November 30, 2007
HP-703

Remarks of Treasurer Anna Escobedo Cabral
on Working Together to Help Struggling Homeowners

Atlanta- Good morning. It's a pleasure to be here today.

I want to thank Suzanne and the Consumer Credit Counseling Service of Atlanta for bringing us all together today to talk about what is truly one of the most significant issues our economy is facing.

Many Americans in cities and communities across our country are experiencing challenges due to the turbulence in the housing and mortgage markets. Many are struggling to keep their homes as their mortgages reset to higher rates. In fact, I'm sure most of you have heard the statistic that an estimated 2 million subprime mortgages will reset in the next year and a half.

The good news is not all of these families will face foreclosure. Some will adjust into their new payments and others will refinance to better rates. But a portion of homeowners will not be able to stretch to make their new monthly payments, and these are the borrowers we aim to help.

I know a little later on Mark Duda is going to share his data on the specific impact of foreclosures in Atlanta so I will let him speak to the local numbers and statistics. But I've had the opportunity to visit places like Detroit, Cleveland, and other affected cities, and I've seen firsthand the serious consequences of foreclosures. The bottom line is that foreclosures are painful for families, for communities and for the broader economy. We need to do our best prevent as many families from experiencing this blow.

I applaud all of you for coming together to address this critical challenge, and I want to take some time to share with you some of the ways we've been working to reach struggling homeowners.

I've spent a majority of my career working in the federal government, and if there is one thing I've learned, it's that the government can accomplish much more when we bring everyone to the table. As we've worked to address the challenges in the housing market, Treasury and the Department of Housing and Urban Development have talked to mortgage lenders, financial institutions, housing counselors and a range of industry experts, and we've brought together our resources to help more borrowers.

Recently, a new national alliance made up of our nation's leading counselors, servicers, and investors called HOPE NOW was formed to identify and reach out to struggling homeowners. CCCS and NeighborWorks are among the many dedicates partners in this effort. This partnership is a significant step to educating more homeowners about their mortgage options.

One of the main goals of this effort is to implement a unified, aggressive outreach strategy. More than half of borrowers whose mortgages go into foreclosure never reach out to their lender or a homeownership counselor for help. Many bury their heads and believe that foreclosure is inevitable.

To get more borrowers to act and reach out for help early, the alliance recently launched a new direct mail campaign. While their heads are buried in the sand, many struggling homeowners ignore the letters from their lenders. The HOPE NOW mail campaign provides good information about foreclosure prevention under one recognizable and trustworthy HOPE NOW banner. HOPE NOW has sent more than 300,000 letters this month to borrowers who could have the option to work out a more affordable solution, and they will continue to reach more borrowers in the coming months. For borrowers who are reluctant to call their lender, they can call 1-888-995-HOPE to reach an independent, non-profit counselor who can help guide them through their options.

But we can't do this alone. We need your help. At Treasury, we're asking Congress, state and local leaders, community leaders and many others to help spread the word to their community members on how critical it is to reach out for help early. I encourage you to help us make your community members aware of the HOPE NOW letters. Homeowners need to know that when they receive a letter from HOPE NOW, they should not be afraid to open it and to call the number on that letter.

We are also getting ready to help launch a public service campaign that lets homeowners know, "Nothing is worse than doing nothing." But we need the help of these community leaders to encourage local television and radio stations to run this announcement.

In addition to outreach, the HOPE NOW Alliance has streamlined efforts between counselors and services so that they can communicate better and improve their efficiency. The Alliance is also developing standard performance measures. Any strong initiative must have measures of progress. New performance standards will help determine categories of borrowers who can be helped and track progress to ensure people are getting the help they need.

Foreclosures are in the interest of no one. The borrower, the lender and our communities suffer as a result. The investment community has also acknowledged that foreclosure prevention is in their interest and has taken steps to recognize the important role of counselors in helping more Americans remain in their homes.

HOPE NOW is laying the groundwork for tremendous progress going forward. But work remains for all of us. We know that the most important step that struggling homeowners in Atlanta can take is to call their lender or a local HUD-certified counselor. The HUD web site at HUD.gov offers a complete list of local housing counseling organizations. More information can also be found at HOPENOW.com.

I spend a lot of time talking about financial education, and what we are seeing in the housing market underscores the important responsibility we all have to remain informed. The mortgage process can be extremely complicated, and lenders must offer clear and understandable information with the products they sell. At the same time, individuals must take the responsibility of being informed into their own hands. There is a variety of information and help out there.

Treasury's financial education website MyMoney.gov offers lists many helpful resources that can walk individuals through the process of buying a home. The price of not being informed is too high, and we all can do more to empower ourselves and others around us to become more informed about our financial choices.

I encourage you to help us spread this important message to as many homeowners as possible, and if there is any way we can be of help to you in reaching your community members, please let us know. In the end, if we can help keep more families in their homes, our country and economy will be better off as a whole. Once again, I applaud you for your leadership, and thank you for your important partnership in helping to preserve the dream of homeownership for families and citizens of Atlanta.

Thank you.