Outgoing Department of Housing and Urban Development (HUD) Secretary Julián Castro recently released an exit memo recognizing the agency’s efforts under the Obama Administration, summing up its missive in words every disenfranchised American Dreamer strives for: “HUD provides a passport to the middle class.”
The memo, “Housing as a Platform for Opportunity,” acknowledged several housing initiatives undertaken since 2008, as well as issued future-focused remarks for the incoming administration. President-Elect Trump appointed former presidential candidate and retired neurosurgeon Ben Carson in December to succeed Castro as HUD Secretary.
“Everything we did in the last eight years was oriented to bring greater opportunity to the people we serve every day,” wrote Castro. “[That] includes more than 1.2 million borrowers in 2016—more than 720,000 of them first-time homebuyers—who reached their own American Dream because of the access to credit the Federal Housing Administration [FHA] provides.”
Castro outlined housing-related action taken during his tenure as HUD Secretary, including addressing housing affordability and stock concerns, preparing for the impending effects of climate change, reducing homelessness, and upholding the Fair Housing Act.
Affordability—both for homebuyers and renters—is at crisis-level in many areas, Castro emphasized, pointing to the introduction of the National Housing Trust Fund and Rental Assistance Demonstration programs as effective first-go endeavors. Sixty-five affordable rental units are available for every 100 very low-income income renters, according to Castro, and millions are spending more than half of their income on rent.
Lessening the burden on low-income households was the reduction of the mortgage insurance premium in 2015, which has resulted in $900 in annual savings for 2 million FHA homeowners, according to the memo.
“Some critics in Congress objected that lower premium costs would generate less reserves in FHA’s Mutual Mortgage Insurance (MMI) Fund to cover claims on defaulted mortgages,” Castro wrote. “Today we can say with certainty that not only has this mortgage insurance premium reduction improved access to credit for a great number of qualified families, but it did not undermine the financial health of FHA’s forward mortgage portfolio.”
Castro called attention to the diminishing homeownership rate, as well, which has fallen to 43 percent among African Americans, 45.6 percent among Hispanics and 71.9 percent among whites—underscoring the disparity between white and minority populations, who, according to recent data from the Pew Research Center, are at the center of the overall decline in homeownership.
“If we are to reverse this trend in a responsible manner, FHA must continue to be a key source of support for low- and moderate-income and first-time homebuyers,” Castro wrote.
Low- and moderate-income households are most impacted by the effects of climate change, added Castro, accentuating the need for resilient housing that withstands more frequent and powerful natural disasters.
“Low- and moderate-income households (about 40 percent of the nation’s households) are especially vulnerable when disaster strikes, and have the most difficult road to recovery when jobs are lost, homes are damaged and access to opportunity is compromised,” wrote Castro, referencing the positive impact of HUD’s $1 billion National Disaster Resilience Competition. “I encourage the next Administration to support local government efforts to create natural disaster-resilient buildings and infrastructure.”
Castro also spotlighted the Property Assessed Clean Energy (PACE) programs, which allow homeowners with FHA-backed mortgages financing for energy efficiency home improvement projects. (The National Association of REALTORS® recently expressed concerns about PACE programs, published in Real Estate magazine.)
Castro, in addition, discussed the state of homelessness in America, citing the achievements of the U.S. Interagency Council on Homelessness (USICH) and the Opening Doors plan in reducing homelessness by 14 percent. Castro urged Congress to extend USICH, which is set to expire in October this year.
“In order to build on the momentum created, I hope the next Administration continues to provide leadership in this area and will support ongoing federal collaboration,” wrote Castro. “I hope that Congress will take the lessons learned from the extraordinary progress we’ve made reducing veteran homelessness, and make the same strategic and consistent investments for other populations.”
Equally important, Castro wrote, were HUD’s efforts to widen homeownership opportunities following the bust. More than 5 million homebuyers and over 3 million refinances have been helped by FHA since 2009, according to the memo.
“The [FHA] served as a stabilizing force during [the] crisis by providing access to mortgage credit for underserved borrowers, and preserving a path to the middle class that can be passed on from one generation to another.”
The incoming administration, Castro concluded, has more to do in the way of supporting housing.
“The work is far from finished…Where a child grows up should never determine where she ends up. I have been committed to that single mantra in my work at HUD, and I urge the next Administration to build upon what we have achieved and continue fulfilling the vision of making a decent, affordable home available to every citizen.”
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