Speech delivered to meeting with 16th District Builders and Realtors - June 7, 2004

Homeownership and Federal Housing Policy

[As prepared for delivery]

Every community throughout America values the pride and financial benefits that accompany homeownership. 

That is why America celebrates June as Homeownership Month. 

Homeownership is great for neighborhoods and communities as owners develop deeper roots and interests in their home and neighborhood.

Homeownership – having your own private property – is the foundation of our society and the rule of law.

Homeownership is the tie that binds us as a community and as a nation, and we should do all we can to encourage it.

Homeownership and home improvement act as the economy’s backbone. 

The housing industry creates jobs and income for workers when other sectors are slow. 

A record 68.6 percent of Americans now own their home… and are benefiting from the rising value of their homes. 

More families own more homes with more equity than ever before, and use their equity to upgrade their houses, pay for their kids’ education, for medical expenses, auto purchases, travel, and countless other needs. 

In total, since 2000 equity in residential property has risen by $3.8 trillion – a 33% increase.

The media has painted this as a negative.

But in reality, it has helped middle-income families build wealth and improve their quality of life.

The focus should be on partnering to expand opportunities for homeownership for low-income Americans.

Now is a great time to talk about the American Dream of homeownership because our economy is growing stronger. 

The United States Department of Commerce recently announced that our economy grew at a rate of 4.4 percent during the first three months of this year. 

The numbers mark twelve straight months of economic expansion, the fastest sustained rate of growth since 1984.

The American people have overcome recession, a major terrorist attack, corporate scandal, and high oil prices to lead our economy to a period of sustained growth unseen in 20 years.

And for the last three years, the housing industry has been the pillar of the economy. 

It’s created over 600,000 new jobs in two months. 

Incomes are rising and the President’s tax cuts in 2001 and 2003, allowed more Americans to keep more of their own money to save, spend, and invest. 

Owning a home is a family’s quickest path to self-sufficiency. 

Yet a “homeownership gap” remains, and Hispanic and African American families are far less likely to own a home. 

For the first time, the homeownership rate among minority Americans has risen above 50 percent.  

President Bush has taken the bold step of challenging the nation to close the gap and create 5.5 million minority homeowners by the end of this decade. 

He has called on all of us to achieve this goal. 

More than two-dozen major companies, nonprofits, and industry groups have joined the “American Dream Team” to help make this goal a reality. 

Since the President issued his homeownership challenge in June 2002, more than 1.5 million minority families have put out the welcome mat at their new homes. 

At this rate, we’ll reach our goal ahead of schedule.

But it helps to have business like yours to help.

And I am pleased to work with a number of local initiatives as well.

Habitat for Humanity

• Each year, I volunteer with Habitat here in Lancaster.
• This ministry – that’s really what it is – has helped millions find a roof for their heads, to find a home.

Sunnyside Peninsula

• Years ago, Congress awarded $240,000 for the development of the Sunnyside Peninsula.
• I said then that this part of the city – southeast Lancaster – needed a boost.
• The development concept was born through community input and involvement. 
• It incorporates the latest in environmentally friendly design and planning concepts.
• It’s a public-private partnership with the goal of revitalizing the downtown, neighborhoods, heritage tourism, preservation, and business climate in the City of Lancaster.  
• When it’s completed, families from all walks of life and all races and ethnicities will call the Peninsula home.
• It will be a great asset for the City of Lancaster by expanding opportunities in the city.

Last December, the President signed into law the American Dream Down Payment Act, designed to combat homeownership barriers such as high down payments and closing costs. 

The American Dream Down Payment Act will provide direct assistance to first-time homebuyers, opening the door to homeownership to some 40,000 families each year.

The Administration has also proposed the Zero Down Payment Mortgage, which would allow consumers to qualify for FHA loans without having to pay with cash at the closing table. 

The Zero Down plan is different from the American Dream Downpayment Act. 

Instead of granting a lump-sum award to qualified buyers, FHA would insure 100 percent of the cost to acquire a home for first-time homebuyers. 

This would allow them to finance the full purchase price and all of the closing costs. 

