that's something i think we are a very concerned about cows and organization looking at making sure there is available liquidity for all americans who can responsibly pay for a home mortgage over the years to come. >> i just want to mention one thing, senator, if i could on the last question and i'm going to let the experts talk about the mortgage side of it. but where fannie and freddie are concerned, i want to say that i just don't think they know what to do, and that's why having you and our senate and congress is

so important. i think they really are trying to with the conservatorship and with fhfa are trying to find a long-term profitable arrangement will benefit the taxpayers. i can say that fannie and freddie both on the ground have created environments where they are reaching out to homeowners in a very unique way using counseling organizations setting up the health centers and mortgage health centers and really using people who can interact in a face-to-face basis with the homeowners and influence their behavior and held the servers on the back end to make a determination as to whether they can keep their mortgage or not and also how in the transitioning a lot of people are not going to be a will to stay in their homes. what will happen to these

families, someone has to deal with this and i just want to encourage you and fhfa and the gse is and fha the counseling environment because we are on the ground with these homeowners and home buyers we can convince them and work with them and help them to understand what they should and should not do. >> very good, thank you. >> turning back i think the que are in as currently proposed as overly restricted for two reasons. one, dave said nicely if you look at the credit risk that the higher ltv's or lower down payments, i think there's strong evidence that it makes perfect sense to allow the law were down payment loans that the control for all the other risk factors it's perfectly allowable for the

down payment loans. a second reason, and this goes to the broad reform, if you look at the fhfb data under the current roll i believe only over time on average only about one-third of all mortgage loans are qrm so in the future world where we do something that the gse is a think there would be very restrictive and would mean that the government's role in the mortgage market would be very limited, and i'd think that leads to all kind of problems with respect to the ability for the borrowers to get a 30 year fixed-rate mortgage the risk of the credit to the bar was i think more reasonable goal would be something closer two-thirds of mortgages, and if you adjust to the lt requirements and allow for the lower down payments, you can i think quite reasonably get to about two-thirds of the market and that is a much more reasonable goal not only with respect to what's happening now but long run in the mortgage

market. ischemic just add to what david marks said you may actually go to the website and have the listing of the data and what loans would qualify under the que rma and it is very restrictive. and again, although the well intended legislation dodd-frank in terms of the mortgage lending does represent a clear and present danger to the future of the housing market if we don't do something about it is restrictive. >> i see we have a universal agreement on that and ms. mayer let me ask this and then i will let this panel go, how does the refinance proposal differed from boxer and isakson's legislation? if you could give me some sense of that. >> sure. let me pull up my notes here. there are several things as i commented earlier the mortgage

insurers are a really big issue that i think we need to address. the mortgage instruments industry almost all of the companies are reducing will be. i'm not sure their insurance is as good as we would like to count on as we do now, so we are going to have to deal with a large number of potential folks who have mortgage insurance and i think there are ways to do it but that is going to be one key issue and the warranty is a related issue that gets to the mortgage insurance question. those issues i think are really holding back a lot of people from being able to participate and harp and if we don't address the might of x that we are going to get the take up that we should. i think also trying to take steps to bring down the closing cost is important and we have to take seriously what the cost is to the gse and the balance and i applaud them for having looked at that, but i think one may need to adjust the feel a little bit to help adjust to ensure it

serves as a budget neutral program from the congressional budget office, but i do think there is some chance that a legislative solution would succeed where we may or may not succeed with the administrative one and some of the parties involved are kind of holding up the process. i don't think by the way there's a discussion on the panel the second means. i'm not sure that the recent ordination of the second liens is actually a big problem. i think most of the major lenders will already do what they do and see it in their interest to have a lower band on the first lien so i'm not sure that is the biggest issue i think it is in the other areas. >> one question mr. stevens, while i have you here it's a question related to your tenure as a commission of the federal housing administration today as i understand, fha is required to have a capital reserve ratio of 2%, and for the past two years the fha capital reserve has been

below. so given that number in the critical role in the housing market are you confident it can continue to be a source of funding for the low and moderate income borrowers. >> as you said, senator and other members, that is a critical resource for providing financing particularly to the first-time home buyers and most of the data shows in the first-time home buyer market they are making of the vast majority of those of the funding because of the loan to dalia requirement. another variable i would highlight is fha is one of the few entities in the housing finance system that has operated entirely on its own ability with its own capital. however that was stressed a good job below the threshold of 2% on the capitol reserve ratio and the actual real studies of the last couple of years have expected that the capitol ratio would grow and there would be net receipts of the subsidy as it were on the budget side. but all of that assumed that the

index would show some growth which is the flattening of that index has continued to extend year after year and so despite a variety of measures that have been taken under particularly secretary donovan's administration with raising the mortgage insurance premiums of three times, changing the underwriting requirements putting the scores and please, changing product tones, eliminating the lenders that were not originating responsibly it's still subject to the economics of the housing system and i have no inside information obviously. i left the administration, but i am concerned that just given the housing market and the seasoning of some of these big portfolios like the 2009 portfolio and other potential impacts from the reverse mortgage program that there may be some impact to the capitol reserve ratio, and i would hate to see it go negative, but the good news about the program has operated

under the full faith and credit of the u.s. treasury, but i am certain it will bring extraordinary criticism and focus should adopt - on the study comes out at the end of the fiscal year that ends at the end of september and usually it is early november. so i am anxious to see how that is doing deutsch and all the additional stress that has occurred in the housing market of the last 12 months. >> i'm anxious as well and we will have to make sure to pay attention to the report. >> thank you all for the input and the expertise i appreciate all of the witnesses sharing their insights today. i think the testimony can be very useful in exploring the problems the homeowners facing refinancing restructuring the loans in ways that potential actions that we can take. the record is going to remain open of the hearing for a week from today if any senators wish to submit questions for the

record and what it thinks of the committee, this hearing is adjourned. >> [inaudible conversations]

wrote an article about how the fbi uses informants to get information about potential terrorist plots. we spoke with him on the journal.n >> host: every hour, excuse me, every wednesday i should say on the last hour of the washington journal we are going to be taking a look at a recent magazine spotlight on magaziness and the look at the recent covet stories. today is the mother jonesie magazine on the use of fbi informants to prevent a lonethe wolf attack. trevor who wrote the piece atta. trevor aaronson, let me begin with this part of your story.

"counter-terrorism is the fbi's top priority." why so many informants? how are they being used, and why? guest: the fbi does not believe a coordinated attack is possible. they fear someone who is in a community somewhere in the united states and is inspired to commit some kind of actor terrorism on their own. the fbi believes this is the primary way of identifying them. informants can go into the community centers and talk to people and figure out who these people would ba and then alle fr them the opportunity to move forward -- figure out who these people would be.

host: who are these informants? what do they look like? guest: they could be your neighbors, a store clerk. they run the gamut from the community. in some cases they are criminals. they were caught doing some kind of crime and they are working off the crime by serving as an informant for the fbi. in some cases, they could be immigrants and the fbi used that as a leverage to get them to cooperate. host: you say a network of about 15,000 informants. how does the fbi to determine where to put these informants across the country? guest: the use a program called

domaine management -- they use a program called domain management. it allows the fbi to create demographic maps of the country and divide the country to the use of commercially available data. they are able to say that we believe these communities pose the greatest risk. the use domain management -- they use demesne management to find the people who seem the most willing to commit some act of terrorism. host: give us some examples. guest: in the case of a man in illinois, a man the fbi

identified. the fbi began to realize he was interested in committing some act of terrorism. the fbi sent another informant to him that offered him a place to live. he goes analyst with the informant. over some weeks, they talked about committing some act of terror, that he wanted to assassinate a judge. but he was broke and did not have a car. the informant introduced him to an arms dealer who could provide him with the means to commit this act of terrorism. the arms dealer exchange in trade some speakers to provide him with the grenades. there were able to prosecute him.

an obvious question in a case like that is whether he could have committed that crime were not for the fbi provided him with the means and opportunity. host: that is a question you posed at the beginning of your piece. why do ask if they are leading them? guest: we looked at more than 500 defendants in terrorism prosecution says 9/11. half of them in vault informants. -- half of them involved informants. in the case of 49 defendants, the informant acted in a much larger role. he provided the means and the opportunity for the target of

the investigation to move forward in a terrorist plot that he otherwise would not have the means to do. in some cases the informant provided the actual target and the plan and the dummy bombs that they would use. these are people that evans did not suggest they would have any capacity to commit these crimes. host: what was the outcome of those court cases? guest: and from that has been used in a number of trials and has been unsuccessful -- entrapment has been used in a number of trials. men were economically depressed. an informant offered them $250,000.

the offer to buy the main defendants, james cromitie, a barber shop, seemingly inducing these people to commit this crime. they received 35 years in prison. the defense attorney at talk to explain that meeting the bar of entrapment is difficult in federal court. this is different from what the federal court see as entrapment. entrapment has not been an effective defense. host: 240 of the cases were charged with terrorism. what does that say about our national security laws? guest: the 500 cases we identified we did so in terms of

how terrorism was to find. the first type is someone trying to hijack an airplane or someone trying to use a weapon of mass destruction. that is type one. type two is when someone commits charged with a crime such as money-laundering. but the defendant has some kind of links to international terrorism. in some cases, the department of justice is not able to prove the terrorism case and so they settled for lesser case, like money laundering. the number of cases that pose significant threat to property or people's lives were very few. the public came to mind were 90 -- najibullah zazi and faisal

shahzad. but those types of cases are by far the minority of cases that the government prosecutes. these were not five order cases that in our view were threats to your life or national security. host: you have a map in your story showing cases have been filed in 36 states and in washington, d.c. viewers can get an idea about where these cases are being filed. the majority are along the east coast. the use of informants by the fbi is nothing new. how did the fbi responded to what you found? guest: the explosion of informants that we of seen since 9/11.

there were 5000 informants. today there are 15,000 -- there were 1500 informants. today there are 15,000. the fbi says that the use of informants is necessary to find people who are planning or willing to do some sort of a violent act within the united states. informants are highly effective. the average fbi agent cannot go into a community and build relationships and gather information the same way someone from that community can. the fbi relies on them to gather information. this is critical to the efforts to use these informants to

gather this kind of information. host: how much are these informant being paid? guest: in some cases substantial amounts. shahed hussain was paid $100,000 for one case. in other cases, the informants are motivated by things other than money. sometimes immigration violations are a big reason why people cooperate. shahed hussain was motivated by money and an immigration violation. the fbi has dual leverage over him. host: did you talk to these informants? guest: in some cases the informants do not want to talk. shahed hussain did not

cooperate. another informant in orange county blew the whistle when he alleges he had to spy on the community as well as gather information on other would-be informants. he says the fbi knew there were abusing first amendment rights. sending informants into mosques without a clear reason that these were up to some kind of criminal activity. host: our first phone call from tacoma, washington. caller: i want to discuss the current technological landscape in a slightly different light.

