Richard F. Syron's Speech to Congressional Black Caucus Legislative Conference on September 23, 2005
Prepared Opening Remarks for Richard F. Syron
Chairman & CEO, Freddie Mac
Congressional Black Caucus Legislative Conference
Financial Services "Brain Trust" Panel
September 23, 2005
I would first like to thank Congresswoman Maxine Waters for the invitation
to join you this morning, and for organizing a panel which centers on such a
critical issue – homeownership, which is at the heart of wealth creation.
***
Now, I feel passionately about this topic. My dad was a laborer and my mom
a domestic, and our family sacrificed plenty to pay that mortgage on our modest
home. That experience is still a part of me, and it's one reason why I've
making workforce and affordable housing a priority at Freddie Mac.
Today, the homeownership rate stands at an all-time high – almost 70
percent. But despite this success, African Americans and other minorities are
not sharing equally in the dream of homeownership. There's a "homeownership
gap" in this country.
It's no secret that African American and minority homeownership rates
are 25 percentage points below the rate for white families.
And this gap has had a direct impact on the economic vitality of Black America.
The typical African American household, for example, has a net worth of only
$6,100, while the net worth of the typical white household is nearly $67,000.
The reason for this disparity goes beyond such social and economic indicators
like income and education – it also centers on homeownership.
Now, if you're not already in the club of homeowners, it seems like the
bar is being raised even higher. When I was a kid, a median-priced house would
cost roughly two times the family's annual income. Today, in the stronger
markets where the jobs are, that multiple has increased to three or four times.
And as Congresswoman Waters can tell you, in California, home prices often go
as high as seven times a family's annual income.
These are very difficult challenges to overcome. At Freddie Mac, we make it
possible for millions of families to own a piece of the American dream. And
more than half of all Freddie Mac mortgage purchases support housing for low-to-moderate
income families.
But we're not as successful as we need to be to get more African Americans
and other minorities into homes.
That's the reason why we have a launched a number of new initiatives and programs.
We have financial literacy programs that provide the education and guidance
you need to keep to a budget and bolster your credit rating. And we have an
entire suite of affordable mortgage products, some which allow borrowers to
qualify for a mortgage with as little as $500 out-of-pocket. On the other side
of the homeowner equation, we're working closely with mortgage lenders to help
level the playing field for African Americans with little or no traditional
credit history.
Equally important, we not only want to help African Americans achieve the dream
of homeownership, our goal is also to help them sustain it – to financially
hold on to it. We want to make sure that once you get in the front door,
you don't ever have to pack your bags and leave through the back door
because you can't afford to make the mortgage payment. We're
helping thousands of families avoid foreclosure and remain homeowners through
special counseling and other initiatives.
***
While all these programs are important, I know all our attention is now centered
on the refugees from Hurricane Katrina, and what can be done to help them find
shelter and assistance. No one could witness events in the Gulf Coast without
being moved by the enormity of the destruction, and the challenges ahead for
these families. To help, we are:
- Contributing $10 million to relief efforts, with nearly an additional $1
million being raised from employees and our corporate match program.
- Suspending mortgage payments for affected borrowers for up to 12 months.
- And working to donate housing units from our own inventory.
Overall, this storm will test our nation and its commitment to help the less
fortunate and poor. It goes beyond just supplying housing; education, health
and other concerns need to be addressed.
We will be judged by the next generation on the progress we make to improve
the lives of these thousands of displaced persons.
We look forward to working together with all the conference participants to
achieve this goal.
Thank you.
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