The future looks bright as well. While the pace will ease up somewhat, this will still be one of the best years in history for housing.
Across America, home values keep growing. Housing starts, home sales and purchase mortgage originations remain strong. Low interest rates and rising incomes will help keep home purchases affordable. The so-called “housing bubble” is nowhere in sight.
More than ever, housing is a major force in American life, in the economy, in our communities and in our families. President Bush speaks about the virtues of building an “ownership society,” with homeownership at its core. And owning a home is the surest path for most Americans to build family wealth.
In the realm of housing, as the saying goes, “It’s all good.” But it’s not all easy. We have a big job to do this year. We who deliver the American Dream must join together to build and extend that dream.
We must meet America’s growing housing needs. We must tackle America’s toughest housing challenges. And we must preserve America’s remarkable housing finance system, the best in the world.
America has growing housing needs, because America keeps on growing. The Statue of Liberty still beckons the seekers of a better life. Our remarkable economy, prosperity, opportunity and optimism make America one of the best places in the world to live and raise a family. Unlike almost all other developed countries, the United States continues to grow.
All in all, this decade will produce some 30 million more Americans. They will produce 13-15 million new households. They will need a place to live. They will need over a million and a half new homes built every year. They will need you, America’s home builders, like never before.
And like Liberty’s torch, the American Dream burns as bright as ever. Americans want to own their homes. And they want to harness the growing wealth they will build in their homes. So in this decade, Americans will demand a doubling in the amount of funds available for housing capital. That means we must find $6-$7 trillion more in the international credit markets than we needed at the beginning of the decade.
Consumers will need low-cost, consumer-friendly mortgages, the kind that Fannie Mae is here to supply — in all communities, at all times.
So as America grows, demands more homes and more capital to finance those homes, Fannie Mae will be there to do our part for the American Dream. And we will be there to help you tackle America’s toughest housing challenges.
America may have the best housing in the world, but millions of Americans — especially minority Americans, are still overlooked, underserved and overcharged when it comes to the American Dream.
It has been over a century since emancipation; 50 years since the end of segregation; just over 40 years since Dr. King declared, “I have a dream;” and more than 35 years since the Civil Rights Act and the Fair Housing Act. But here in the 21st century, when it comes to housing, minorities are still locked in the Eisenhower era. The minority homeownership rate stands below 50% — 26 points below white Americans.
We must double and redouble our focus and efforts to close this gap. Fairness demands it, the President has called for it and the future of our industry depends on it. For the emerging markets of today will be the surging markets of tomorrow. Over the next 20 years, the Hispanic-American population will grow by 75%, African Americans by 28% and Asian Americans by 80%. These families will drive the housing market. They need us, and we need them.
We have many other tough housing challenges to tackle.
We must exterminate shady and predatory lending, so people who have homes are not fleeced out of them.
And Bobby Rayburn is absolutely right — we need to build and rebuild the housing stock that the nation and its workforce need, where they need it the most, so that public servants — teachers, police, firefighters and others — can live in the communities that count on them; so the women and men in uniform who protect and defend America can come home to the American Dream; so that families who live in the small towns, in the farm belt and on the back roads are not consigned to the hinterlands of housing; so that families not seeking or not ready to own a home still have a good roof over their head with a rent they can afford.
And Kent Conine is absolutely right — as you build the homes America needs, we need to ensure a steady supply of funds to acquire land, prepare development and finance construction. So we appreciated the support of Kent Conine and the home builders as we won HUD’s approval for our Acquisition, Development and Construction loan program.
And as you strive to meet the demand for workforce housing, we need to fight the blunt instruments of growth limitations that can stifle your ability to meet the growing demand for housing with an affordable supply.
Among our toughest housing challenges, we also must make sure home buyers everywhere — from the central cities to the country roads — can get the best mortgage at the best price and the most home for their mortgage dollar. And that is where Fannie Mae comes in, with a mission to supply the capital to meet the nation’s housing needs and challenges.
With Fannie Mae at its core, America’s housing finance system can meet this challenge. It is engineered to serve the needs of the consumers, not those of big banks. And it draws housing capital from all over America, and all over the world, and sends it to every community across the nation.