i want to argue that the benefits outweigh the cost in this current landscape. there is the convenience factor alone. you want to an up-to-date market report, keep tabs on stocks, sign up for paypal. not just convenience alone. i think this is disruptive. digital facebook was developed in a dorm by to make checks -- in a dorm room by two naked chicks? caller: it appears to me that your guest is proposing is that those who wish to protect us in this country should be

denied the very access to those people who are trying to do us harm. these people who are angry or frustrated in life, these are the ones who are being sought out by those who wish to do us harm. i think it's a good thing to be able to identify these weak spots. guest: that is true that people caught in these are disgruntled and have their own problems. that was a theme in the sting operations. these people tend to be poor and desperate and in many cases there were recent converts to islam. to move them along, to see that something is in the careekoran.

i'm not proposing that the fbi investigate terrorism and not the best to get muslim communities when a police they are harboring a terrorists -- when they believe they are harboring a terrorist. the people involved would have had the capacity to commit the crimes were not for the fbi providing the means to do so. somebody can be angry to say they bought a building but few people have the means to do so. the fbi found people who said they were angry but lacked those means of the fbi provided those made to commit the crime. host: who else worked on the peace? -- piece? guest: "mother jones" and the university at berkeley.

caller: we get the legal aspects and get this people on the page to try to stay legal and everything like that. we got enough democrats and republicans. the surprise to courts -- they're all corrupt. we got to give back to the basics and make people start abiding by the law. host: let me ask you about the court system and what you found when these sting operations took place. how much time are some of these folks servant who were lured into action by an fbi informant? guest: the average tends to be about 35 years in a sting

operation. in some cases the fbi spends a year or more with the target and moves them along through the plot. we also found that oftentimes missing.ople go some things are not recorded and so no one knows what was said. that is a critical period for defense attorneys to try to prove entrapment. no one knows what was said during the early investigations. these informants are not the most credible of people. host: what did you find out? guest: in some cases the fbi says they cannot record because it is not safe to. when an informant is going through a committee looking for

targets, it doesn't make a lot of sense to record every single conversation. at some point it becomes clear that this person is a target and still recordings are not made. that raises a significant question of why the fbi chooses not to record these conversations. in many cases this is a matter of convenience for the fbi. it makes the job easier not to record the conversations. there was one case in baltimore where a man was involved in a sting operation where he was plotting with an fbi informant to bomb a military recruiting station. there was another sting operation going on in portland, oregon.

that made national news for some reason. it was a well-publicized case. the man in baltimore hears about this case and things he is in a sting operation, too, and begins to back out of the plot. the informant ranges a meeting to bring him back into the plot . in that case, the meeting was not recorded due to a recording malfunction. as a result, antonio martinez did move forward with a plot and has been indicted with using a weapon of mass destruction. caller: greta -- host: john, are you there? kim is a democrat in new york. caller: i think this program is

nothing more than a replacement for the cointelpro programs that were in place in the 1970's. you'll find there are thousands of law-abiding americans that are being surveiled by the fbi. people who love committed no crimes -- who have committed no crimes, committing no crimes at all. host: trevor aaronson. guest: that is true. there have been abuses that have been documented. a year ago, the inspector general's office cannot with a reported showed the fbi was targeting political activists on the left that it did not reason to believe were involved in criminal activity.

host: the caller mentioned a term of entrapment. she broad up cointelpro -- she brought up cointelpro. host: how has it changed since then? guest: the significant difference between cointelpro an will we see today is this is less of a counter intelligence program. cointelpro was involved in disruption of organizations. at the time of the communist party in the united states, 80% of its membership. the fbi was supporting the communist party as a way of getting into the communist party

and disrupting it from inside. a host of organizations on both sides of the political spectrum. what the fbi says they are trying to prevent the next terrorist attack. they are less interested in disrupting organizations and more interested in disrupting significant threats to our safety. someone willing to use it weapon of mass destruction of some sort. this is basically the rules the fbi uses for its undercover operations. it is currently going through a revision, which has been criticized by a group from the left. it allows for the fbi to go through your trash to look for

information on you. they could find some embarrassing information on you and use that against you, to the to cooperate as an informant. that is not to say that that hasn't happened in the past. it gives a set of rules for how the fbi can behave and how we can handle informants and the ways in which it can't recruit informants. we have never seen the full version. it has been redacted. host: bill from fort lauderdale. caller: i wanted to ask you if you are familiar with are familiar"shock doctrine," and how that relates with what she is mentioned in her books in the bigger picture. guest: i have not read that

book. if you could explain her theory to me. host: are you still there? caller: she is creating brushstrokes about interrogation and going back to milton friedman's economic picture that we kind of protected around the world. i'm in the early parts of the book, relating to 9/11. 973 was the coup in chile and how the cia was involved in that -- 1973. i just was wondering -- she has written quite a bit about -- host: what are some of the ethical situations that the fbi informants, and come into?

trevor? guest: as far as the legal use of informants, there isn't a problem with illegal use. whether theoning tactics that the fbi is using it are properly or ethical. the recruitment of informants within the muslim community is difficult for the fbi. there are many people who choose to spy on their communities. the fbi is using tactics that are legal but questionable. the idea of using immigration against someone is very new as a means of recruiting informants. other means they use are finding someone who has some sort of

extramarital affair. the fbi can go to them and say we know you're going through an extramarital affair. corporate with us and will not tell your wife -- quapaw right with us and we will not tell your wife. host: do you think it'll be higher? guest: absolutely. informants are a critical part on how the fbi operates. we looked at these 500 cases. the number of sting operations -- we've seen an increase since obama took office. the has been an increase in informant-led sting operations. i think it is fair to say the use of informants will continue and increase. the fbi has made a number of

measures to accommodate this. they have a program that assigns agents to help maintain the credibility of informants. the have invested millions of dollars in a computer system that tracks informants. they may need an informant that speaks is certain language. these are all investors that the fbi has made. ost: you say that agents' annual performance are based in part on their recruiting efforts. guest: that is right. agents for effective at recruiting are assigned to that

task full time or will go into communities and recruit informants. the get them registered and it will then bill the not too informants working drug cases or counter terrorism case or white- collar cases. host: mary is a republican in california. caller: good morning. i have a question for trevor. it seems to me that when informants are looking in the community for people that have a propensity for committing a crime, if an informant with a passed on that individual -- to see if he can develop the tendency -- what he assumed that later on, a year, five

years, the gentleman or the woman would improve and he would -- i find it somewhat childish that just because he is calling it entrapment that people whether a propensity for this -- [inaudible] someone who would want to protect this country would be trying to do to seek out people who would do us harm. little suspect.suspec i don't know much about "mother jones." motivation for bringing this article. is "mother jones" doing harm to

this country with informants that are helping us. strongarm -- 15,000 -- host: i think we got your point . guest: the fbi says when someone says i would like to blow up a building or lay grenades in a shopping mall, will we do have us do -- what would you have us do? i think that is something we can empathize with. if you come across someone who says he wants to commit this crime, you do not want to say this guy does not have the capacity and will mature so let's ignore him and you find

six months later he did commit this crime. nobody wants to be that fbi agent. we're asking that in these cases, even though someone says they want to commit a crime, you need the capacity and the means to commit that crime. the fbi is providing the means. they can provide the means for the person to commit the crime and then prosecute them with the theory that in a couple of years, maybe someone would have provided them with a bomb. whenever found an example of that, were some was willing to commit this type of crime and the fbi passed on him and then somehow summoned connected to al qaeda or international terror provided him with the means to do that. i don't think it is easy for people to get access to these types of weapons.

as far as whether we're doing any sort of danger, one of the purposes of journalism is to look at how the government behaves and questioned that. we're using interviews with fbi agents and available court records. every informant with identified in this investigation was named in a court record or named in an affidavit. we're not releasing any confidential material. whether we're doing any harm, i don't think so. host: did you receive any requests from the fbi for clarification? guest: no. we tried to articulate their view. i interviewed dozens of fbi agents as part of this investigation.

some are quoted throughout the paiece. what the policies are behind the sting operations and that was incredibly important to us. host: brine from chicago -- brian from chicago. caller: you said the contract that defense has not been successful in most of these cases. i wonder if you could say something about the liberty city 7, one of the first of these cases several years ago, where a young man living in a housing project in miami was set up in a sting operation in an individual posing as a representative of al qaeda who

administered in al qaeda oath of allegiance to him. these were young men who had a steady group. they had a security patrol in the project. my understanding is that all but one of those seven were exonerated. host: trevor aaronson? guest: these are people who lived in a poor section of miami and a fault a religion blended elements of christianity and judaism. they have a committee control the was like the guardian angels. there were seven people indicted. they drop the charges against one person. they get three trials before they gained convictions on five of the six.

five are currently in prison. that was an example of the use of the day informant with a checkered past. he had lied on a polygraph test, which should have excluded him. he was then assigned to enter into this group posing as an al qaeda operative. the primary evidence was he had a camera to case the office of the fbi as part of a plot to bomb that office. they had a recording of him administering to al qaeda at the members of this group, and that was enough to convict them. these are men who trouble getting up in the morning let alone commit some act of terrorism.

the fbi through this informant with the means to move forward with this plot that involved bombing the sears tower in chicago and the miami office of the fbi. they were able to get convictions on five of the seven. the seventh one was deported to haiti based on evidence from the case. host: our informants ever trained -- are informants ever trained? guest: they go through role- playing and they're standing policies and manuals and the law to make sure they're not violent constitutional rights. in informs, there's not any kind of informants school where they send them to.

they basically instruct them. e, gosay, here's your wir talk to them. they're supposed to have specific instructions as to what they are supposed to do in the undercover operation as lost record the meetings and record as many of the meetings as possible. but there's no training for this. that is why there is a lot of questions about whether these people are being entrapped or whether the actions of the informants are overly aggressive. host: "mother jones" encourages you to dig deeper. go to motherjones.com. you can watch surveillance video. second-guess the feds.

decide how much of a threat. c which cases were tried in your state -- see which cases were tried your state. host: motherjones.com for more. lou is next. good morning. what is your question or comments? caller: the judgment uses the term wmd quite loosely. we invaded by iraq and wmd refer to as nukes. do you define wmd.

