NBC "Today" - Transcript

Interview

NBC "Today" Interview With Hud Secretary Shaun Donovan

Interviewer: Matt Lauer

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MR. LAUER: Shaun Donovan is the secretary of Housing and Urban Development.

Secretary Donovan, good morning to you.

SEC. DONOVAN: Matt, it's great to be with you.

MR. LAUER: Thanks. Nice to have you here. The president, in that last sound bite in Savannah's (Guthrie's) piece, said that this plan will not rescue the unscrupulous or the irresponsible, people who lent money in a predatory fashion or people who simply bought too much house, more than they could afford. That's a pretty big group, isn't it, Secretary Donovan? And aren't those deals going to continue to haunt the housing market?

SEC. DONOVAN: Well, let's be clear, Matt. There are three parts to the plan that were announced yesterday: First, $200 billion as a backstop to Fannie Mae and Freddie Mac. They issue more than two- thirds of the mortgages today in this country, and those mortgages are available only to people with good credit.

So we're going to have lots of people who played by the rules benefiting, as well as from the refinancing that was announced yesterday. We have lots of families across the country who have paid their bills, but because the housing market has declined, are now underwater and haven't been able to benefit from today's low rates. They're going to benefit as well.

MR. LAUER: Let me jump in and ask you, in devising this plan, did you folks calculate or estimate a number of mortgages that simply are beyond saving? And, if so, can you share that number with me?

SEC. DONOVAN: Well, look, Matt, one of the things that's absolutely critical -- this started as a mortgage crisis, but it's become a jobs crisis. So the recovery bill that was signed by the president two days ago is going to create or preserve three and a half million jobs. That will help a lot of homeowners stay in their homes.

We believe, though, that there are those who can't be helped or shouldn't be helped. Investor-owners won't be eligible. Those who have gone way beyond their means in terms of being so far underwater that they can't be successful in a house, we're going to help transition them to rental housing or something else. So there are clearly a number of homeowners around the country who shouldn't benefit and won't benefit from this plan.

MR. LAUER: These numbers we're hearing about, where they're supposed to get -- the banks are supposed to get the mortgages down to 38 percent of a homeowner's income, and then the government steps in and gets that number down to 31 percent -- are you guys confident that the average person facing all the economic pressures they're facing right now can handle even that 31 percent over the long term of a mortgage?

SEC. DONOVAN: Absolutely. Thirty-one percent is a widely accepted standard. And one of the good things about the plan, we are already beginning to see a number of investors and servicers come down to the 38 percent standard with their own money. So I want to be clear. Lenders have to step up to the plate too. They've got to have skin in the game and bring the mortgages down to 38 percent first.

MR. LAUER: Which brings me to my last question. It is not mandatory for many banks to take part, although you are offering incentives. So are you worried at all that some banks are going to do the math and they're going to say, "Wait a second; the cost of concessions is higher than the cost of foreclosure," and they're going to go the foreclosure route?

SEC. DONOVAN: There will be some borrowers, as I said before, who are simply too far underwater for this to make sense. But we think the combination of the requirement of receiving TARP funds, to have all those participate, as well as the incentives on interest rate and success payments that we're offering, will help tip the balance for millions of homeowners and bring those payments down and keep them in their homes.

MR. LAUER: Secretary Shaun Donovan. Secretary Donovan, thanks for spending time with us this morning. We appreciate it.

SEC. DONOVAN: Great to be with you.

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