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Shaun Donovan Speaks

February 13, 2009

Posted by: Carol

Shaun Donovan, the new Secretary of HUD, is speaking at the NYU Furman Center Housing Policy Conference, began his remarks by praising Judith Rodin for engaging her community and remaking it in ways that engage the "least of these."

Donovan began by saying that this is may be less a crisis of housing, but rather a crisis of a government in transition.

"It's a little early for me to be out speaking," Donovan said. "No speechwriter, no assistant secretary. It's a risk.

"In crisis there is opportunity. But in crisis there is also crisis."

He reviewed the grim statistics: 2.2 million foreclosures this past year; 45% of home sales in December were distressed sales; in cities like Las Vegas and Stockton 10% of homes in foreclosures. The landscape is littered with vacant homes contributing to a decline in housing values like we have never seen.

"But this is no longer a crisis simply of bad mortages. It is a crisis accelerated and most threatened by job loss."

A comprehensive foreclosure response is forthcoming. Here are the broad themes:

It has become abundantly clear that we must expand loan modifications.

There is a need for broad industry standards for loan modifications.

We need targeted bankruptcy reform to become a safety net.

We must deal with community and family impacts of foreclosures. There is much we can do to limit foreclosures. But there will continue to be foreclosures. Limit the damage of foreclosures through more money for family shelter and neighborhood stabilization (in particular, to support innovative regional efforts, like that in Chicago).

We must insure continued availability of capital for purchasing and refinancing mortgages already out there.

That deals with the immediate crisis. But Donovan called for using the current crisis to help HUD turn housing policy in these ways:

>> Remaking our mortgage system. Long-term goal has to be to return liquidity and innovation to the private market. We need a bridge from where we are today to making private capital available for mortgages that needs no government support. We must, however, restore transparency and make the mortgage transaction much clearer to the average consumer.

>> Dealing with persistent rental housing crisis. President will keep his pledge to fund the Housing Trust Fund. We must build new tools and resources for rental housing, especially for low income families. We have made good progress on homelessness for singles. Now we need to use that as a model for attacking homelessness for families. HUD's rental programs are at least a generation behind. We must find ways to open up HUD's programs to private capital and innovation and make them flexible and open to innovation happening across the country. We must also be able to account for the resources we spend in order to rebuild trust. Otherwise, we will not be able to meet our goals.

>> Beginning to use housing policy for broader sustainability within economy. This is an area more than any other where we can begin to advance simultaneous goals of housing and sustainability. There is a growing recognition that the way we build housing and our cities are in no way sustainable. That must change. HUD touches 1 in 10 homes in this country, so HUD can set examples for private sector in retrofitting buildings and adding renewable energy technologies for energy efficiency. HUD can catalyze the way housing is built and renovated across the residential market overall that will have a dramatic effect on emissions.

But focusing on housing is not enough. We must focus on location efficiency, and HUD must be the leader within the administration on this issue. This budget will create an Office of Sustainability within HUD and partner with DOE and DOT to create a team within the administration to focus on how we make our nation more sustainable. Ron Sims will lead the new office of sustainability and to coordinate efforts across agencies.

This is an enormous priority of this president, and Carol Browner has already convened five secretaries, along with the head of EPA, to begin identifying opportunities for collaboration and policy change.

>> Reenergizing fair housing. The pattern of practices on subprime loans differentially target minority communities. HUD will step up enforcement and you will see that in the next 100 days. But HUD's mission in fair housing is not just enforcement, but also affirmatively further fair housing. How do we make neighborhoods of impacted poverty into neighborhoods of choice? We must through the office of sustainability create a geography of opportunity that opens up every neighborhood to be a neighborhood of choice.

>> Allowing HUD to become a leader on research and evaluation. It is difficult today to understand what constitutes success at HUD. It's not clear what we should count. So we must begin to create systems of accountability. Is HUD contributing to states and localities in achieving their plans? Is HUD contributing to fair housing? We need to count and count we will. But that's not enough. The crisis we face, to be frank, is whether the federal government can make a difference in housing. The image most Americans have in their mind of public housing is of Chicago's housing projects, of those projects being so bad that they had to come down. To change that, we must hold ourselves accountable to a standard that has never been imposed before. In the end, we can never advance the agenda on housing unless we can demonstrate that we make a difference in people's lives, not just in housing, but to broader success in communities, better education and job outcomes.

This enormous opportunity will not come again. If we waste it, we only have ourselves to blame.