guest: i agree the definition is very loose. this can be something like use of a car bomb. the fbi has provided the target with a van or a car that they have lead the target to believe has explosives in it. in one case, a man drove the van in the crotch of a downtown skyscraper and walked away, across the street, and dialed a soulful that he believed would activate the bomb and destroy the building. for purposes of federal prosecution, the definition is not limited to what you might think like a chemical bomb or a chemical weapon or some kind of nuclear material. it can be something as simple as a car bomb.

caller: good morning. i have three things i would like to comment on. this project is well needed. to defend the fbi, there was a caller earlier who said they were wrongfully arresting an accusing people. the ku klux klan and mlk and things like that. the fbi has grown along with the country. when i was in college, by will then go it into the stages and going to the trials and tribulations. the fbi represents the problems

we have today. back then it represented those problems. it wasn't always justice. there were racial issues. we have grown since then. i would like to know how these would-be terrorists are prosecuted when they are found to be a would-be terrorist. are they 20 years, 30 years? a life sentence? guest: they have statutory minimums for sentencing. in many of these cases, 35 years is the statutory minimum. if the person was found guilty, the judge has to send them to at least 35 years. in most of these cases, the judges are sentencing to the minimum.

in one case, the judge said she was skeptical of the case and believe the definition of terrorism has been extended to an enormous and extenextent. the target said he wanted to bomb a synagogue. the fbi informant made that possible. yearsfinding that 35 tends to be the sentence. host: 240 were charged with terrorism. 192 of those cases was providing material support to terrorists. 36 were charged with funding terrorists.

an independent caller from texas. caller: good morning. i am a jamaican student and the states. the, you made about the challenges and using entrapment as a defense in court piqued my interest. i remember one case. he was tried in the u.s. he carried the drugs and so forth. everyone thought this was entrapment. they lost the case. i can appreciate the lehmann's perception of law -- the perception.erceptioman's guest: first of all, winning a

case built on a contract requires the jury to agree that the person has been entrapped. that requires sympathy. the jury has to be sympathetic to the suspect. defense attorneys find that -- this does not instill that sympathy. in the terrorism cases. these people will say hateful things about americans wanted to do violence to the united states. things that when you hear, it makes you not want to like the person. that affects the ability of the jury to find entrapment. was the person predisposed to committing the crime were not for the fbi providing the means to do so?

that is what the real question is. people say they want to commit these crimes, but they lack the means to commit these crimes. if the person says he wants to do, then the department of justice is able to meet that predisposition bar. mitt romney cases -- entrapment exclusives is not a to terrorism. it is difficult to win an entrapment defense. you have to admit you committed the crime. so you're losing sympathy with the jury. host: trevor aaronson is a contributing writer to "mother

jones" magazine. you can find the store on our web site, c-span.org, as well as motherjones.org. trevor aaronson, spoke to students at liberty university in lynchburg virginia. liberty university was founded in 1971 by jerry falwell and is

the nation's largest christian university. governor perry is introduced by university chancellor jerry falwell jr. this is 30 minutes. .. minutes. >> this bring my friend and i were discussing the upcoming elections by e-mail. david is a texan -- . [laughter] david is a texan and a political junkie and a community organizer. he successfully organize hundreds of events from pastors and discuss national issues. he once worked for my father organizing pastors policy briefings all over the country. i told dave how much i admired his governor or having the guts to say things that one exactly politically correct like, when governor perry handed the texas -- from the union and how i would love to have him speak at liberty university.

we talked about how it was too bad he was not running for president in 2012. a few weeks later i learned their vice president for executive projects johnny moore and david laing had collaborated to make the governors visit here possible. david flew all night to be here with us today so welcome david laing, few would stand up wherever he is. [applause] we have many visitors and guests today here in the center and watching by television so i want to give them a little bit of the history of liberty university. my father founded this university in 1971 and it was a monumental task to start university from scratch in lynchburg virginia 1971. as a result we went through decades of struggle, financial and otherwise, but now liberty we find it in turning a new ewe.

earlier this year we began celebrating our 40th anniversary. at the same time it became apparent to us that we really were entering a new era of our history and so many ways. in recent years the university has achieved all that our founders thought that would take another generation to attain. our student body is more than doubled since 2007 and the last academic year over 72,000 students were enrolled. that number will exceed 93,000 this year with more than 80,000 studying on line and 12,500 on-campus. the campuses have tripled inside in the past decade and the only university with a year-round artificial ski slope. not that has anything to do with education but it is fun. liberty is the largest university in virginia, the eight largest of all colleges in the united states and the world's largest christian university. [applause]

this is fitting for liberty because from the beginning division was not to create another bible school but instead to become free evangelical christians with notre dame and brigham young university czar for their respective faiths. division was to provide academic excellence, world-class facilities ncaa division i athletics, all the programs and student activities that would be available at any major university but to provide it all in the distinctively christian environment with a faculty and support staff committed to biblical trends and morality. the goal here has always been not only to teach students how to make a living but also how to live. to dream for liberty university is noble because it really has never been accomplished in quite the same way anywhere else. we are thankful not to watch that goal in that dream unfold before our very eyes. liberty's net assets have increased by over 600% since 2007, allowing us to continue to

provide over $100 million a year in scholarships and an institutional aid for students keeping quality christian education affordable for as many as possible. as a result of these financial vans men's we are also transforming our campus over the next few years, over a dozen of the oldest buildings will be replaced and in a couple of years of campus will look nothing like it does today. in the last few weeks forbes and u.s. news have ranked the best colleges in the united states and liberty has ranking has increased over previous years. last november liberty entered the capital markets for the first time by completing its first public bond issue percolate in the liberty was a brand-new credit on wall street liberty became one of only 78 universities in the nation to receive a the credit rating of aa or higher from standard & poor's. liberty's double a rating is one notch below the united states of america's recently lower rating

of aa plus, but standard & poor's gave liberty a positive outlook and they gave president obama and the united states of american negative outlook so we are proud of. [applause] today's speaker has an a+ rating but it is from the national rifle association. [applause] he said recently in south carolina he believes in gun control. he said he believes that you should hold a gun with both hands when firing it. [applause] governor rick perry participated in a debate earlier this week with seven other republican candidates for the nomination for president. by the end of this month five of those candidates along with his surrogates and by then candidate obama, we invited him to speak to me, five of those candidates

will appear here at liberty by the end of this month over the last two years. your privilege to hear first-hand from so many of our nations leaders of this critical juncture in our history. rick perry is a fifth generation texan whose extraordinary life is let him from the tenant farm in the rolling plains of west axis to the governor's office of our nation's second-largest state. terry grew up in this mall can unity of creek texas and attended a small school. he was a boy scout and later became an eagle scout. he was among the first generations in his family to attend college at texas a&m university in 1968 and be attained a degree in animal science. i learned yesterday that. i have much more in common than i realized. i learned he was a prankster in college and at one at that one s most famous pranks was wanted played -- place live chickens in the closet of an upperclassman during christmas break. when i was a student at liberty

i was well-known for releasing live chickens in a crowded cafeteria. i spent several months washing dishes in the kitchen because of that, but we have more in common than i realize, governor. perry after college was commissioned as an offering in the -- officer in the united states air force where he flew a c-130, flew a c-130 tactical aircraft in destinations around the world productive being honorably discharged in 1977 with the rank of captain perry returned home to the family farm where he grew cotton, wheat and he married his high school sweetheart and governor perry and his wife anita have two children griffin in sydney, ages 28 and 25. perry's life has been one of public service. he spent two decades in elected office, although while remaining a reputation as a staunch physical -- fiscal and social conservatives. c. as control spending and taxes and balance its budget and has

the distinction of being the only governor to cut state general revenue spending since world war ii. he instituted historic lawsuit reform, creating a loser pays tort law that resulted in a lowering of medical malpractice premiums for doctors in texas by about 21% and historic tax cut for property and a tax cut for small businesses with less than perry has been numbered among the most pro-life governors in american history. [applause] on august 132011, governor perry announces candidacy for the presidency of the united states. that was months after we invited him here to speak and we are honored to have you here today, governor perry. 31 years ago this fall as a liberty freshman i sat

mesmerized as a conservative governor from a large state gathering about his vision for america. at that time america was mired in an economic malaise that seem to be waning in its standing in the world, reaching government control and double digit interest rates and inflation. as young college students we feared as many of you do now that our nations future was in jeopardy. ronald reagan was that governor. he was elected president -- . [applause] he was elected president soon@ thereafter and over the following eight years, he returned america to prominence in prosperity and became one of the greatest presidents in the history of the country. i have a feeling today history is about to repeat itself. join me in welcoming to the stage iv the first time, 47th

much. honor to be here. chairman falwell thank you and it is a distinct honor to be on this campus that your father founded 40 years ago. when you think about -- think of him 40 years ago as it walked across this barren mountain and the magnitude of the campus that has risen from that soil at that particular point in time. it is truly a testament, testament to his vision, for he saw the possibilities of what could be built here, university that would educate the masses and the university with plus 60,000 students a year when you include those that are on line and mr. chancellor i want to applaud you and your family of supporters that are on this campus for continuing that

vision, for shepherding this modern university into the future and for reserving those unique christian origins and. [applause] david blaine thank you for coming out here today. actually david is what we call a -- he lives in california but we claim him in texas so thank you rather for coming out here. we have been involved in some great battles together and standing up for the values that are important for this country. one of those, and i just want to mention this, a powerful message that we brought pastors together across the state of texas, sharing with them the importance that they need to stand in the pulpit every day and defend the value, the christian values. america is going to be guided by some set of values. the question is going to be,

whose values? david lane and i and i would suggest most of the people in this audience believe it is those christian values this country was based upon. [applause] so i got my webster's out, and i just looked up the worá convocations so i would make sure i kind of understood what i was walking into here. it refers to this large formal assembly of people, which i agree 10,000 people in one spot is a large formal assembly, but i was most intrigued by the definition in the living dictionary. that is kind of the cousin of the living bible i guess. and it is a term of art used on

freshman, where terrance conned them into thinking a vacation i4 what@< is going to get them outf thea$ú0 house. i learned early on that college wasn't a parent sponsored vacation as the chancellor shared with you. my unit was squadron six and they made sure that we understood at texas a&m that being a freshman in the corps cadets was not going to be one big fraternity party. they shave their heads and they put on khaki uniforms and they stood us up against the wall for inspection each morning by our superior officers. they would look around for those minor offenses that we might have, whether it was a scratch on a belt akel are

insufficiently shined shoes and they told us when they found which was on a regular basis to drop down and give them 72 which of course they meant 72 push-ups in honor of our graduating class of 1972. and they wore us out so that not a single member of my freshman class managed to stay awake in class for the first few weeks, which i was hearing from my parents was kind of the start of why my grades were what they were. you know managing to balance that between being a cadet in being a student, that life in the military while trying to keep a focus on the variety of subjects that would prepare me for life after the military, it wasn't always easy. quite frankly i struggled with it. i fully admit that.

