The U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan joined KPCC's Steven Julian this morning to talk about the nationwide housing settlement and how the federal government is stepping in to help California.
Is the settlement itself enough?
"We can have all the settlement programs in the world, but if a family doesn't know what's available to them, and get the help they need through counseling and other help to actually put documentation together and access that help, the programs don't mean anything. And that's what we want to make sure we're implementing this in a way that helps as many families as possible."
Is there any thing unique about this program to California?
"When you talk about the housing crisis, California is unique. You suffered the most damage of any state in the country, and so this settlement — and frankly, all the other work that we're doing — has the potential to be particularly helpful here.
"Kamala Harris was just tremendous in fighting to make the settlement bigger and better throughout the process. There are things that she won in the settlement that are specific to California: minimum levels of commitment from the biggest banks, and some oversight and ability ... to keep going. To keep investigating, and to have the ability to pursue a number of claims beyond those that were settled in this settlement."
You're also involving the Democrat, Maxine Waters, of Los Angeles. What's her role in this?
"There's a lot of focus on the individual families that are harmed by foreclosures ... To lose the single most important investment of your life, to be kicked out of your home with the uncertainty it brings to your life, to your children. But the impacts around entire communities are devastating as well. Even if you're making every mortgage payment, and scratching and clawing, working two jobs to do that, if you live next door to a house that goes into foreclosure, your own home loses $5,000 to $10,000 in value that very day that that foreclosure sign goes up."
"Maxine Waters has been a real champion of what we call 'neighborhood stabilization.' These are investments that we've made to help and buy up and renovate and rebuild homes that have been foreclosed. We've invested close to a billion dollars in California alone. What it's done is not just help to bring down vacancy rates in 75 percent of the neighborhoods where it's been invested, to increase home values in about two thirds of those neighborhoods where it's been invested, but it's also helped to create about 12,000 jobs across the state of California. And as you know, construction work was one of the things that was hit hardest in this crisis, so putting construction workers back to work is a critical part of this."
In 2008 I was not underwater. Today I am underwater, but real estate is cyclical. Home values are cyclical. Why not just wait for this trough to bottom out and come back up and we'll reclaim our home values in time? Why do we need the federal government's intervention for that?
"There are people out there that do say, 'Just let the market hit bottom; we shouldn't do anything about this.' When you say that, you have to recognize what it really means. It's easy to say, but at the end of the day, savings in our homes is the single biggest source of how we send our kids to college, it's how most people get capital to start a small business, it's how people save for their retirements, so waiting to just let the market run its course means there are millions of families in California and around the country that will have to give up on those dreams, and that's something that we're simply not willing to let happen."
Click the audio play button to listen to the whole conversation.