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(Seattle, Washington) -- Tonight, U.S. Senator Patty Murray told members of the Seattle Mortgage Bankers Association that while there are positive developments in Washington state housing, there are serious problems beneath the surface that she needs their help to address.

"We can all be proud that Seattle is a place where businesses want to operate and where families want to live, but I am not satisfied with the status quo," Murray said. "Underneath the surface, there are some real challenges brewing. If we don’t address them, the future we all want will be at risk."

Murray is the top Democrat on the Senate subcommittee that funds and oversees federal housing and community development programs. In her speech, the Senator outlined three challenges:

  • Getting the federal government to make the right investments in housing, transportation and jobs,

  • Addressing the affordable housing crisis

  • and improving the secondary mortgage market.

Murray also outlined some of her concerns with the President's budget proposal, which he submitted to Congress earlier this month.

"Overall, the President has proposed increasing spending on programs that promote home ownership, and that's a good thing. But at the same time, he is cutting or eliminating the tools that help people find affordable housing. That can interrupt the pipeline that's so important for moving our state forward," Murray said.

Murray said she was going to question the HUD Secretary upon her return to the Capitol.

"As I head back to Washington, D.C. next week, I'll be fighting for our priorities and for our state. There's a lot on our plate, but if we work together, we can build the type of community we all want to live in," Murray said.

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Senator Murray's Remarks Follow:

Thank you, Joe. [Joe Krumbach, president, Seattle Mortgage Bankers Association] I'm honored to join all of you this evening.

I think from a very young age, I understood how important your work is. I might not have known about all the finances, but I understood the value of good housing. I grew up in Bothell in a loving family that was very big – and in a house that was very small. I have six brothers and sisters. We had dogs, cats, and whatever else my siblings found wandering the streets and brought home. With my parents, we had 9 people living under one roof . . . . 9 people and 1 bathroom. (Laughter) And let me tell you when you’re running late for school, and you’re 4th in line for the bathroom, you begin to appreciate people who help families move into a bigger house.

My Role on Federal Housing

Since then, my perspective on housing has grown and so has my responsibility. When I first entered the U.S. Senate, I served on the Banking Committee. Today, I’m the highest-ranking Democrat on the committee that funds the Departments of Treasury, Transportation, and Housing and Urban Development. I’m one of four people in the country with a direct role in writing the bill that funds HUD and our government’s housing and community development programs.

Today I don’t just advocate for one family looking for a bigger home but for all the communities in our state who are trying to move forward on housing. At the federal level, I'm sitting at the table as the law is written, and I use that seat to fight for our state.

For the past few months, I’ve been traveling throughout the state meeting with housing leaders in different communities to hear about the challenges on the ground. So I know how important housing is, not just from a personal standpoint, but in terms of making our state and community strong, supporting our economy, and protecting our way of life.

As mortgage bankers, you are a critical link in helping people become homeowners and in building the types of communities we call home. You are part of the solution, and frankly you have a lot at stake in the coming months.

In Washington, D.C., there are a lot of things happening that will affect you, your business, and our community. The new Fed chairman has left the door open for at least another interest rate hike. The President just released his budget, and it proposes drastic changes for housing and community programs. And the Senate Banking Committee is working GSE reform. Tonight, I want to offer you an update on what I see happening, and I want to take a frank look at both the good and the bad that I see around us.

Lots to Celebrate

On the positive side, we do have a lot to celebrate tonight. Our economy is growing, home ownership has reached an all-time high, housing starts are soaring, and when the new Fed chair speaks we can understand him. (Laughter) Closer to home, we can all be proud that Seattle is a place where businesses want to operate and where families want to live.

Problems Below the Surface

But I am not satisfied with the status quo. Underneath the surface, there are some real challenges brewing. If we don’t address them, the future we all want will be at risk. For example, it’s great that people want to move here, but if our roads and transit systems can’t support them, our economy – and our quality of life – will suffer. It’s great that the national home ownership rate is approaching 70 %, but that doesn’t help a family who can’t afford to rent – much less buy – in King County. And it’s great that interest rates are historically low today, but if we keep piling up massive deficits – those rates won’t stay low for long.