the second semester of my sophomore year that dean -- i actually went to college to be a veterinarian, and the dean of the veterinary school advised me that i actually wanted to be in animal science major, and that i really didn't want to be a veterinarian and i told them a oh no sir that was my hearts content and what i always wanted to do. being a veterinarian i worked every summer to work for that veterinarian and he said son i'm looking at your transcript. he want to be in animal science major. so, four semesters of organic chemistry made a pilot out of me. you see many go to college to discover what they want to be. others to discover who they are. it is a process of discovery at the heart of the higher education mission. for it, is the basis of one of

the main pillars of many universities which is university research. universities exist to impart knowledge, to discover new knowledge. they are the reasons we have classrooms and laboratories. something is greater that is going on in the midst of this academic process. we began here -- hearing more about ourselves. we began hearing more about ourselves than even those around us. we began learning about ourselves. awareness of the world around us is an important part of personal growth and it often occurs in the diverse setting of a college campus. now i grew up as the chancellor shared with you, in a small west texas community. it was called paint creek, and

with the exception of one trip in 1964 when i left to go to the national boy scout jamboree, i saw philadelphia, new york and washington d.c.. other than that one trip, that was the only world that i knew, that little place called paint creek. a little school out in the middle of this county, 60 miles from the closest place that had a post office. across the market road was a methodist church in a baptist church. your choice. our teachers lived on-campus housing. the entire school building had grades one through 12. i'm very proud to stand before you today and tell you i graduated in the top 10 in my graduating class.

[applause] of 13. [applause] oh my goodness. when i wasn't -- when i wasn't going to church or to school, you usually found me obviously on the farm helping my mom and dad on the dry line cotton farm and for me, i didn't worry about the latest fashions. my mother sewed most of my clothes. i didn't know that we weren't wealthy in a material sense. i knew that we were rich in a lot of things that really mattered in a spiritual way.

it was texas a&m that broaden that perspective for me as much as i should say as much as an all-male military institution could do in the late 60s and early 70s. it wasn't until i flew around the world as a pilot in the united states air force that i learned about a world that is incredibly more diverse and complex than paint creek or college station in 1972. for the first time in my life, i met oppressed people who didn't take freedom for granted because it didn't exist where they lived. i saw a rulers treat people like subjects who thought very little about the basic conditions or quality of life of those people that they ruled over. i learned what a grand privilege it is to be an american. as students of this most unique university, whose very name

speaks to the desire of every human soul, liberty, i hope you were flecked on the blessings it is to live in america. our founding fathers were the first among the nations to declare our rights are endowed by our creator and that among them are life and liberty and the pursuit of happiness come and dwell liberty may be the gift of god, its preservation requires the sacrifice of man. i am mindful today that we are free because generations of americans have been brave. there is no greater force for freedom than the men and women of the united united states mil. [applause]

47,092 of our fellow americans have given the ultimate sacrifice in iraq. another 2711 have done the same in afghanistan. that is more than 7500 families, who sent their loved ones off, wave them goodbye, hugged and kissed them for the last time and never saw them again. you are the generation that grew up in the shadow of 9/11. many of you were children that day that those towers and the pentagon were struck. you have grown up and you know the presence of evil is real and this fallen world. our response cannot be to

isolate ourselves within our borders but to engage our allies in the quest to build these enduring alliances around the globe for freedom and we must do what ronald reagan did at the apex of the cold war, which is to speak past the oppressors and the illegitimate rulers and directly to their people. the ones who live behind the walls of oppression while yearning to be free. of the arab spring began when a tunisian street vendor set himself on fire over the oppression of the authorities. and regardless of tribe or tongue, people desire to be free. america must continue to be the world's leading abdicate for freedom, speaking the truth to adversaries and dictators in keeping with our democratic

values. you are blessed to live in freedom, but as the scripture says, to whom much is given, much is expected in return. when i returned home after college in my four and a half years as a pilot in the united states air force, i wasn't one of those people who knew at the age of 12 that he wanted to be a doctor or a lawyer or for that matter a governor or a president. i spent many a night pondering my purpose, talking to god, wondering what to do with this one life among the billions that were on the planet. what i learned as i wrestled with god is this, i didn't have to have all the answers.

that they would be revealed to me in due time. and that i needed to trust him. my faith journey is not the story of someone who turned to god because i wanted to. it was because i had nowhere else to turn. i was 27. i had been an officer in the united states air force commanding a fairly substantial piece of sophisticated equipment telling men and women what to do, but i was lost, spiritually and emotionally. and i didn't know how to fix it. we each have a desire to live lives of happiness and fulfillment and -- while this

world tells of happiness comes from what we can get. i believe it comes from what we can give. our blessings are never fully realized until we give them away and we share them with others. as spiritual beings we are meant to live in relationship with our creator and with one another and the happiest moment moments i have ever experienced are when i am and communion with god and in community with others. whenever we have for ourselves and to the problems of our people the very act in itself has a way of making our problems seem substantially smaller. small acts of love and devotion remind us we are part of something vigor than ourselves. and they teach us the greatest rewards in life, when we are

focused on the well-being of others. do not fret if you do not know your place in the world yet, or what you want to be one day. simply trust. trust that god would not have put you here unless he had a unique plan for your life. he who knows the number of drops in the ocean, who counts the sands in the desert, he knows you by name. .. 0@ moses was a hotheaded murderer who is afraid to speak in public.

god used him to lead the israelites to freedom. david was an adulterer and a worker. god said that he was a man after his own heart. he brought us his son through the linen which of his transgression.sgres paul was a sipersecutor christio , but god used him to spread the gospel to the arms of the universe. god uses broken people to reach a broken world. the mistakes of yesterday say nothing about the possibilitiesf of tomorrow. do not live in fear. living faith.th don't fear the judgment ofuncert others or thehe uncertainty of e future. don't also your voice because

you are young. t paul wrote to timothy and saidea do not be ashamed of your use. you have the right, like everyok americ yan, to speak her mind.os you have the right to insist onl change, to tell the people in power you will not have yourou inheritance that are your future work age.your voi your voice matters.our user. tell country is your country as well. it to a bunch of washington politicians to tell you how to live your life. [applause] [applause] this is your future that we are debating today. don't be silent. when you use your voice. let your words be characterized

by grace and humility and truth and whenever you choose to do with the live, know that the thought and prayer some of my generation go with you, as does the future of this country. god bless you. through you may god continue to bless this great country that we love. thank you. [applause] [applause] >> president obama continues to talk about his jobs program at north carolina state university in raleigh. the white house said the presidents jobs legislation will be on capitol hill on monday. [cheers and applause]

>> hello, north carolina. [cheers and applause] thank you. [cheers and applause] thank you. thank you. thank you. [cheers and applause] [cheers and applause] thank you. [cheers and applause] thank you so much. how's it going, raleigh? [cheers and applause] it is good to be back at tennessee.

good to have all these rules in my wolfpack. [cheers and applause] i just hope none of the students here are skipping class on account of me. [cheers and applause] your professor to see you on tv, you know? i want to think so many people who helped set this up, but a couple of folks in particular were to acknowledge. first a welcome guest in the governor of the great state of north carolina, bev perdue within the house. [cheers and applause] bev has been working tirelessly on behalf of this date is help

to guide so much of the emergency efforts taking place after the hurricane, so we are grateful to her. and we also have one of the finest public servants i know come the former governor of the great date of birth or later, jim hunt is in the house. [cheers and applause] i want to thank chancellor william wood said, chancellor north carolina state university. as well as thomas roth, president of north carolina's date university. [cheers and applause] and i want to thank the power sound of the south. [cheers and applause] thank you. everybody can sit down if you

want. you all have seats. that's fine. [cheers and applause] this is the hard-core right here. [cheers and applause] i want to thank erv for the introduction. as you mentioned, i just visited his small business, which is called weststar procession, down the road in a packed. like weststar sad, but so many in the triangle do so well. they hire smart people, give them the best technology, create something of lasting value. and that's how this country built a strong and growing economy and a strong, expanding middle class.

fats are his grief. and that's what we've got to get back to you. and that's why came to raleigh here today. [cheers and applause] i came to talk about how america can get back to a place where we are creating good mono class jobs again. jobs that pay well, judge set off offer some security. jobs available for the young people who will be graduating from north carolina state. [cheers and applause] because i know that the students are thinking about. and we can do that if we can finally get washington to act. if we can get folks to stop worrying so much about their jobs and start worrying a little more about your jobs. [cheers and applause]

now, on monday i think congress has a piece of legislation called the american jobs act. it is a plan that does two things. it puts more people back to work and if it's my money back in the pockets of working americans. [cheers and applause] everything in this proposal, everything in this legislation, everything in the american jobs that is the kind of proposal that in the past at least has been supported by democrats and republicans. everything in it will be paid for. anybody wants to know more about it coming you can read it on whitehouse.gov. i know you guys don't have enough to read.

and every single one of you can help make this delivery out to you congress to pass this though. pass this jobs bill. [cheers and applause] now, let me tell you why you need to pass this bill. tell them to pass this bill so we can know the people who create most of the new jobs in this country and that small business owners like erv. because while corporate profits have come marine back, smaller companies have it. so what this jobs bill does is it cuts taxes for small businesses that hire new employees. it cuts taxes for small businesses pay raise this reset their current employees. [cheers and applause] because small businesses payroll taxes in half and that would

help 170,000 small-business owners in north carolina alone. [cheers and applause] and if they choose to make the investments next year, it comes right up those investments. for small business owners who have contracts to the federal government, we're going to do what not. today ordered all federal agencies to make sure the small business owners get paid a lot faster than they do now. in many cases, it will be twice as fast and that puts more money in their pockets quicker, which means they can hire folks quicker. now, we've got to tell congress to do their part. you know come you've got republicans in congress that like to talk about how were in favor of america's job creators. you know? if you're in favor of america's jobs creator, and this is your

bill. this will actually help american job creators. we need to pass this jobs bill right away. [cheers and applause] but that's not all this bill does. pass this jobs bill and companies to get a tax credits for hiring americans veterans. [cheers and applause] we ask these men and women to leave their careers, leave their families, risk their lives to fight for us, to fight for our freedoms. the last thing they should have to do is fight for a job when they come home. [cheers and applause] that's why congress needs to pass this bill. [cheers and applause] pass this bill because it will

help hundreds of thousands of young people find summer jobs next year. [cheers and applause] it's also got a $4000 tax credit for companies that how your anybody who's spent more than six months looking for a job. [cheers and applause] and extend unemployment insurance, which means it is providing hope and support for folks who are out there that want to work, but hasn't found a job yet. that also puts more money into the economy because they spent that money in small businesses and large businesses and that means they have more customers than light of our people. but we also say if you're collecting unemployment insurance, go get connected to temporary work as a way to keep their skills sharp while you're looking for a permanent job. [cheers and applause] pass this bill and radio north carolina, about 19,000 construction workers on the job.

