Transcript: HUD Secretary Shaun Donovan’s remarks on the $25 billion mortgage settlement
Remarks by Housing and Urban Development Secretary Shaun Donovan on the $25 billion housing settlement with the nation’s 5 largest mortgage servicers:
“Eric, thank you. And I want to thank everyone here on this stage but also the countless folks who are here in the audience that worked so closely, so long hours – including into the wee hours last night – to make this day possible.
“And I want to return in a moment to talk about the remarkable work, in particular, of our state partners – the Attorneys General. But I do want to single out, in particular, Tom Perrelli who was just a relentless, magnificent partner in this work. Tom, thank you. Eric, thank you for picking Tom, putting him on this as a partner, and I really do want to appreciate all the work that you did together with my team.
“As Attorney General Holder just mentioned, this historic settlement will not only hold institutions that wronged families, neighborhoods, and contributed to the collapse of not just the American economy but the international economy – not just hold them accountable – but it will also provide immediate relief to homeowners, forcing banks to reduce principal on loans, refinance loans for underwater borrowers, and pay billions of dollars to states that can be used for direct help to consumers struggling today.
“And it comes not a moment too soon for homeowners, for our housing market, and for our economy. We all know how the housing bubble burst, how lenders sold loans to people who couldn’t afford them, and how they packaged mortgages up to make profits that turned out to be nothing more than a mirage.
“And we know that these actions hurt millions of families – families who did the right thing but still lost their house or saw their home prices drop through no fault of their own.
“But as the banks acknowledged with this settlement, and as HUD, state Attorneys General, banking regulators across the country heard from consumers in every state of this nation, those abuses didn’t stop there. They continued long after people got the keys to their new homes. We know this not only because of the investigations that Attorney General just spoke about but because in the summer of 2010, long before the ‘robo-signing’ scandal erupted into public view, HUD initiated a large-scale review of the Federal Housing Administration’s (FHA) largest servicers.
“Combined with the work that you’ll hear about from our Inspector General and his remarkable team, between us we devoted more than 15,000 hours to reviewing servicing files for thousands upon thousands of FHA-insured loans. And the scope of this review included not just the robo-signing conduct that has been so publicly discussed but a long list of mortgage servicing issues such as lost paperwork, long delays, missed deadlines, or problematic loan modifications offered to homeowners.
“As HUD’s Office of Inspector General found, the country’s five largest loan servicers also routinely signed foreclosure related documents without really knowing whether the facts that they contained were correct.
“In effect, many of the very same financial institutions responsible for so much of this crisis were making it worse – harming families, neighborhoods, and our economy.
“This settlement holds those institutions accountable for their actions.
“As you’ve heard, in this core settlement we’re announcing today more than $25 billion in total. And that number could grow as we look at additional institutions to this settlement.
“But this isn’t about just punishing the banks for their irresponsible behavior. It’s also about requiring them to help the people they’ve harmed by funding efforts to help homeowners stay in their homes. And that’s precisely what this settlement delivers.
“Reducing the loan balances for approximately 1 million families who owe more on their mortgages than they’re worth or have suffered in other ways. Principal reduction at this scale would not only help these underwater homeowners start building equity again but also their neighbors, who’ve watched their homes drop by $5,000 to $10,000 in value each time a foreclosure sign goes up in their neighborhood.
“The settlement will also help unemployed homeowners to catch up on late mortgage payments. It funds housing counseling services to connect at-risk families to the help they need. And it helps communities struggling with vacant properties that drag down neighborhood home values.
“And by instituting tough penalties and stringent timelines enforced by our respected and independent monitor, Joe Smith, banks have a strong incentive to provide this help quickly and effectively. The settlement also provides cash payments to homeowners who are victims of deceptive servicing practices.
“Now we all recognize that you cannot undo the pain of this crisis simply by writing a check. But these payments provide victims with welcomed and needed relief.
“One of the most important ways this settlement helps homeowners is that it not only right past wrongs but that it forces the banks to clean up its acts and fix the problems uncovered during our investigations going forward. And it does that by committing them to major reforms in how they service mortgage loans. These new customer service standards are in keeping with the Homeowner Bill of Rights announced by President Obama in the last few weeks – a single straightforward set of common sense rules that families can count on when they’re making the single most important purchase of their lives. And it requires lenders and servicers in this settlement, which just the five of them represent nearly 2 out of every 3 mortgage loan serviced in this country, to follow a long list of rights for those facing foreclosure. No more lost paperwork. No more excuses. No more runaround.
“And this is just one step in making sure we right the wrong of this crisis.
“Indeed, last month, as Attorney General Holder mentioned, he and I announced with many state partners as well an investigation into the conduct of financial institutions that broke the law that led to the crash of the housing market, including securities and origination-related cases.
“So while it isn’t designed to address all the issues of the housing crisis, it is a historic agreement and a big victory for those who are harmed the most.
“Combined with a broad-based refinancing plan that President Obama announced to help homeowners last month and additional steps we’ve made to support principal reduction, it provides a path toward stability for our housing market and our broader economy.
“Banks and mortgage servicers expect that homeowners will meet their obligations under a mortgage. Homeowners should have the very same expectation of their financial institutions. And with this settlement, those institutions will be forced to live up to those expectations.
“Holding these banks accountable is what this settlement is about and helping the millions of families harmed by this crisis.
“It’s why I’m so proud to join all my partners today, and why I’m particularly proud to introduce not only [Iowa] Attorney General Tom Miller but also to thank [Colorado] Attorney General John Suthers for their leadership in getting to this historic agreement.
“You know, many Americans have lost faith in institutions in this country and our ability to cross party lines and to put country ahead of politics. This agreement restores my faith and I hope so many others’ faith that we can do big things regardless of party divisions and geographic lines.
“This would not have been possible without the early and relentless leadership of Tom Miller and John Suthers. I have come to call them friends and partners through this, and I recognize the remarkable work of their colleagues as well. But I need to single them out, and in particular as I welcome Tom Miller to the podium to say thank you for their remarkable, remarkable work.
“Many of the things that we need to do to help homeowners going forward will require Congressional action. And I think we have on this stage and example of what can be done when we put country ahead of party. But we also, as President Obama has said, we cannot wait for that action. And this announcement today shows that we can do big things in this country across partisan lines and restore faith in the ability of our institutions to help families that need it most.”
- Department of Housing & Urban Development: Overview of mortgage servicing settlement
- C-Span.org: Video of $25 billion mortgage settlement announcement
- WhatTheFolly.com: Transcript: President Obama’s remarks on the $25 billion mortgage settlement
- WhatTheFolly.com: Transcript: Attorney General Eric Holder’s remarks on the $25 billion mortgage settlement
- WhatTheFolly.com: Transcript: Iowa AG Tom Miller’s remarks on the $25 billion mortgage settlement
- WhatTheFolly.com: Transcript: Colorado AG John Suthers’ remarks on the $25 billion mortgage settlement
- WhatTheFolly.com: Transcript: HUD Inspector General David Montoya’s remarks on the $25 billion mortgage settlement
- WhatTheFolly.com: Transcript: Illinois AG Lisa Madigan’s remarks on the $25 billion mortgage settlement
- WhatTheFolly.com: Transcript: North Carolina AG Roy Cooper’s remarks on the $25 billion mortgage settlement
- WhatTheFolly.com: Transcript: Associate AG Tom Perrelli’s remarks on the $25 billion mortgage settlement
- WhatTheFolly.com: Transcript: Press conference Q&A on the $25 billion multi-state mortgage settlement