HUD Secretary Steve Preston praises lenders

October 21, 2008 9:23:10 PM PDT
The United Nation's International Labor Organization has predicted that the world's financial crisis will put 20 million additional people out of work. The organization says by this time next year more than $200 million people around the world will be unemployed.

In San Francisco, for the second day in a row, a protester managed to get on stage during a mortgage bankers conference. This one tried to put handcuffs on former white house advisor Karl Rove before being escorted offstage. Mortgage bankers heard from the country's top housing official Tuesday.

Housing and Urban Development Secretary Steve Preston, who is trying to slow down the pace of foreclosures, praised lenders for helping distressed homeowners.

He also prodded them to do a lot more.

"Nearly 12 million Americans have mortgages today that cost more than the value of their homes, and we're gravely concerned about the on-going impact that low home values and the tough economy can have on our future," said Preston.

Preston is forecasting over two million foreclosures this year. He praised lenders for renegotiating terms on troubled mortgages, something 27 of the country's biggest mortgage firms is doing.

Despite his praises, Preston, who's forecasting two million foreclosures this year, warned that congress may step in with new rules if more lenders don't take bold steps to keep people in their homes.

"Nonetheless, we continue also on the other side to receive consistent feedback from borrowers and counselors that servicers often don't have the authority to help them, or that loan modification guidelines are so rigid that many people who can be helped are unnecessarily falling through the cracks," said Preston.

The Mortgage Bankers Association sees hard times ahead.

A forecast issued Tuesday calls for unemployment to rise from 6.1 percent nationally to 7.7 percent by early 2010, with existing home sales to end this year 13 percent lower than last year. Home loan rates will slip in the coming months from 6.5 down to 6 percent.

The mortgage industry is still trying to figure out how so many borrowers could qualify for loans with little or no income verification.

HUD is working on new rules to make sure that doesn't happen again.

A Mortgage Bankers Association spokesperson indicated responsibility for creating the problem is widespread saying, "There was an appetite on behalf of the borrower to have access to credit, there were lenders who were making credit available, and then there was an appetite on Wall Street and the investment community. We need to make sure that we help the people who can stay in their homes stay in their homes."

The troubled housing and lending markets have created little joy lately. However, the mortgage bankers have invited Jay Leno to perform for them Tuesday night. They're paying $199 per person.


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