[applause] a commonsense idea. there are a lot of roads and bridges that need fixed. there's a lot of work that needs to be done in schools and airports. all these things are native repair. in north carolina alone are 153 structurally deficient bridges that need to be repaired. four of them are near here, on or around the belt line. why would we wait to act until another bridge falls? [cheers and applause] all across north carolina, all across the country their schools with low seating, ventilation support can make students sick.

how can we expect our kids to do their best in places like that? and the answer is we can't. this is america. [cheers and applause] i don't know about you. i don't know about you, but i don't want any of our young people studying and broken down schools. i want our kids to study in the best schools. [cheers and applause] i don't want the newest airports are the fastest rail roads being built in china. i want them being built right here in the united states of america. [cheers and applause] there are construction projects like this all across the country just waiting to get started. their are millions of unemployed

construction workers looking for work. my question is, what is congress waiting for? there's work to be done. there's workers ready to do it. let's pass this jobs bill right away and get it done. let's go. [cheers and applause] pass this jobs bill and they'll be fighting to save the jobs of the 13,000 north carolina teachers, cops and firefighters. [cheers and applause] i hope -- i hope some of the young people here plan to go into teaching, plan to go into education. but here's the challenge. we've got incredibly talented young people who want to teach, but what places like south korea are acting teachers to prepare their kids for the global economy, we are laying off teachers left and right. you see if your north carolina.

budget cuts for superintendence all over the state to make layoffs they don't want to make. it's unfair to our kids. it undermines their future, our future. it has to stop. if we want our kids ready for college, ready for careers in the 21st century, tell congress to pass the american jobs that give the teachers back in the classroom where they belong. [cheers and applause] yes, we can. but to pass this thing, but we need congress to help us do it. now, if we pass this bill, the typical working family in north carolina will get a $1300 tax cut next year. [cheers and applause]

$1300 that would've been taken taken from your paycheck. it will now go into your pocket. that will help local businesses know that they've got coverage. but if congress doesn't act, if congress refuses to pass this bill, middle-class families will get hit with a tax increase at the worst possible time. we can't let that happen. as i pointed out last thursday, there are folks in congress who have been fighting pretty hard to keep tax breaks for the wealthiest americans. you need to tell them they need to fight just as hard to help middle-class families. [cheers and applause] that's the american jobs act. it will lead to new jobs for young people, construction workers, teachers, veterans, for the unemployed.

we'll provide tax relief for every worker in every small business in america. it will not add to the deficit. it will be paid for. we'll pay for this plan. we'll pay down our debt. we will do it following the same principles that every family follows. we'll make sure the government lives within its means of a couple we can't afford to pay for what we really need. [cheers and applause] and that means for going to cut some things we would make if we had racked up so much debt over the last decade, but it does mean we'll keep on doing the things that matter, like making sure the you guys who are here are coming up with all of that debt. that's going to make sure to increase pell grants. that's funny make sure to increase student loans, affordability, to make sure you guys get the education you deserve. [cheers and applause] but in order to do that, we've

got to make sure everybody pays their fair share, including the wealthiest americans and the biggest corporations. [cheers and applause] also north carolina, this comes down to what our priorities are. do you want to keep tax loopholes for oil companies, or do you want to renovate for schools and we build more roads and bridges so construction workers have jobs again? [cheers and applause] t. want to keep tax breaks for multimillionaires and billionaires? or do you want to cut taxes for small business owners and middle-class families? [cheers and applause] it would be nice if we could do it all, but we can't. we've got to make choices. that's a governing is about. we know what's right. we know what we have to do to create jobs right now.

and create jobs in the future. we know if we want businesses to start here and stay here and higher here, we have to out build cannot educate and out innovate every country on earth. we've got to give workers the skills for new jobs here and we've got to give our young people a chance to earn a college education. [cheers and applause] and we've got to follow transcendent example. we need to stay but three words made in north carolina, made in raleigh. we need to build an economy that last. in raleigh, that starts now. >> i love you, barack. >> i love you back. [cheers and applause]

but if you love me, if you love me if that me pass this bill. [cheers and applause] if you love me, you've got to help me pass this bill. [cheers and applause] it starts with your help. democrats and republicans have supported every kind of proposal that's in the american jobs act in the past. we've got to tell them, support it now. that's where you come in. already come you got some republicans in washington who said that some -- some of this may have to wait until the next election. they said maybe we can kick our problems down the road rather than work together right now. some of them were even quoted as saying, even if they agree with

some of the things in this bill that they don't want to pass it because it would give me a win. give me a win? give me a break. [cheers and applause] that's exactly why folks are fed up with washington. this isn't about me. this is about giving me a win. this isn't about giving democrats or republicans a win. it's not about positioning for the election. it's about giving the american people a win. that is what it's about. [cheers and applause] it's about giving small business

owners and entrepreneurs a win. it's about giving students a win. it's about giving working families a win. it's about giving all of us a win. i get fed up with that kind of game playing and we've been seeing that for too long. too long. we are in a national seed. we've been grappling with the cray says for three years and instead of getting folks to rise up above partisanship in a spirit that says we are all in this together, we have folks that are purposefully divided, purposely, singing just in terms of how does this play out in terms of this election?

now that's not all republicans. there's some republicans get it. i was in ohio yesterday in republican governor doesn't agree with me on a lot of stuff, but he agreed it's a good idea to come back for the middle-class. [cheers and applause] he says this is not a time for partisanship. it's a time to figure out a way which we can get is doing in this country. he's absolutely right. a faction in washington may be content to wait until the next election into anything. i've got news. the next election is 14 months away and the american people don't have the luxury to wait that long. [cheers and applause] there a whole bunch of students here who will have graduated by then and he looking for job. they can't wait that long. there's a lot of folks living paycheck to paycheck, day-to-day. they can't wait that long. they need action and they need

action now. so raleigh, you need to build leaders -- you need leaders who will put country before party. [cheers and applause] and your jobs in your life and your well-being and your future above everything else. so for those of you who did get plans today, i've got a homework assignment for you. that's right. i am asking all of you, not just here, not just you and raleigh, but anyone watching, anyone listening, anyone following in mind. neg to lift your voice. mccurry. call, e-mail, tweet, facebook, they said, write a letter. one is the last time he did that? to your congress person at the time for partisanship and politics is over. now it's not the time for it.

the time for gridlock in games is over. the time for action is now. [cheers and applause] i just want to say -- i just want to make sure everyone understands their homework assignment. tell them. tell them that if you want to create jobs, pass this bill. if you like construction workers back on the worksite, pass this bill. if you want teachers back in the classroom, pass this jobs bill. fewer tax cuts for middle-class families and small business owners, pass this jobs bill. if you're a veteran sharon the opportunity to defend it, pass this bill. now is the time to act. we are not people who just watch things happening. we make things happen. we are americans.

we are tougher than the hand we have been dealt. we are bigger than the politics we've been putting up with. we are paid trips and pioneers and innovators and which were endorsed their individual efforts, but also three commitment to one another. we have built an economy that is the engine and envy of the world. we're not going to stop now. the time for hindering him is over. the time for moping around -- we've got to kick off our bedroom slippers and put on our marching shoes. we've got to get to work. [cheers and applause] there are people who -- there may be people whose refrain is no we can't, but i believe yes we can. we are people who run our destiny and we will run it once more. so let's seize the moment, get to work and show the world once again why the united states of america is the greatest country on earth. thank you, north carolina!

thank you, rally. god bless the united states of america. [cheers and applause] [cheers and applause] [cheers and applause] [cheers and applause] [cheers and applause] [cheers and applause] [cheers and applause] ♪ ♪

♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪

♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪

♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪

♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ >> president obama given the job speech and what airline earlier. house speaker john potter was

delivers his job speech and right to economic washington, which c-span will be covering. ♪ ♪ ..

including remarks from former secretary of state condoleezza rice. she's introduced by the former president. this is about 15 minutes. >> and former u.s. secretary of state, dr. condoleezza rice. [applause] with >> thank you. thanks for coming and good morning. i have the distinct honor of introducing a dear friend, a new musician, a goal for what, an elegant woman who ably served america as our secretary of state, the finest -- i better be careful in this -- [laughter] one of the great secretaries of state ever, condoleezza

understands, i think we all understand that in order to shield human suffering america must lead. that means the congress must lead, that means corporate america must lead, that means ngos must lead, that means the individuals must lead and that is what this conference is saying. we understand the obligations and the call and somebody understands that as well as anybody is our dear friend, condoleezza rice. [applause] >> thank you her. thank you with a very much. it's a pleasure to join you hear for this very important

affirmation of the importance of the global health crisis that we face and america's role in it. i would like to think first and foremost president bush and mrs. laura bush especially the first lady was an amazing partner in our diplomacy from everything from advocating for people for their freedom to the gulf crisis. thank you very much for your guidance and for your role. [applause] the u.s. aid administrator and the ambassador, fenty for your continued leadership on these issues. i would like to very much welcome to the united states, madam janet of rwanda and that is a country that has come through extraordinary difficulties and is still standing and progressing. thank you have very much. [applause]

to my friend, jim glassman, who is heading the bush institute at smu in dallas, where i have the pleasure of serving as the chairman of the advisory board, thank you for your leadership, jim. this global health summit is very important, and it's important that we meet here in washington. it's important because the united states of america has always been at its best in international affairs, always been at its best in the world in fact always been most successful in the world when it's all use lead. in fact, the view that no man, woman or child should have to live in tyranny, and poverty or disease is a moral case. it is a case that we who are fortunate enough to live on the right side of history defied

must make for those still trapped in tierneyad poverty and disease and despair. s indeed a moral case but i want to say to you that it is also a practical case. it's a practical case because places where governments and leaders will not or cannot provide for their people are ultimately dangerous places. we've just come through the tenth anniversary of september september 11th, and we learned the hard way on that bright september day that the danger to us, the greatest danger came not from the marching armies of large states, but from a stateless group of terrorist networks that plotted and planned in the world's fifth poorest country, afghanistan and

then launched a devastating attack probably costing about $300,000. we learned the hard way that where there is hopelessness and despair there is danger. where there are unstable states, there is danger. where people cannot exercise their right to to their voice and to their well-being there is danger. we learned of that terrible day that our interests and values are linked inextricably, and we cannot allow poverty and disease and tierney to continue to exist in this world were weak here in america will pay a price for it. that is the national security case for our compassion.

