HUD Secretary urges housing advocates to continue fight to keep foreclosure funds from being diverted

TRENTON – Federal Housing and Urban Development Secretary Shaun Donovan told a packed conference room of housing advocates to “continue making your voices heard” by urging lawmakers to spend money intended for housing programs for that purpose.

Specifically, Donovan said the $75 million in direct aid New Jersey is receiving from a federal foreclosure settlement should be used for things like housing counseling and legal services for homeowners who are “under water.”

“Ultimately it’s a state decision on how these funds are used,” Donovan said at a Housing and Community Development Network of New Jersey conference at the Trenton Marriott.

He said housing counseling and legal services have a proven track record of stopping foreclosures and keeping homeowners in their houses. He estimated that some 8 million families in the country have been helped through housing counseling services.

“Encourage them to do the right things,” he said. “Help the struggling families it is intended to help.”

He hinted not so subtly what New York Attorney General Eric Schneiderman intends to do with the federal foreclosure settlement funds it has received.

“I’m pretty sure he’s going to do the right thing,” Donovan said, adding that a reduction in any of these funds puts more homeowners at risk. “Fewer folks that are helped, fewer communities are helped, and more pain for New Jersey and its housing market and economy.”

New Jersey received some $800 million in total from the foreclosure settlement, the bulk of which will go toward refinancing, write downs, and anti-blight efforts.  But housing officials have criticized the $75 million in direct aid that they said the Christie Administration is diverting to the General Fund. The administration disagrees with that claim.

Donovan said he also hopes to get some programs through Congress that will enable current homeowners to refinance their mortgages so they could take advantage of some of the lowest interest rates on 30- year mortgages in recent memory. Refinancing of homes could save families an average of $2,500 and $3,000.

He dismissed the notion that the federal government shouldn’t be involved in housing financing issues, adding that many families rely on growing home values and equity to help pay for their kids’ college education and retirement security.

“What you’re effectively saying is to give up on those dreams,” he said.  “This president (Barack Obama) and this HUD secretary are not willing to stand by and let those dreams disappear.”

Donovan called for support of the $15 billion Project Rebuild neighborhood stabilization program, which helps prevent homes from being foreclosed and surrounding homes from seeing property values drop.

“Your own home drops in value by up to $10,000 the minute that sign goes up.” HUD Secretary urges housing advocates to continue fight to keep foreclosure funds from being diverted