Congresswoman Schakowsky's Keynote Address

Congresswoman Jan Schakowsky
Keynote Address
Sargent Shriver National Center on Poverty Law
2007 Landau Housing Justice Awards
June 11, 2007

It is such an honor to join the Shriver Center in recognizing tireless warriors in the fight for affordable housing – the Horner Residents Committee and the Jane Addams Senior Caucus.  I have had the privilege of working directly with the Senior Caucus and am so delighted to share in this moment with them.

What makes today’s occasion even more exciting and special is that 2007 marks the Shriver Center’s 40th Anniversary of battling poverty.  As the Center’s namesake, Sargent Shriver, once said, “A line has to be drawn somewhere between what is essential and what is peripheral.”  The Center has drawn that line and has been using its resources, talent, and tenacity to ensure that low-income families have what is essential to a decent life. 

Your work has changed the lives of thousands and thousands of families.  And, although there are still roads to walk and mountains to climb, it is wonderful that the Center is still strong and vibrant after all these years. 

The United States is the richest country in the history of the world and has the resources to make sure that safe and affordable housing is available for all.  Instead of providing tax breaks to multi-millionaires or spending $2 billion a week on a war in Iraq that is making our world more dangerous, we could make a commitment to ending the persistent affordable housing shortage.

With the amount of money that we’ve spent in Iraq, we could have built 3,902,633 public housing units nationally, 211,326 in Illinois, and 90,178 in Cook County. (figures are from costofwar.com)

In Chicago alone there are over 17,000 people who are homeless every year, and 4,900 on any given night.  Of these, 53% are in families.  

In Illinois, families are the fastest growing segment of the homeless population, currently 40% of the total.  New research suggests that homelessness is rapidly increasing among the elderly as well.

And, the problem is getting worse. According a 2005 report released by the Center for Housing Policy, over the six years prior to the release, the number of low and middle income working families paying more than half of their income for housing increased by 76%.

They also found in a 2006 report that the homeownership rate of low- to moderate-income working families with children has been dropping.  In 1978, 62.5% of all such families owned their homes. As of 2003, homeownership stood at just 59.6%. Had the 1978 homeowner rates prevailed in 2003, an additional 2.3 million children would be living in owner-occupied homes.

The drop in homeownership for working families makes sense when one considers that here in Chicago, the cost of a median-priced single-family home in Chicago jumped 50% between 2000 and 2005 while median income rose a measly 3%. 

Renters aren’t faring any better. Median rent in the nation rose by 33% between 1994 and 2004 – compared to an only 3% increase in renter income. 

Across the U.S., a family needs to make $16.31 an hour in order to afford a two-bedroom apartment at fair market rent.  In Chicago, they need to make $ 17.98.

In other words, a family should make around $33, 925 a year to afford a two-bedroom apartment in the U.S.; $ 37,400 if they live in Chicago.

However, a recent study conducted by local Chicago universities found that 75% of Chicago’s working poor earned less than $13,000.

I am also greatly concerned about the latest creative financing schemes that lenders have been selling to potential homeowners over the past few years.  Families have been encouraged to take on Adjustable Rate Mortgages (or ARMs), interest-only loans, or a combination of both.

Lenders have been pushing products with more risk than most families can handle – and now that the adjustments are being calculated into the monthly mortgage payments, the tidal wave of foreclosures has started.

The latest statistics show U.S. foreclosure rates are up 43% from 2005.  Nearly 2.2 million families have lost their homes in recent years.  This has cost families as much as $164 billion.  Colorado, Nevada, and Florida are the worst hit, and analysts say that these loans, which put people in more house than they can afford, are major contributors to the problem.

Now that the housing market has cooled off and the value of homes is increasing more slowly, it is expected that we will see even more foreclosures.

Some of you may remember that there was another time in the U.S. when interest-only loans were the craze:  right before the Great Depression.  Millions of families lost their homes then, too.  