indeed, in the national security strategy of 200 to, we talked about the three d's common defense, democracy and development. but they have to go together, step by step to build a more secure and prosperous world because we're in despair leaders, we are not faced. now, that practical case of course is undergirded by the moral case. the proposition that every life is precious, that every individual has potential and that any person left without the access to education, to health care and to freedom is a world that we as americans cannot tolerate. now, as secretary of state, i tell every day with the world as it is. and i knew that i had to work in the world as it is.

but the great thing about america is we've always been able to imagine and work for the world as it ought to be, not just the world as it is. that shows in our history, a history of which germans of a certain age remember food packets, the american relief effort that was literally the difference between life and death for so many german citizens. where american soldiers are still remembered for handing out candy to children. that picture emerges we're victims of earthquakes and the victims of tsunami is remember american relief boxes that stood between despair and hope emblazoned with an american flag.

now, it's thanks to the leadership of president and mrs. bush and eight years of the bush administration, and now the commitment of the obama administration to those same goals, aids orphans and africa sing america the beautiful. mr. president, you may remember that we went to ugonda, and i will never forget that moment when literally these aids orphans saying one of our great national hymns. it was a moment that affirmed what it means to intervene in the lives of people who are otherwise only known hopelessness. in saudi arabia and from what the middle east, thanks to the work of the first lady now continue to in the current circumstances women are no longer ashamed to talk about a breast cancer diagnosis.

i know firsthand the surge of breast cancer. when i was 15-years-old i will never forget the day at st. mary's academy when my father was just a little late picking me up from school. and in the day before cell phones i got a very worried. i didn't know what to think. when he finally got to me she said that he'd taken my mother to the doctor and she had been diagnosed with probably having breast cancer. fortunately, my mother left for 15 years beyond that diagnosis. but i cannot imagine what it would have been light to be unable to express our concern for and despair to pray our prayers for the disease to leave my mother and spare my mother. and yet, and places in the middle east that has been the fate women. now thanks to programs by the united states of america, we are

encouraging them to speak about the disease to get treatment to be home again. throughout africa and other parts of the developing world, but let's not protect children from the totally preventable disease of malaria caused just by a mosquito bite. the united states of america is doing good things. in the same tradition of those german soldiers in germany who gave candy to a child and the boxes between life and death of that bear the american flag. during my time in government, i had many extraordinary experiences. but perhaps the ones i will remember the most are those where you see the faces of those children and those people who have been helped but in my

memory, too the prophecies and decisions that led us to make the difference, sitting in the oval office with president bush on that last day we were trying to determine to launch pepfar, the president during all of the arguments about the budgets and with the american people to commit to $15 billion, the single largest program buy any country, listening to questions about whether or not in those days whether or not it was good enough to be able to extend life if you couldn't yet deliver secure to read and again my mother came to mind. because since she lived that 15 years and longer thinks to good treatment here in the united states she got to see her 15-year-old daughter become a 30-year-old woman, a professor of stamford, a person who would

serve in government, she got to see me grow up and that meant a world of difference to her and me to ring [applause] so i said to the president on that day you may not be the will to extend people but extending their lives matters and we have extended through pepfar many lives. mothers and fathers who will be there for their children. [applause] i remember the decisions about the children's hospital, the hospital that opened in iraq despite its struggle, a hospital that is dedicated to the treatment of children with cancer and advanced private partnership that brings hope to the children of that region and

the clinics throughout afghanistan particularly women's clinics that finally give help to those that were so despised by the taliban that they were executed for challenging the regime, both women executed in the stadium that had been built by the u.n. to play soccer. it's a very tough for older out there for anyone but it's a really tough little if you're poor, if you're living in tierney and if you don't have access to health care. this is work that must continue. it must continue in the private sector to the corporations, through non-governmental the institutions, to the angels of mercy of those relief organizations could do extraordinary work in the hardest places. i'm so grateful that i've had a

chance to get to know barbara bush's -- barbara bush, you're daughter's work for the global health corporation. i got to meet with some of barbara's some of the kids around the world who are going to be involved in helping to bring health care around the world and it's great because it means a younger generation is now devoted to it committed to this cause. the private sector has a lot to do. but the united states government also has a lot to do. this work has to continue. we face challenges of joblessness with an education system that's not quite working with policies that are not quite working we face deficits and debt and uncertainty about our economic future. but let us never forget that our

own security is linked to the well-being of others. and let us never forget, too, that out of chaos comes danger. the united states of america must lead because it is important that the most compassionate and generous and the freest country on the face of the earth will also be the most powerful. we don't have an option to retire to take a sabbatical from leadership in the international community and in the world. if we do, one of two things will happen. there will be chaos because without leadership, there will be chaos in the international community, and that is dangerous. but it's quite possible that if we don't lead, somebody else will and perhaps it will be someone who does not share our values of compassion, the rights

of the individual and freedom and to give someone leaves, doesn't share our values, the balance of power that saves this freedom so carefully constructed over the last year's the favor that has brought millions out of the tyranny of communism, millions out of the terrie in this debate could tyrian and that favors free will be in danger and i can assure you the balance of power that they have is replaced by a balance of power that favors something else. not only the value is what our interests will be at risk. the united states of america has no choice but to lead. thank you for this gathering that recognizes not only the

moral case but the practical case for involvement and making the lives better of those less fortunate than ourselves. thank you very much. [applause]

>> and what is that? >> it's basically while it's pry much proven just reasically whis open for debate it is pretty much proven just recently traded it allows the right to bear arms to individuals. it's the right to keep and bear arms. >> do you think it is safe?

>> it's a weaker target, so i feel with a handgun sure i would be able to defend myself lot easier. >> if you're talking about a robbery of a person [inaudible] >> that's one of the winners from last year's studentcam competition and you can see all of the winning videos online at studentcam.org. this year is underway. the topic the constitution and you. get more information at studentcam.org. now a senate panel looks at whether to expand the existing housing refinance program for people who are having trouble making payments on their mortgages. the head of the mortgage bankers association david stevens is among those testifying at this one hour and 45 minute hearing.

the senate banking subcommittee on housing is chaired by senator bob menendez on new jersey. >> trillion to give a little time to my colleagues who are going to be on the first panel and i sure they are on their way. i will start off with our opening statements and then hopefully by the end they will have arrived and we will recognize them. we have a very robust agenda here and want to hear from all the expertise that was assembled and try to move it along. this evening on the subcommittee on housing transportation community development will focus on those the state of the housing market as well as the ideas for refinancing and restructuring mortgage loans. this is a very important hearing not only for those concerned because the housing market is what incurred to the quakers the economy and we need to fix the market to the broader economy

moving to create jobs as well as the challenge of the present homeowners as well as keeping the aspirations alive of the future homeowners. on a regular basis i hear from the new jersey homeowners who have trouble with their home loans whether it is being denied the opportunity to refinance at today's lower interest rates because they are under water and our banks not willing to do the reduction when they have hit hard times? it's hard to be optimistic about economic growth if the housing market remains in its present status. for most families in america, their home is their single largest asset and their source of appreciated wealth. so the hearing today is divided into three panels. the first panel consists of the two distinguished senate colleagues to discuss their bill which i'm proud to co-sponsor the helping responsible homeowners act s. 170 that will

help them underwater to refinance more easily. the second panel will discuss the state of housing market and specifically home sales, home prices consumer demand, short sales and foreclosures, rent and rental availability and whether these problems continue to be nationwide or scope were becoming more regionalized if and ideas to refinance or restructure existing home loans including shared appreciation, mortgage modifications, refinancing existing loans and to get in touch of historic low interest rates and the barriers to doing so and allowing the short refinance program to be used on the gse inventory. it's my hope to in this hearing and a subsequent one that we will follow up on her next week that we can develop a housing policy and promote initiative that gets our housing market moving again. half with no other member i see wishing to make an opening statement let me call upon my to

distinguished colleagues for their statements, senator boxer of california, senator isaacson of georgia and i am happy to welcome them. they both have strong records and housing policy, and they will talk abut a bill they've introduced to jump-start the market and help millions of homeowners refinance their mortgages. with that, senator boxer. >> thank you so much mr. chairman. i'm proud to be here with senator isakson. he has a long profession which was before he came here he was in the real-estate business. so i'm very proud that he is on this bill and just to say this before i read any of my statements, our bill is based on a very simple premise. if you have paid your mortgage all along through all these

difficult times, and it is have a high interest rate and you've never missed a payment as the value of your home went down and down you find yourself under water, mr. chairman and stick the seven or 6% rate you should be reworded with a program like this and what we say is you should have a chance if you want to refinance at the current level. but this is such a win-win. number one, fannie and freddie, because these would all be home mortgages backed by fannie and freddie, they actually make money on this. as we look at the cbo analysis about $100 million because a would stop many people from defaulting right away. second, if you are the homeowner you are going to have thousands of dollars in your pocket because you refinanced. i remember the years when bill

clinton was president one of the reasons there was such the prosperity there is because the tremendous number of refinancing. it's the best way to get money into our economy quickly. city essentially this is what the bill does. if you have a loan backed by fannie and freddie, and if you have a high interest rate and you would like to take it is vintage of these low rates then you should have a chance to do that and not be disqualified because you are under water and have the ridiculous fees they have in place now waived so you can to get and digit of these rates. we call it the helping responsible homeowners act. we are heartened that the president mentioned something like this in his address to the congress. we are heartened that you are on our bill. we are thrilled with that. that it was endorsed by mark

zandi that is going to testify later at the analytics and by william gross, managing director and post see audio of pintco. it's been cursed by the national association of realtors and the law center, the national association of mortgage brokers and many others. so it is a win-win for fannie and freddie. they can do this without our legislation and senator isakson and irc into the please, if they're listening somewhere out there, please do this. this will save you money. this will save fannie and freddie $100 million. this will help, by the way, cbo says up to 2 million homeowners but when they make that estimate, that's when interest rates were higher and we believe we are looking at perhaps three

to 4 million homeowners, 5 million are actually closed 5 million are eligible for this. so that's our story and we are sticking to it and we are strong on this. the fhfa we hope will follow on some of the statements they've been making recently but this is going to help our economy and keep people in their homes and i beg you let's get out in front of this crisis. we are a diamond lead and a dollar short. let's get in front of these folks. these are the folks that have never missed a payment. what's help them stay in your homes. thank you very much. >> thank you, senator boxer. senator isaacson? >> thank you pittard i would ask them as consent my statement be submitted for the record. >> thank you very much for calling this appropriate hearing on the housing industry, and i'm