How Can Work Together for a Stronger Community?

We do face some challenges, so tonight I want to explore one question: How can we work together to build a stronger community? I think the answer involves three steps:

  • First, we need to make the right investments – in transportation, jobs and housing. I’m very concerned that the path we’re on today is not going to deliver the vibrant economy we all want.

  • Second, we’ve got to address the affordable housing crisis – especially here in King County.

  • And third, we’ve got to improve the secondary mortgage market. You – and your customers -- deserve institutions that are more efficient, more reliable, and more transparent.

1. Make the Right Investments

So let me turn to that first step – making the right investments.

You know, as I meet with working families, the main concern I hear is that they don't feel secure. They're worried they could lose their job or their pension or their healthcare. They worry they won't be able to put their kids through college. There is a lot of insecurity, and we need to address that.

We all want our country to be strong, and the way to do that is to invest here at home – invest in our people, in our infrastructure and in our future. We're spending a lot of money in places like Iraq – and that's appropriate, but I want to make sure we're not ignoring the homefront. In March, I visited with our soldiers in Iraq, and I was so proud of their work. They deserve our support, but they also deserve to come home to an economy that has jobs for them and opportunities for their children.

Tight Budget Climate

One of the challenges we face in Washington, D.C. is the tight budget environment. In the past, our government had more flexibility to meet the needs in local communities, but that has really changed. Because of the costs of Hurricane Katrina and the war, we're operating under some very tight budget limits. We can't fund everything. To me, that means we have to fund the most important things -- the things that will pay back dividends for our economy and our future. That's why I'm working to increase funding for education – so that our kids will be able to assume the jobs of the future. It's why I'm investing in areas like job training and economic development.

Invest in Transportation

One of the most important investments we can make is in transportation. I’ve been an advocate for better roads ever since I served in the Washington State Legislature. Back in the 1980's, when I was a state Senator in Olympia, I asked for a seat on the transportation committee. Today, in the United States Senate, I'm the top Democrat – and former chairman – of the committee that funds transportation projects. I've worked to make sure the federal government is a strong partner in modernizing our roads and highways. I know that when we invest in transportation – we're investing in our future economic growth – we're making our businesses more productive, and we're helping families enjoy a better quality of life.

So the first step to make our community stronger is to make the right investments. It’s a tight budget year and we can’t fund everything, but if we have the right priorities, we can make every dollar count.

2. Address Affordable Housing

The second way to make our community strong is to address the affordable housing crisis. Over the past few months, I've been traveling throughout our state meeting with the stakeholders in housing. I've seen a wide range of challenges throughout the state. But no matter where I go, affordability is a top priority – especially here in King County. As you know, a family should spend no more than 33 percent of its income on housing. In King County, people are spending between 50-80 percent of their monthly income on housing. That means a few things. First, it means they're not saving. They're not able to put money away so that one day they can afford a down payment. They don't have much money left over to buy the goods and services that employ our neighbors. The high cost of housing can mean people are stuck in substandard housing. And it probably means they're moving further and further away – but still working in the city. That creates all types of pressures on our transportation system. It means more congestion and higher costs for businesses and families.

As you all know, the affordable housing crisis certainly affects your business. We want to have a steady progression of people moving from being renters, to savers, to homeowners. If we block that pipeline – if people get trapped with rents they can’t afford – they won’t be able to save, they won’t become homeowners, they won’t come to you for a mortgage, and our region won’t get all benefits that come from having more people own their homes. So it’s important from a business perspective, and it’s important from a civic perspective.

Now in Washington state, we are tackling the issue. Non-profit groups, public housing agencies, and leaders from your industry work very well together with developers to leverage federal dollars to build affordable housing. These units go to rental and they go for sale. It’s a success story, but we need to do more. And we need a budget that allows us to do more.

