News Magazine of the UW Department of Communication
By Julian Martin, COM361
Republican Presidential candidate John McCain’s plan to deal with bad mortgages is a grave concern secretary of Housing and Urban Development (HUD) Steve Preston said Monday at Town Hall.
Preston said that he disagreed with McCain’s intention to have the government cover the difference between what mortgage holders owe and what their homes are worth. He believed that this would put an enormous burden on taxpayers, and that it should instead be the financial institutions that should bear the responsibility. However the Secretary was also hesitant to strongly elaborate on his criticism of the future republican administration’s proposal.
The Secretary focused on explaining exactly what caused the housing meltdown. Preston said that the meltdown was caused through a combination of predatory lending, a surge in subprime mortgages, misunderstanding on the part of investors and reckless actions by home buyers with bad credit.
"I'm particularly amazed that people [Wall Street investors] who had all these sophisticated models and were trained to analyze all of this stuff bought it and distributed these loans around the world,” he said.
During the discussion, Preston said that the current administration is trying to address the crisis through the actions of HUD and the Federal Housing Administration (FHA) through refinancing assistance, and housing counseling.
“In the last 12-13 months, we’ve refinanced over 400,000 people,” he said. “There’s one thing I want to mention here…our job, my job, is to make sure that were doing everything we can to reach out to people.”
The crisis has affected every region differently Preston said. He then noted how the Puget Sound has been able to stay largely unaffected by the crisis, and went on to praise the actions of local housing authorities. The Secretary differentiated Western Washington from states such as Florida and California, who he said have suffered from overbuilding, although he also said that there was an interconnectivity between how each region has been affected.
“I think this area of the country has fared better than most”, he said. “You could say it’s all relative, but if it’s going in the wrong direction, it hurts.”
When asked about the bailout plan, and how soon it would be able to assist homeowners, Preston said that people in the administration were running unbelievably hard to get the situation dealt with as quickly as possible.
“We want to make sure that there is a broad sense of stability in all of these institutions,” Preston said. “Confidence in these institutions is absolutely essential for them to operate.”
Looking towards the future of the housing market, Preston was unsure of how long it would be before there is a significant turnaround in the meltdown, but remained hopeful in HUD and the FHA’s ability to help with the crisis. Preston said that there are indicators of economic improvements that the American people can look towards, including an improvement in housing prices.
“Six to Eight weeks ago, I thought a year from now we’d be seeing ourselves coming out of this,” he said. “What we don’t know yet is how the events of the last six months have had an effect on our economy.”