particularly pleased to join senator boxer of california in this particular piece of legislation which addresses a new phenomena that has taken place in the most protected housing recession america has seen since the great depression. that caused strategic for closure. there are the 10,900,000 american homeowners under water right now today as estimated that 10,900,000 are making payments on mortgages that the payoff is more than the house is worth. a new phenomena is something to cause the foreclosure where we shall look of the future of real-estate, looking at the values and walking away from their homes by a foreclosed house on the street thinking they will be better off. this has led the marketplace worse and continued to contribute to the downward pressure on the home values to read of the 10,900,000 people who are under water come up to 2 million of them and as senator

boxer stated might be more since rates have gone down can make a strategic decision instead of walking away from us underwater to refinance the pre-existing balance of the current lower rates put more money in their pockets and make the maintenance of the mortgage better for them in the long run when the housing recovers. that's always does. it is not a boost to the market on the standpoint of creating sales, but it is a depression on more foreclosures and it makes it less likely people will use strategic for closure as a mechanism to deal with our financial situation and it should help to stabilize home values and the long run and short run. i commend senator boxer on her leadership she originated this thought and i've been proud to work with her and i think it's something fannie and freddie ought to do but i'm not interested in the private offer ship but they will do it by tomorrow and it does make good sense on the cbo score is outstanding. let me address a second subject if i might dealing with housing. the second panel was terrific and i am not going to be able to

stay for all of it but i want to commend you in particular mr. richard smith and ivy zelman who's going to testify. they are to of the best authorities that i know of and has about 25% market share, the residential market in the united states does else in the consortium of companies that deal with residential brokerage. ivy zelman come i attended her seminars and i know people she consults with. she is as good as anybody i've ever heard and both of them will make a significant contribution. second, i appreciate your leadership on the limit situation which is confronting us by the end of this month. we don't need to do things that make things worse in the housing market. we need to do things that make it better. what center boxer is proposing along with me and my help to her on this is good for a wedding of strategic for pleasures but keeping the loan limits and expending on that to the end of this month is important to maintain the housing market that we do have. it's not the time for the government to construct

availability of mortgage capital for people who are qualified to buy houses because of a limitation on loan limits and i commend you on your leadership on that and look forward to answering any questions you or senator merkley may have. >> let me thank you for your initiative and insights and i hope our friends over of the agency's here and don't wait for the legislative action but we will if we have to come and i appreciate your observation, senator isakson and try to have you with me on the efforts of ensuring that the amendments are retained before the end of the i think critical part of the element we have to do in the market side so i appreciate your long-term leadership in this field and joining with me and others in trying to preserve this. i have no questions for either of you but senator merkley were? >> thank you mr. chairman. i want to express my appreciation for the work that you've done on this helping

homeowners stay in their homes, decreasing the number of foreclosures is absolutely essential. i would ask a short question with regards to the score might understanding is this would save money for the gse is but because the fed holds a number of the securities it might diminished in value with a lower interest rates but there is a cost the estimate or can either one of you kind of just clarify what the cbo was pointing to? >> how much will the bill cost? fannie and freddie dena as we said before from the changes in the bill wyatt to 100 million because the savings realized by reduction and stifel and foreclosure would outweigh any lost revenue due to the elimination of the risk-based feet and the reduced portfolio

income. because of large holdings, fannie and freddie mortgage-backed securities, the fed would experienced reduced investment income of 2.6 billion or four-point over ten years. so this means there is a net cost. so although this means there is a net cost, the federal government shouldn't be profiting. this is my feeling from borrowing, borrowers paying higher interest rates than they should have to. the fact the fed holds the situation and create a perverse incentive for the government to keep them trapped in higher cost loans so that's the answer. >> that's excellent and i appreciate the work that you have done on this. >> you are dealing with what we refer to businesses inside baseball you've got the conservatorship fannie mac and fannie mae and buying and paying

if you lower the rate or the yield on a mortgage you will lower the value of that instrument. but if on the other hand you are stabilizing the loan that would otherwise have been defaulted on on any form of dynamic scoring this is a net gain and the government there is no question about it. >> what is the way of walking away on your obligation? >> that's a great question as me tell you what the consequences are you wouldn't be able to borrow money for seven years at best and richard smith can address that subject but there would be my guess if you walk away from your mortgage in default, your credit support those in the tank and every interest rate you pay on credit cards, car finance and student loan, whatever else is going to go up, not down. you're not going to be put to the home mortgage for seven years if that soon and the destruction it does to your financial statement and credibility as a homeowner goes away so the cost is far greater

to the country for somebody to default on the loan and have it for closed than ever would be to stay in the house. >> absolutely. >> thanks to the committee and thank you to both for joining us. let me ask our next panel to come up to the table and i will introduce them as to come up and be seated. let me welcome my fellow new jersey and richard smith whose president and ceo of the corporation, a global provider of frivolous deed and a relocation service which is headquartered in pursuit of the new jersey. mr. smith oversees the reality franchise group consisting of many well-known companies such as better homes and gardens, central 21, coldwell banker and the reality is her among others and the committee looks forward to his testimony today. mark is the director of the financial regulation of the cato institute and has worked there

since 2009. before that he was the senior member of the professional staff of this committee and in a position he worked on issues relating to housing mortgage finance economics, banking and insurance for the ranking member shall be. he's appeared before the committee many times and we thank him for his presence this afternoon as well. ivy zelman as the ceo of zelman and associates and has over 19 years of experience in the housing and related industries. zelman and associates which she found in 2007 delivers research on the housing market and has been repeatedly recognized for its expertise. prior to that she worked as the credit sweeps and put of eight years as a managing your trip and we are pleased to have you today to discuss the estate of the housing market. mr. smith, welcome and we look forward to your testimony. i would ask you each to synthesize your testimony about five minutes or so. we are going to include your

full statements for the record and we look forward to having a discussion with you, mr. smith. >> good morning, chairman menendez and the subcommittee and think for the introductions. to the current state of housing we will make a bold statement that its existing sales have stabilized on a unit basis in the range of 4.9 to 5.1 million units on an annual basis. however, the average price will continue to move in the range of down 4% to the up 2%. they should see slight improvement in the year-over-year growth for the new homes and price we think is also going to move in that range. but more on the positive side from the flat to up about 2%. we think the high end of the first week of the majority of the market, the middle market and move up as notably absent. they are typically paying cash first-time buyers are financing in less than 20% down.

it's important to note the 25 to 27% of all homeowners have little to no equity which is a point you made earlier in the chairman's opening comments. ranking is certainly topic in the media these days so it will run its course however it's certainly more cost effective today and most in the united states where it is increasing at the rate of five to 7% annually and new york city is an example 10% year over year. but is holding back housing? ha the unemployment, the foreclosed inventory overhang and consumer confidence and failed or marginally successful government intervention programs. we are going to recommend some remedies to solve the jobs stating that the unemployment number that concerns us in housing is not the 9.1 or the 9.2 cheetos bureau of labor statistics which is currently 16.2 underemployed or temporary employees do not buy homes. for closure is a major issue and

is depressing prices nationally of the most foreclosures occur in the ten states predominantly in the five it is nevertheless an overhang that needs to be addressed. the continued delay in the foreclosure process is harmful to the housing. the sooner the foreclosures are permitted to continue and accelerate, the sooner we will see some balance in the average sales price and invest the equity in the homes owned by taxpayers. we are very much in favor of the efforts to mitigate or prevent foreclosure triet we are strong proponents of the short sale process. we like in particular of the debt for equity program as it's been recommended by a number of people were both the lender and homeowners share the equity of their home and we also like a so ability to really think in the current environment some loans can be assumed and have an assumable characteristics so a new buyer could be in the position to assume the low interest rates that we enjoy

today. we are strongly in favor of the refinance programs and we think that again is an effort to mitigate and prevent foreclosures said the expansion of h.a.r.p. or any program that makes it possible for the homeowners to refinance at the current rate of four, for .5% are very much in favor of. we also are very much in favor of not permitting these gse limits to expire in october. we think that is damaging to a very fragile market. we are in favor of german and senator isaacson's effort to extend those to read this is not a time to run the risk of upsetting again a very fragile market and the national flood insurance program needs to be extended that's going to put about 500,000 homes at risk we would encourage that strongly and i will be remiss not mentioning for the benefit of this committee and others who might be watching substantial concerns we've had with respect to dodd-frank in particular the qualified residential mortgage

component which we think is particularly punitive to the low to moderate income homebuyers. the reform is not something that we feel should be entertained in this environment. the market is fragile and uncertain and the reform can certainly be handled at a later date. it's working well now. we know there are fundamental reasons for the focus on the gse reform. that will, it's just not appropriate in this environment. we appreciate the opportunity to speak to the issues. we know we will have an opportunity to elaborate on these items when we go to the panel discussion, and i want to thank the chairman for his leadership and again, we are available as a resource in any manner you think is appropriate. >> thank you very much. you have actually time left of your five minutes. >> i did my best. >> mr. calabria? >> i will try to be within that. i want to start by saying there's a fair amount of

consensus in terms of what's going on and i live close but i'm not going to talk about the things we agree upon but all the attention were some of did a disagreements and tensions are that is not to undermine the agreement i do want to emphasize. job is incredibly important and a the point the labor market is driving the housing market more than obviously there is a feedback between the two. and i also wanted to emphasize the point mr. smith made about the foreclosure process really does need to be fixed and spread out otherwise we are continuing to have the huge overhang out there and i think it's important cy want to touch on a couple facts. the first of which is despite the price declines in many years in many press it is still a relative to income. nationally we've seen the median prices fall to three times median income and that is an average, so overall, it looks like housing is back to the affordability that there should be that if we look at san

francisco you're still looking at median house price is being eight times the income so it's important to keep in mind we are looking at a lot of markets. there's lots of markets still on affordable by any stretch of the imagination and there is markets where new-home prices still remain above correction cost in the long run in the market prices are going to fall up until the 2003 that was actually the trend. i think as we have seen of our markets that reassert itself prices will continue to fall in those markets. i think it's also worth noting the total existing home sales in 20 timberlake 5% the 2007 level but if you look at the new home sales the were 60% below the 2007 level and i think the primary reason for the difference is that existing home prices have fallen considerably more and to me as an economist to the listed markets work to lift prices fall volumes will and i think we not need to be concerned about the price declines. i've recognize there are the

