Secretary of Housing and Urban Development Shaun Donovan Previews Obama's Housing Speech

Shaun Donovan, United States Secretary of Housing and Urban Development, appeared on CNBC's Squawk Box Tuesday morning to give an insider's preview on President Obama's upcoming speech on housing in Arizona today. Despite a resurgence in the housing market, Donovan said that a step Obama has in mind is to help families save money by refinancing their mortgages, which will hopefully lead to stronger communities in hard-hit areas, and more growth, if all goes according to plan. According to Donovan, another major point of the speech will highlight the idea of streamlining mortgage requirements to give qualified families an easier time getting homes, thus simplifying the overall application process. "The other thing he's going to say is 'Look, we can't ever go back to what made this crisis happen in this country. We have to build a housing finance system for the future that protects tax payers, that puts private capital first, but we also have to make sure that we have a system that provides safe, simple, 30-year mortgages, so that there's also access', because as he's been saying 'We need to have a better bargain for the middle class'," said Donovan. "And home ownerships is one of the key building blocks to help families get in the middle class, and stay in the middle class." Part of that is replacing the system that we had in place by winding down Fannie Mae and Freddie Mac until a functioning replacement can be completely implemented. The Federal Housing Administration, Fannie Mae, and Freddie Mac currently make up over 90 percent of the mortgage market. Their portfolios can be limited, increasing year-over-year, "dropping them by 15 percent," Donovan said. The aim is to "bring private capital in front of the taxpayers on new loans that they're making today," even for those with existing loans in place. He said that they could also bring down the loan limits for the FHA, Fannie, and Freddie to decrease exposure and direct lending to "the people that need it most." Related: Benzinga Market Primer: Tuesday, August 6: Futures Flat Ahead Of Fed Speak "Not everybody is going to be able to get a mortgage or buy a home. We need to recognize that as a country, but we can also take specific steps that, even while we're ending Fannie Mae and Freddie Mac, make mortgage lending less expensive: New technology, simplifying regulations, making sure that there's a simple, three-page form for the homeowner," said Donovan. Donovan did note that mortgage rates will slightly increase by a little upfront, but that in exchange, families get a safe and secure investment that builds them equity. "That's something that is a good bargain," Donovan said.