Potential homebuyers wouldn’t have to make the minimum 3 percent down payment required under current law.

The Zero Down program would assist creditworthy-but-cash-poor working individuals and families who’ve been excluded in the past. 

Most can afford the monthly mortgage payment, but have not had the opportunity to save for the down payment. 

FHA projects that our proposal would generate 150,000 new homebuyers in the first year alone. 

In order to cover the costs of the program, families who qualify for a Zero Down Payment Mortgage would be charged a modestly higher insurance premium on their home loan. 

For example, for a $100,000 mortgage, a borrower would pay about $50 a month more than a regular FHA borrower during the first five years.

By enacting Zero Down, Congress can make homeownership a reality for 200,000 more families in areas where affordable homes are needed most.

I look forward to Congress enacting the Zero Down Payment Mortgage.

To promote the production of affordable housing in areas where it’s scarce, the Administration has proposed a Single Family Affordable Housing Tax Credit. 

The President's budget for the coming year would provide developers with nearly $2.4 billion in tax credits to build new homes or rehabilitate existing structures. 

We have two goals:

• to create homeownership opportunities in distressed neighborhoods, and
• to revitalize these neighborhoods through increased homeownership.

In addition to encouraging homeownership, HUD’s proposed budget promotes the production and accessibility of affordable housing for those who rent.

HUD’s three major rental assistance programs collectively help some 4.5 million households nationwide. 

Our major program is Section 8, which provides both tenant-based funding through the Housing Choice Voucher Program, and project-based rental assistance through HUD’s Public Housing programs.

The Administration has proposed a broad reform of the Housing Choice Voucher Program. 

In my view, there’s no alternative; the program must become more effective, efficient, and better able to meet the needs of the low-income families that depend upon it.

I’d also like to tell you about our new regulatory reform program that we call “America’s Affordable Communities Initiative.”

Many barriers to homeownership are local in nature. 

It’s no accident that many of the cities facing affordable housing shortages also have the tightest restrictions on growth. 

A complicated web of state and local regulations on developers and builders keep many markets from meeting the demand for affordable housing. 

Very few single-family homes are being built in lower-income neighborhoods, in spite of overwhelming need. 

Regulatory barriers delay construction and driving up costs. 

The barriers include out-of-date building codes… approval processes that are duplicative and time-consuming… restrictive zoning ordinances… unnecessary or excessive fees and taxes.

Removing these and other barriers is key to meeting the housing needs of our nation. 

Experts estimate that if the barriers were dismantled, development costs on average could drop as much as 35 percent. 

This means that millions of Americans would be able to buy or rent housing they can’t afford today.

HUD is working with communities and local organizations to highlight the importance of regulatory reform. 

We want to develop new tools to deal with the challenge and encourage local action. 

And we’re leading by example.

HUD is reviewing the Department’s own regulations, looking for barriers that we’ve unintentionally created over the years… and we’re dismantling them.

HUD is taking many additional steps to overcome regulatory barriers. 

The problem of creating affordable housing extends across all sectors… but government-created regulations made the problem much worse. 

Affordability problems will not end until the free market is allowed the flexibility to build the homes Americans at all income levels want and need.

Homeownership is not just a dream…it is the American way. 

These initiatives are meant to open doors for families.

But government can and should only do so much.

You make this possible.

The House is pursuing a “Competitiveness agenda” in the coming months that will focus on regulatory reforms, tax relief, tort reform, health care, and energy.

And we’ve taken a number of steps to improve the way you do business.

We are working to make tax relief permanent.

Comprehensive tax reform is going to a key to this strategy.

We should work to simplify the tax code.

And need to make the 2001 tax cuts permanent.

One thing we can do for small businesses is make the 50% bonus depreciation permanent.

This is set to expire on December 31, 2004

I have co-sponsored a bill – H.R. 4128 – to take care of this.

We should also extend the R&D tax credit.

Our businesses are the best in developing new products and ideas.

The R&D credit is an effective means of encouraging companies to increase their U.S.-based research activities in the US.

These jobs pay well and require highly skilled workers.

And it will help our manufacturers.

