Is Owning A Home Still A Good American Dream?
MICHEL MARTIN, HOST:
I'm Michel Martin and this is TELL ME MORE from NPR News. Later in the program, we're going to talk about something that might have happened to you. Somebody says something personally insulting about you, you heard it. You probably also had a moment where you weren't quite sure what to do about it. We'll talk with a woman who found herself in that very situation, and we'll find out what she did. That's later. But first, we want to continue our conversation with the Secretary of Housing and Urban Development, Shaun Donovan.
He's been serving in that role since the beginning of President Obama's first term. Before the break, we were talking about whether the money intended for the relief of homeowners in distress is actually getting to the people who need it most.
SHAUN DONOVAN: There is no question that we have had challenges in reaching those folks. And if you look at the initial work that we did around this, we had some programs that worked very well - neighborhood stabilization. We've helped, really, millions of families in communities around the country that were hardest hit, begin to turn their communities around by buying up, renovating, rebuilding homes, put 90,000 people back to work, and we've seen real results. Those communities are improving.
But we had other programs, some of the modification programs, that we had a very hard time reaching families at first, and I'll tell you, a lot of that was that we had a structure set up by Congress that didn't allow us to force banks to make those changes. And what we found is, they were woefully ill-prepared to be able to deliver that aid. They lost documents. They couldn't return phone calls. And that problem of the - what we call servicing in this country - of how we treat homeowners once they get a loan, was broken. And so one of the things that we did was to adjust our strategy. We made changes, and we've now reached millions of families with that help. But we also realized that we had to use our enforcement powers, not just to get convictions, not just to get money from the institutions that had made these mistakes, but that we also needed to use that authority to force them to start making these changes.
So we reached this really landmark settlement last year, over $25 billion, and what we've seen is that the results have actually been better than we expected, because we had the real stick of enforcement to be able to force them to do this. We now have over 620,000 homeowners who've received help. And in particular, principal reduction, where those mortgages are being permanently reduced, has now become the standard for most mortgages when we're helping homeowners. And let's remember, we had $2.5 trillion of housing wealth that was created in this country between the beginning of last year and March of this year. That means an enormous amount, not just to individual families and communities, but to the economy overall.
MARTIN: Before we let you go, a final question. It's a philosophical one. For years, generations really, owning a home has been considered kind of a core part of the American dream. The rate of homeownership has dropped in this country, particularly among certain groups that have been particularly hard hit, you know, as we have discussed. There are those who argue that that's really the wrong dream. That maybe we should have a different dream. And I just wanted to ask you as a person for, you know, housing has been your professional life, what do you think?
DONOVAN: Well, I would put it slightly differently. It isn't that homeownership is the wrong dream, it's that homeownership shouldn't be the only dream. And frankly, we had a federal housing policy that was all about homeownership, and we had sort of forgotten about those who rent. And particularly folks at the - who are lower income, they tend to be renters, right. And, you know, you were born in Brooklyn, I'm a New Yorker, renting's OK, right.
And we need to have a housing policy that says look, if homeownership is the right thing for you, we want to help you make an informed, smart decision. We want to help you get a loan that's not going to explode two years down the road and destroy your dream of homeownership and your - all your family savings along with it. And let's face it, most people during their lives, they do both. We need to have a federal policy that supports both, and particularly, we had seen dramatic cuts to rental programs. And frankly, we're still having those fights today. Folks in this town, talking - some are boarders, not you, saying, oh well, sequestration didn't really happen.
We've got 60,000 homeless folks that are back out on the streets because of sequestration. We've got 125,000 families with Section 8 vouchers, average incomes of $10,000 that are losing their vouchers. That is real, and that is about priorities. And so we do have to have a country that values both homeownership and rental going forward.
MARTIN: Shaun Donovan is the Secretary of Housing and Urban Development. He was kind enough to join us in our studios here in Washington, D.C. Secretary Donovan, thank you so much for joining us.
DONOVAN: Would love to come back soon. Transcript provided by NPR, Copyright NPR.