commitment to use every resource at its disposal to help distressed borrowers and neighborhoods, and rebuild a stronger housing finance system. The depth of the crisis guaranteed that we would have a long road to travel. In the wake of the crisis, home prices, which had not declined nationally since the Great Depression, collapsed by nearly a third. Nearly one in four homeowners owed more on their mortgage than their home was worth. Mortgage delinquencies had more than doubled from their pre-crisis levels. And nearly one in ten single-family loans was seriously delinquent or in foreclosure. When the President came into office, the housing market was in a freefall and credit markets were frozen. Fixing this required an around- the-clock, all-hands on deck approach. We worked with Congress to implement tax credits for first time homebuyers. We bolstered state and local housing finance agencies with borrowing assistance. We supported neighborhood stabilization and community development programs. We introduced mortgage modification and refinancing initiatives that helped families stay in their homes and transformed a mortgage servicing industry that was woefully unprepared for a crisis of this scale. And Treasury and the Federal Reserve committed substantial financial support to help keep mortgage rates low, ensure Americans could continue to access mortgage credit, and prevent the bottom from dropping out of the housing market. These policies were critical to averting an even more severe, protracted housing crisis. And around the country, we see conditions in the housing market and broader economy gradually improving. The U.S. economy is getting stronger, registering 12 straight quarters of growth. GDP has recovered to its pre-crisis levels and the stock market is close to its 2007 high. The private sector has added over 5 million jobs over the last two and a half years. These factors have helped support the housing market, which is also showing signs of improvement. Today, fewer borrowers are falling behind on their mortgage payments. Foreclosures are easing. And most recently, home sales, housing starts and home prices have all improved. These developments all support the very goals you are discussing here today: restoring communities, expanding housing choices, strengthening the housing market and creating jobs. https://www.treasury.gov/press-center/press-releases/Pages/tg1738.aspx 1/4
image-container-1 5/5/2020 Remarks of Under Secretary for Domestic Finance Mary Miller at the Governor's Housing Conference on Restoring Communities Across … https://www.treasury.gov/press-center/press-releases/Pages/tg1738.aspx 2/4 While we are seeing progress in the economy and housing market, we know that there is still a lot more work to do, in Maryland and elsewhere. And that’s ultimately the point of this conference, and so I’m especially glad to see so many people who have been on the front lines here today. The Administration wants to work with you to continuing to develop, strengthen, and refine our housing programs to support the housing market and continue to grow the economy. Today, I want to talk about the Administration’s housing programs and how we can continue to work together to help homeowners and communities. Perhaps Treasury’s best-known assistance program is the Home Affordable Modification Program, or HAMP, which helps struggling homeowners achieve more affordable payments and remain in their homes. Since the spring of 2009, over 1.3 million borrowers have received a permanent HAMP mortgage modification or related assistance, and an additional 1.4 million borrowers have received help through the Federal Housing Administration, including many borrowers here in Maryland. Importantly, HAMP introduced standards on how to make modifications successful, as well as new consumer protection guidelines for servicers —who were, in most cases, completely unequipped to handle the rise in mortgage defaults. As a result, nationwide, HAMP helped catalyze an additional three million private sector mortgage modifications by establishing the guidelines that most lenders follow today. Now, because of HAMP, servicers know how to design modifications so that they make economic sense not only for the homeowner, but also for the owner of the mortgage. HAMP has also been instrumental in improving practices for troubled borrowers by introducing detailed “single point of contact” guidelines. These guidelines help ensure that a homeowner seeking assistance can receive personalized help from a mortgage servicer, to reduce time and avoid lost or misplaced paperwork. These guidelines have caused the biggest servicers to re-examine – and in many cases start providing –customer service for homeowners. Servicers’ business models before the financial crisis were as payment processors, receiving payments from borrowers and passing them on to the owners of the loans. Today, servicers have learned, and mortgage investors demand, that the servicers need to work closely with struggling borrowers, and build a sensitive, customer-oriented system working to provide homeowners with solutions that prevent a foreclosure. We also worked closely with the state Attorneys General and the Department of Justice in the national mortgage settlement over foreclosure practices. The HAMP standards served as a basis for many of the servicing standards required by the settlement. Maryland received $60 million under the settlement. I am pleased to see that these funds will be used by the state for neighborhood stabilization programs, housing counseling and legal aid programs, and combating mortgage fraud, among other purposes. As you all know, helping homeowners refinance into more sustainable mortgages and take advantage of today’s historically low rates is also a major tool in our toolbox. So far, more than 1.5 million Americans have taken advantage of the Home Affordable Refinance Program (HARP). We’ve seen a recent surge in participation as deeply underwater borrowers have become eligible to refinance their mortgages as long as they are current on their payments. And like HAMP, HARP has taught us best practices, and proven that refinancing to a lower cost mortgage reduces the risk that a borrower will default. But today, only homeowners whose mortgages are owned or guaranteed by Fannie Mae or Freddie Mac are eligible to participate in HARP. We want to expand refinancing opportunities for responsible homeowners regardless of who owns their loans, and the President is calling on Congress to do just that. This will continue to be a priority going forward. These loan modification, refinancing and foreclosure programs have directly helped struggling homeowners, and have also reached even more homeowners by serving as models for private lenders operating outside of government guaranteed loans. I also want to briefly mention two other areas of focus: Treasury developed standards to facilitate responsible short sales where appropriate, and has also worked with the FHFA to conform the short sale standards of Fannie Mae, Freddie Mac, and Treasury. Short sales, deeds-in-lieu and non-performing note sales are playing an increasingly large role as alternatives to foreclosures; this helps to stabilize housing prices and provide dignified alternatives to families for whom loan modifications don’t work. By avoiding foreclosures, these alternatives can minimize the damage to our neighborhoods and communities. We are also working with FHFA to explore better ways to manage the resolution and disposition of the GSEs’ book of non-performing loans. Shifting the risk and servicing responsibility to special servicers, who have expertise in loan workouts, could give such servicers more flexibility to determine modifications or find faster resolutions for troubled borrowers. Several states, using Treasury’s Hardest Hit Fund, are experimenting with this approach by purchasing non-performing loan purchases from private lenders. So far, there is a great deal of interest in this innovative approach, and we hope for positive outcomes for individual borrowers as well as for local housing markets that should see fewer properties going into foreclosure. We want these programs to reach as many homeowners as possible. Of course, no matter how many targeted programs we’ve designed, a homeowner that’s in trouble must know that this assistance is available and communicate when they need help. That’s where local government and local industry can help connect struggling borrowers with the resources we can offer, and that’s a reason why I’m glad to have the opportunity to speak with all of you here today.
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