In the end, this R&D will cut costs for consumers and make your product more sellable.

The 2001 tax cut included a repeal of the estate/death tax. 

The original intent was permanent tax relief, but Senate opponents used a technical Senate rule that forced the tax cut law to sunset in 2010.

On June 18, 2003, the House made the death tax repeal permanent by passing H.R. 8, the Death Tax Repeal Permanency Act of 2003. 

Having introduced similar legislation myself earlier in the year, H.R. 158, I was pleased to be a co-sponsor of this important bill, which was introduced by Representative Jennifer Dunn on June 12, 2003. 

No one should have to meet the undertaker and the IRS on the same day. 

Repealing the death tax will benefit consumers, small businesses, and family farms that will not close up shop because of a tax that makes no sense. 

Permanently repealing the estate tax is vital to encourage savings, investment, and sound, life-long financial management. 

When President Bush took office, one of his priorities was to implement a comprehensive energy policy.

This is essential – whether you’re a family taking a vacation, a realtor on the road, or a builder trying to fuel construction equipment.

The House did its part in passing H.R. 6, the Energy Policy Act, last year.

We even had a conference agreement and were prepared to pass it, but the Democrats in the Senate decided at the last minute to play politics and kill the plan.

Now, the future of a comprehensive energy plan is uncertain.

We desperately need an energy plan. 

We need to reduce gas prices, reduce our dependence on foreign sources of oil, invest in alternative fuels, and create and sustain jobs in our domestic energy industry.

H.R. 6 does this; and we need to pass it.

We are also working to reduce health care costs for businesses.

H.R. 4281, the Small Business Health Fairness Act of 2004, passed the House with my support on May 13, 2004.

The bill would allow the creation of Association Health Plans (AHPs).

AHPs allow affiliated groups to join together across state lines to provide health insurance at lower premiums. 

You or your employer would be able to join an AHP through membership in an existing association – like the ABC or National Association of Realtors.

They would allow small businesses and other groups to join together to obtain the same economies of scale, purchasing clout and administrative efficiencies as large corporations.

AHPs are estimated to reduce health insurance costs by 15 percent to 30 percent. 

New coverage option for the self-employed and small business workers will also promote greater competition and choice in health insurance markets.

During the 107^th Congress, I also supported the Bipartisan Patients Bill of Rights, which supported the creation of AHPs.

We have also passed a number of measures to make it easier for you to comply with OSHA regulations.

H.R. 2728 gives the Occupational Safety Review Commission additional flexibility to make exemptions when a small business misses the 15-day deadline for filing a response to an OSHA citation.

H.R. 2729 increases the number of members to the Occupational Safety and Health Review Commissioners from three to five to help ensure that cases are reviewed in a timely manner.

H.R. 2730 clarifies that the Occupational Safety and Health Review Commission is an independent entity that is given deference by the courts reviewing appeals of OSHA citations rather than the agency.

H. R. 2731 allows small employers to be awarded attorney’s fees and court costs when they contest OSHA citations and prevail in court.

The problem with all of these great initiatives is that Democrats are opposing them in the Senate.

We are working to make progress on each of these bills and initiatives.

I think each one is a necessary part of making our economy stronger and the business environment healthier for the type of work you do.

I’ve always said that our economy needs to create things.

That’s why I spend a lot of talking about and focusing on our manufacturing sector.

But you are just as big a part of that.

Perhaps even more so.

The products you create and sell are assets, not just consumer goods.

From a financial perspective, a home builds wealth and creates equity.

A homeowner as a personal stake therefore in the future of his or her community.

A community that goes in the right direction, creates higher home values and more equity.

But a house is in some ways priceless.

You take raw materials and create a finished product that offers returns far beyond equity or a balance sheet.

You help our neighbors realize the American Dream.

The memories that are created, the interest in the community a homeowner shows all improve our area.

From an economic standpoint, you create jobs and help build wealth in communities that desperately need it.

You are the engine of our economy.

I thank you for taking the time to join me this morning.

I appreciate what you do.

And I appreciate your input.

I can take questions, if you have any.