New HUD chief: simpler loans, more private lending
Kristoffer Tripplaar/Sipa Press/Newscom
Is there opportunity in the housing crisis?
Mr. Donovan who confesses to being an “eternal optimist” came to New York on Friday to keynote a conference at New York University entitled “A Crisis is a Terrible Thing to Waste: Transforming America’s Housing Policy.”
HUD and Mr. Donovan are likely to have a significant role in the Obama administration’s new housing policy, which is expected to be rolled out relatively soon. And Congress, in the new fiscal stimulus bill, piled on new funding, some $13.6 billion, for HUD to do everything from making public housing more energy efficient to new funding for emergency shelter grants to try to prevent homelessness.
A personal agenda
Donovan, who formerly ran New York City’s housing efforts, has his own agenda as well. One of those goals is to try to get the private sector back into the mortgage market. Only a few years ago, the Federal Housing Administration, which is part of HUD, insured 2 percent of the mortgage market. Today, the FHA backs about a third of all new mortgages.
The FHA, in a way, is returning to its roots. It was created during the Great Depression. In the 1960s, during President Johnson’s Great Society efforts, HUD grew up around it. Then, in the housing boom of the past decade, the FHA steadily lost market share. As one former HUD employee explained it, it was viewed as a dinosaur since it actually checked income and wanted people to be able to afford their mortgages.