While those risky loans are made to people across the income-spectrum, they are especially problematic for low-income families who don’t have much leeway in their budget when 20 to 50% increases in monthly payments take effect. 

Now, I don’t want you to think that the outlook is all doom and gloom.  Not only do we have champions, like the Shriver Center, the Horner Residents Committee and the Jane Addams Senior Caucus who have made serious inroads with affordable housing – and who have kept the current downturn from being worse than it could have been without them – but we also have a change in course with policy makers and policy decisions.

In the past five months, Congress has introduced and passed legislation I believe will help us turn the tide and bring us closer to the point where the American Dream of owning – or even renting – a home can be can be a reality for everyone.  Additionally, we have two great leaders on the Financial Services Committee, which has jurisdiction over housing, who are leading the charge:  Chair of the full Committee, Barney Frank, and Chair of the Subcommittee of Housing and Community Opportunity, Maxine Waters.  Since the Majority has shifted, we have been working to provide funding and programs that will put a roof over everybody’s head.

The Section 8 housing program’s budget was increased by $1.44 billion in Fiscal Year 2007 to allow HUD to renew 257,000 housing vouchers currently in use by individuals and families that we would have lost under the Republicans proposal.  

When the President proposed his budget for 2008, he turned a blind eye to reality and suggested an 8% cut in funding to housing assistance programs.  However, on May 17, 2007, when both chambers of Congress passed S.Con.Res. 21, the blueprint for the federal budget for next year, we rejected his proposal and restored the President’s cuts to housing.  These two actions put us on the road to rebuilding the housing assistance programs which have been decimated over the past six years.

The Financial Services Committee, which has jurisdiction over housing issues, recently passed H.R. 1852, the Expanding American Homeownership Act, which would restore the Federal Housing Administration’s (FHA) role in ensuring critically-needed mortgage loans for low- and middle-income families so that they do not have to turn to predatory and high-priced mortgage loan alternatives like the ones that are costing so many their homes.  The bill would also raise loan limits so that FHA can serve high-cost housing markets, like Chicago’s.  I look forward to voting in favor of this bill when it comes to the House floor. 

Additionally, I voted for H.R. 1427, the Federal Housing Finance Reform Act, when it was considered on the House floor on May 22, 2007.  An important component of this bill is that it creates an affordable housing trust fund.  The trust fund is financed by requiring Fannie Mae and Freddie Mac to contribute 1.2% of their total outstanding mortgages each year.  100% of the funds to be used for the benefit of very low-income families.  In the first year of the fund, millions of dollars will be dedicated for the construction, maintenance and preservation of affordable housing in the hurricane stricken areas of the Gulf Coast.  Billions of dollars will be used to create affordable housing nationwide over the next five years. 

As Chairman Frank said, "How can you be against building new affordable homes for people who need it all over this country, not just in the cities but in the towns and in the suburbs and certainly in the rural communities? We have people who are living in homes that are not fit for humans to live in. We have people still in some places in the deep South that don't have toilets and running water. We have folks who are living in some of the housing and trailers that are falling apart. We need the housing trust fund. We need this reform."

And, we should see this bill signed into law.  It is the result of a deal that was struck between Chairman Frank and the Treasury to ensure stronger oversight of Freddie and Fannie.  Additionally, Senator Dodd, who is in charge of the Senate Banking Committee, which has jurisdiction over the bill, has committed to moving this bill.  This is an exciting time for affordable housing advocates. 

I am thrilled to finally be working with a majority that understands the importance of institutional responses to the lack of affordable housing. 

Not only do we need institutional answer and financial commitments to this probe, we also need you, members of the private sector who are committed to the public good. 

Working together, we can make decisions and choices that will change the very nature of the housing stock that is available, that will ensure that everyone who needs a home can get one.  We can tackle the other issues that contribute to families not being able to find safe and affordable housing – like an irresponsible companies providing inadequate wages.  We are headed in a new direction and I am so glad we are on this journey together.  Thank you.