This month the President presented his budget proposal to us in Congress. I have some real concerns about some of the choices he made about housing. Next month, the HUD Secretary will come before my subcommittee and I'm going to raise these issues with him.

Overall, the President has proposed increasing spending on programs that promote home ownership, and that's a good thing. But at the same time, he is cutting or eliminating the tools that help people find affordable housing. That can interrupt the pipeline that's so important for moving our state forward.


For example, the President wants to cut $1 billion from the Community Development Block Grant program. Every mayor in the country uses those dollars to address affordable housing and local needs. One federal dollar leverages $30 in private capital. These dollars are used to build new affordable housing developments and in many cases provide help with down payments and closing costs for first-time homebuyers. So it’s not a big investment, but it pays off big.

Hope VI

The President’s budget also zeros out the Hope VI program. That program turns massive public housing projects into new mixed-use communities. Those federal dollars are helping to transform public housing into new vibrant communities right here in King County.

At Highpoint, the Hope VI program is providing new home ownership and affordable rental housing for our neighbors. And at Greenbridge, those dollars are transforming one of the poorest areas of King County into an exciting mixed-income, mixed-use community. Hope VI is making a difference here in our community. Unfortunately, the President's budget would eliminate that program.

Section 8 Vouchers

The President wants to cut Section 8 vouchers, which keep people from having to spend so such a big share of their income on housing. If they can spend less on housing today, they can save to buy a home tomorrow.

So I appreciate the work that you and others are doing on affordable housing at the local and state level – I just want to make sure that you're getting the support you need at the federal level.

3. Improve the Secondary Mortgage Market

The third way to keep our community strong is to improve the secondary mortgage market. I think everyone here would agree that the U.S. mortgage market is the most liquid, efficient, and consumer-friendly in the world. That produces some real advantages for individual homeowners, for potential homeowners and for the economy overall. If we want to keep our housing finance system on a steady path, we need access to liquid funds from both American and international sources. As you all know, Fannie Mae and Freddie Mac have provided the critical link between the capital market and the housing market.

The secondary mortgage market is one of the many reasons our whole mortgage system is so successful. But we cannot take this success for granted. We’re all familiar with Fannie and Freddie’s recent accounting scandals. We know how big they are as players in the market. And we know there are questions about their safety and soundness. I think we need a new strong and independent regulator to ensure the success of our secondary mortgage market.

We do have GSE reform legislation making its way through Congress. The bill would create a new regulatory structure for Fannie, Freddie and the Federal Home Loan Banks. It would give the regulator new tools to enhance safety, soundness, disclosure, and enforcement.

That is the goal, but like everything else in Congress it’s the details that matter. The House has passed one bill. In the Senate, the Banking Committee has passed another. There are some differences between the two bills and it’s not clear right now what the Senate bill will look like when it comes up for a vote. Senator Shelby, the Chairman of the Senate Banking Committee, has placed passage of GSE reform legislation at the top of his list of priorities for this year. But a number of issues need to be resolved before anything can get done, including differences on affordable housing requirements, conforming loan limits and portfolio limits.

As far as the timing, last week I was hearing that the Banking Committee is dealing with flood insurance reform in the wake of Hurricane Katrina, so the GSE bill could be delayed a bit, but it remains a top priority. I am hopeful that we can work through the differences and pass legislation this year to create a more effective regulatory structure so we can ensure the continued success of our mortgage market.

The bottom line is this: we need to make the secondary market more transparent, more sound and more efficient, and that’s one thing I’ll be working on.

So as I look at the housing landscape, I see a lot of challenges:

  • a tight budget,

  • a shortage of affordable housing,

  • federal priorities that don't match our local needs,

  • and a secondary mortgage market that we've got to improve.

But I also see good things – especially in the people who are coming together to develop solutions. I'm excited about the things we can do together.

As mortgage bankers, you play a key role in making housing work for families and for our economy, and I want to thank you. More importantly, I want to work with you. As I head back to Washington, D.C. next week, I'll be fighting for our priorities and for our state. There's a lot on our plate, but if we work together, we can build the type of community we all want to live in.


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