cost economies but keeping them above the market clearing levels. it's also worth noting that for the first six months of this your existing home sales were 12% above the last six months of last year and that is when the seasonally adjusted basis. sevier seen these declines you've actually seen the states start to go up and i want to bring up we are at the bottom, not in top of sales. >> we were too slowly climbing out. why would emphasize we are years away from anything that looks like the activity of 2005, a 2006, so i think it is to be a slow climb in getting there. there's also a fair amount of consensus of units about 2 million in pent-up demand. once you get to the people are coughing and people still feel comfortable with this demand will start to come back but we are raised away from it and i think that bars are still

concerned and they want to see price declines. my recommendation would be we need to get to the point they can go no further and that are absolutely risk on the downside but again i think the risk of overshooting on the up side out with the risk of overshooting on the downside. i would also emphasize i look at housing is one of life's basic necessities so i don't see it becoming cheaper as a bad thing so in many markets in the san francisco of the world i would like to see the house prices decline further because i think the would open up opportunities for middle class families to buy houses that they are priced out of buying today. i am also concerned the interaction between the unemployment and the mortgage policies we have to republic to use the example of if carpenter in the tampa umar on likely to find a job any time in the next couple of years. we need to encourage you, assist you, help you move to someplace like austin where they might be creating jobs. we've left people in a -- as a

member statistics that show the discrepancies and i want to emphasize, you know, to me what is illustrative of for instance san jose is a tight market where the oversight is a loose market so even within the same state, you can hear the housing markets were different and we need to target our policies in a way that keep that in mind but let me talk a very briefly about the rental market which is we started to see some minor declines, but we also still have about 4 million vacant rental units though this down to about 500 from last year. again, these are the tightness to mirror the overall housing market, but let me emphasize i think the point we overlook when we talk about the housing market which are those without homes and while there are a variety of statistics that aren't as good as we have on the other side of the market, the indication of homelessness increased over last year, last two years increased particularly among family homelessness and increase particularly in suburban areas

so i do think the rethinking of the assistance programs to see if the assist people in these new areas instead of the traditional focus on the cities as something that merits attention. >> thank you. >> good afternoon and think you mr. chairman and senator merkley for having me here today to talk about the state of the u.s. housing market. as we enter the six years of the worst recession in housing since the depression many have suggested we become a renting a nation and the american dream of common ownership is dead. i do not believe this to be the case. we believe -- i should say i believe our great nation is still forming households supported by population growth, and we expect population growth and how simple missions will translate into nearly triple the activity from today's depressed levels. with that said, there's clearly been a disconnect between the longer-term demographics and the near term reality. there are two and a half million excess vacancies that need to be

observed before the return to the mall building activity levels can be justified. this number as the potential to move even higher given the pipeline of the 4.1 million mortgages either in the foreclosure process or are 90 days delinquent. i believe the most powerful tool washington can provide is a rental program to dispose of these vacant and future foreclosures in the orderly manner. the most efficient and cost-effective way to achieve this goal is for the gse is to expand the financing options to investors don't purchase properties at low price and assume the family strategy to read over the past five years, single-family rental has been the fastest growing asset class. from 2005 to 2010, single-family rentals or about 21% versus just 4%, just 44% increase versus the total housing units and the hardest-hit market such as nevada, florida and arizona, single-family rentals grew at approximately 48% with apartment

units basically flat or unchanged. facilitating an orderly transfer of these units should also be a favorable impact on pricing. giving modest improvement in the economy record levels of affordability and reduction in inventory the first seven months of 2011 the home price deflation has diminished. in such prices of traditional homes excluding foreclosures only declined 1% year-over-year as of july according to carl gotcha press the total decline is approximately 5% suggesting double-digit deflationary for distressed sales which currently account for approximately one-third of transactions to read the second piece is demand which remains at all-time lows by a south activity. despite the affordability we have historical interest rates this hasn't been enough to drive more home buyers of the sidelines. nevertheless, according to the university of michigan consumer sentiment survey 72% of respondents believe now is a good time to buy a home.

furthermore in the recent survey by our firm of the 1500 renters' conducted in five markets showed that 67% of those surveyed want to become homeowners the next five years. with 82% of the ranchers and the key 25 to 34 age group expressing the desire to buy a home so people want to purchase a home and think now is a good time to do so why aren't they doing it? the answer i believe is to fold. first is the conditions of the sumers balance sheets which are still living with high levels of debt and negative equity. indicative of these consumers and renters survey show that just one-third of respondents were able to come up with 3.5% down payment necessary to purchase a medium priced from using the fha financing. the second issue was on certainty which i believe is a nationwide problem, negatively impacting the home sits and prices given the volatility created by the prior tax credits, fear of job loss and mixed messages sent by the government around future housing

policy. however regional differences are significant with major dichotomies dependent on the levels of unemployment, distrust and even turkoman - equivocal delinquencies and vacancies. nationally one of the most significant problems of the home buyers relates to the stringent underwriting criteria magnified by the strict overlays imposed by banks due to the unknown risks related to cutbacks or avert future government burdens. as a result many qualified umpires are being turned away creating a business environment that would encourage the banks to remove the overlays that are above and beyond the tightened lending criteria would be the catalyst for the activity. i also believe given the pending nature of the housing market, allowing the gse and the fha limit to roll back to lower levels of october 1st is a significant mistake and should be put off until the market is on more solid footing. similarly, any legislation related to eliminating or reducing the mortgage interest deduction should be carefully crafted and only considered with

the longer term implementation in mind. in closing, housing has historically been a significant driver of the recessions and recoveries. currently residential investment represents just 2.2% of gdp. representing an all-time drop and well below the long-term media of the 4.4%. suggesting that the industry has been a significant headway on economic growth. housing recovery is essential to the overall success of the broad economic recovery and without it the economy will continue to languish. thank you for the opportunity to testify today. >> thank you all. you've covered hearings and will continue to do more in the question and answer round and then we will see how our time goes. if i were to ask you you have a magic wand, and outside the issue of jobs which clearly the president was focused on came to the congress, leave out his

vision and i would hope all of us are focused on that as a number one job before the country getting people to work. obviously in an economy that 70% gdp is the consumer demand without a job there is no income without the job and i think we can collectively agree on that. the next question is setting that aside for the moment as something that we have a plan, there are different views how well as we might do that. what specifically on the housing front if you had one or two initiatives that could come from the government side to incentivize moving this marketplace for what would you say mr. smith? >> well, we would begin with a comment i made regarding the foreclosure problem. it's a major overhang in. it is intact impacting values across the board will only in the ten states i mentioned but

nationally. we need to accelerate that behind us and get those nonperforming assets back into the marketplace as performing assets that generate true economic value. and it is inevitable they are going to be foreclosed at any point to the accelerator get behind us and let it be correct. i agree that the market will correct itself. the news that will help is this overhang needs to be lifted permanently and the size of that -- can you quantify that? >> the size of the foreclosure problem depending on who you were listening to there's about 1.6 to 1.7 million homes i think the latest estimate is about 1.7 million that some stage of foreclosure that need to be moved through the pipeline that's probably a low estimate. i think that me and others may be of the view that its higher them that because not only those who are in for pleasure but those that are likely to be in for closer to read you will see estimates as low as 1.3 and as high as 7 million units.

the good news is that inventory is shrinking a bit to get the banks are hesitant to proceed on the foreclosure or the attorney general and a number of other regulatory reasons, but it is definitely a major overhang. in fact in many of our conversations with buyers and sellers principally with buyers they're generally of the few more often than not certainly and those ten states that if they just wait that foreclosure inventory will be released bringing prices down even lower, creating a better opportunities so they're literally sitting on the sidelines, well-prepared, perfectly capable of proceeding with the transaction, but they are waiting. and that is taking a lot of wind of the market. they will get even a much lower price, yes. that is a common problem. your answer to the question is dealing with the overhang issue? >> i don't know how we can move beyond that. i think that fundamentally must be put behind us to respect

mr. calabria? >> i want to echo that and ring true that this may be to push off the numbers a little bit my estimate from the mortgage bankers association says seven of 1.6 million loans that are at least 90 days late. of that, my own estimate is you were looking at about between four to 500,000 that are over two years late. so, those you can start with a pretty good assumption that someone that hasn't been able to make a payment for two years is very, very unlikely to become current again. i would say i think you need a triage process. we need to decide who is sable, who can we help, who can we not? and we have to be realistic about it because this is a triage and we will not be able to save everybody. so for that segment in which the owner hasn't paid for in a long time we need to streamline the process and get them back into the inventory quickly and let the prices that would be my number one. my number two might be echoed by

ivy. we need to find a way to get the success of inventory by fannie country become fha back into the market either the investors, some of it does make sense to me as a rental. for instance i go back to my carpenter in argument i would rather help pay that rent in austin where he can find a job than to encourage him to stay in the house that he is in because he's not going to have to pay the mortgage so we do need to change the dynamics and helping people adjust. so those are my to but i will also emphasize it's important to keep in mind first it should be doing no harm. we need some proposals to make sure we are sending the right signal to the by year's end of the investors and all that does need to be kept in mind. >> first i would say that we need to instill confidence in the class and the way you instill confidence is mitigate deflationary. how do you mitigate deletion? you have them back in balance and how do you get it back in

balance? you have the program the government has the ability to implement. that program is appropriate given the consumer's balance sheets are week for them to purchase homes today. yet households need doing. single-family dwelling today by far outpaced the magnitude of the population living in 50 plus unit apartment buildings and these people that have been displaced if they were in a single-family rental with three kids and two cars and a dog they are moving across the street to the same family rentals there will be the orderly distribution by doing so we would mitigate the new dwelling on the market but would put pressure on prices and we would stabilize the prices which would take the consumer sitting on the sidelines because he's afraid actually allow him to be back in the market. that's my first response. my second response would be today consumers that are qualified are being turned away because we have now taken underwriting to an extreme. the stringent underwriting is important and needs to be sound

but because of a black-and-white underwriting process as well as incremental credit overlays, strong potential home buyers with down payments exceeding 30, 40% are being turned away in some cases because of a situation where they are self-employed for example. we've made it difficult for the borrowers who have credit scores that might be 639 it's possible to 640 which by the way fha will ensure a mortgage of 580 or higher but underwriters will not unless it is 640 or higher sweet to give this pendulum and have swung too far to bring in the qualified buyers so i think to fold all of which would bring back the confidence and the confidence we think is the biggest impediment to the recovery in the market but first eliminate through getting rid of the supply. >> what about the rental idea? >> with the chairman's permission, two points. there's the father and the marketplace that the foreclosed