HUD secretary: Housing crisis improving, not over
VICTOR EPSTEIN
The Associated Press
HACKENSACK, N.J. - The head of the federal agency working to stabilize the nation's slumping housing market says more homes are being saved from foreclosure as lenders rework mortgages, but cautioned that the crisis is not over yet.
U.S. Housing and Urban Development Secretary Shaun Donovan said Monday that there are other signs of an improving housing market, such as the slowing decline in prices. He estimated that more than 500,000 homes will be saved from foreclosure this year.
"I wish the administration preceding us had begun to address the problem before we began" the process of having 3 million homeowners in foreclosure, Donovan said, testifying at a field hearing of the U.S. Senate's housing subcommittee in northern New Jersey. Residents in the area have been hit hard by job losses and home foreclosures.
The number of New Jersey homes returned to lenders in August increased 17 percent to 877 from the same period a year ago. That compares to 16 percent decline at the national level, according to the RealtyTrac Inc. mortgage information service.
"We have not experienced anything like this since The Great Depression," said U.S. Sen. Robert Menendez, who chaired the hearing in his home state. He predicted that the full impact of the housing crisis won't be felt until homes are revalued. That process is likely to yield downward revisions that reduce government tax revenue.
Marge Della Vecchia, executive director of the New Jersey Housing and Mortgage Finance Agency said entire neighborhoods are being destabilized in New Jersey by blocks of foreclosed homes that have been boarded up.
Homeowners, counselors and lenders who spoke at the hearing said some lenders are reluctant to renegotiate mortgage terms to keep struggling families in their homes. Many banks continue to prefer foreclosure to renegotiation, they said.
Bryan Bolton, a senior vice president at CitiMortgage Inc., said his company believes that modifying loans is preferable to foreclosures in most cases.
But Phyllis Salowe-Kaye, executive director of the watchdog group New Jersey Citizen Action, said most mortgage lenders aren't as supportive of loan modifications.
"If the industry really believed this we wouldn't be here," Salowe-Kaye said.
She said some lenders appear to be padding their numbers by directing refinancing offers to homeowners with solid finances instead of those in need of help, and then counting those deals as a home saved. She pleaded with Menendez and other lawmakers in Washington to do more to help struggling homeowners and to support a proposal from President Barack Obama for the creation of a consumer protection agency at the federal level.
"We are not at the end of this," Salowe-Kaye said. "We have not peaked. We are still in the middle of this crisis."