In America, housing is not dependent on bank deposits and big bank business strategies. So in America, housing is protected from credit crises, boom-bust cycles and roller coaster economic indicators. In America, housing capital flows freely to lenders and home buyers in good times and in tough times.
So in America, we don’t have to worry that when the economy sneezes, housing catches double pneumonia. Indeed, in the past three years, it was housing that nursed the economy back to health.
And only in America can we take for granted the easiest way to finance a home ever invented — a mortgage with a fixed rate, for a long term, with a low downpayment and the right to refinance without penalty at any time. With this American-style mortgage, if interest rates spike up, families don’t have to worry about the house payment eating up grocery money. And if interest rates fall, they can make a phone call and cut their house payment by hundreds of dollars. Only in America can you find these mortgages, because only in America can you find such a sophisticated secondary mortgage market.
It is this secondary mortgage market that makes the consumer’s favorite mortgage possible. It drives down mortgage costs, and it manages mortgage risks, so that ordinary consumers do not have to bear that burden.
That’s what American home owners get by having the best housing finance system in the world. And the world knows it. Most of them still rely on big banks to finance housing. Most of them only have short-term loans with high rates, huge downpayments and penalties for refinancing. Many of them often suffer credit crunches, boom-bust housing cycles and low rates of homeownership.
It is no wonder that, whenever I travel overseas to attract more capital into our system for home buyers, I am constantly asked, “How can we build a system like yours?” All over the world, investors would rather invest in our system than in their own.
Right now, discussions are underway in Washington about our housing finance system as Congress works on legislation to strengthen our financial regulator. Fannie Mae supports this effort. We want a strong regulator. It is good for our company, the housing finance system and housing.
Our challenge is to help Congress achieve a crucial goal it set forth at the start of the legislative process: First, do no harm. Do no harm to housing, which is powering the economy. Do no harm to the housing industry, the women and men who build, sell and finance the homes. Do no harm to the world’s best housing finance system. And do no harm to Fannie Mae’s mission at the core of the system.
It is our mission to help meet the nation’s housing needs and challenges — a mission to reach and serve the “hard to serve” families; a mission that strives to close the minority lending gaps; a mission that advances market-transforming technologies; a mission that tears down barriers, lowers costs and expands homeownership and affordable rental housing for all Americans; and a mission that sets and meets Big Hairy Audacious Market Transforming Goals. Like our $3 trillion in commitments to underserved families over the past 10 years, and the $700 billion that we have pledged to the President’s Minority Homeownership Initiative.
As progress on reform legislation continues in Washington, we in this room know where we stand. We like a housing finance system that supplies consumer-friendly financing. We believe in a system that bends the market to serve the underserved. We need a system that is dependable and provides a steady flow of financing. We support a system that makes it faster, easier and cheaper for families to purchase the homes you build.
We know that America’s current housing finance system is the best in the world. And we think America should keep it.
My friends, we may be meeting here in Las Vegas, the gambling capital of America, but we do not want anyone to gamble with the American Dream.
Any legislation must answer several questions: Does it create a strong, well funded and respected safety and soundness regulator for Fannie Mae and Freddie Mac? Does it help raise the trillions of dollars needed to finance housing over this decade? Does it support the innovation needed to better serve consumers? And, does it help solve the toughest housing problems facing Americans?
We will stand shoulder to shoulder with the home builders as we address America’s housing needs and challenges ahead. And we will serve side by side with the home builders as we build and extend the American Dream.
One great American who had a dream noted that, “The ultimate measure of an individual is not where he stands in moments of comfort and convenience — but where he stands at times of challenge and controversy.”
Dr. Martin Luther King, Jr. did not have housing in mind when he said those words, but he did have in mind the need to break down barriers and expand opportunity. And he did have in mind the power of unity in the face of adversity.
As twin pillars of the American Dream, Fannie Mae and the home builders are joined by a common commitment to expand housing opportunity. In the coming year, let us work together to apply the full measure of our commitment and unity to the mission we share, and the dream we believe in. Thank you very much.
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