New HUD Chief Stokes Expectations to Stabilize Housing
From HOUSINGFINANCE.COM, By Jerry Ascierto: Lower expectations and then overdeliver on them. It may be wise advice, but the new Secretary of Housing and Urban Development, Shaun Donovan, ain’t havin’ none of it.
Making it clear that he didn’t come this far in his career to be daunted by the task in front of him, Donovan yesterday laid out a framework for breakthroughs, sustainable progress, and bureaucratic streamlining in describing his agenda for HUD in the coming months and years.
Housingfinance.com senior editor Jerry Ascierto reports from the scene in New York City, as the fledgling HUD Secretary came out on familiar turf but in uncharted economic waters.
HUD Secretary Shaun Donovan
Donovan made it clear that the production of new affordable multifamily housing will be a key component of the new administration. “The president will keep his pledge to fund, at significant levels this year, the National Housing Trust Fund,” said Donovan. “We must begin to build new tools and resources particularly focused on the extremely low-income families that suffer the most in our rental markets today.”
The National Housing Trust Fund, the first new federal production program for low-income housing in decades, was passed into law last year. The fund was to be seeded by money from Fannie Mae and Freddie Mac, but their conservator, the Federal Housing Finance Agency, suspended contributions to the fund in December.
Donovan also called for a wide-ranging modernization of HUD’s multifamily programs, which have been neglected for decades. “When I think of HUD’s programs, it’s as if the low-income housing tax credit was never invented, as if the evolution of HUD’s programs stopped a generation ago,” said Donovan.
Donovan also touted several measures in the economic stimulus package that would help stabilize communities hardest hit by the single-family foreclosure crisis. The stimulus bill contains $1.5 billion for HUD’s Emergency Shelter Grants, to help combat rising homelessness, particularly among families. The bill also has $2 billion for the department’s Neighborhood Stabilization Program, which provides emergency assistance to state and local governments to acquire and redevelop foreclosed properties.
Multifamily is where a fair amount of the new stimulus package upside focuses, but Donovan will also be involved in Treasury and Fed efforts to stanch the tide of foreclosures on the single-family side. Builderonline senior editor John Caulfield was on hand at the event in New York to report on that part of the HUD Secretary’s plans:
Within the first 100 days of the Obama administration, Donovan intends for HUD to start accelerating loan modifications and institute industry-wide standards for those modifications. He also plans to initiate targeted bankruptcy reform that will serve as a safety net that keeps as few homeowners as possible from going into foreclosure in the first place.
HUD will take measures to minimize the impact of foreclosures on families and on communities and will work to ensure the continued availability of private capital for mortgages for home purchases and refinancing.
Donovan’s long term plans for HUD are far more ambitious. He outlined a series of five strategic goals designed to not only remediate the current crisis but also deal with future housing needs.
The first involves remaking the mortgage system. With bank and mortgage company lending standards currently untenably stringent, Fannie Mae, Freddie Mac, and FHA are originating 95% of all home loans. To break this logjam, HUD will need to take steps to ensure liquidity and leadership in the private sector and make the loan process simpler and more transparent for buyers.
The kid hardly looks like he needs to shave, so if he accomplishes all he plans, he’s right on track to become known as a housing “wunderkind,” or possibly cannonization.
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