The Federal Housing Administration (FHA) has played a critical role in augmenting Making Home Affordable and preserving the availability of mortgage credit. With the collapse of global credit markets,FHA works with strong and well-managed private sector entities to expand access to homeownership to lower-income households not well-served by the private market. To ensure availability of credit in higher-income markets as private capital has dried up, HUD was successful in advocating to raise single-family loan limits, making millions of additional middle-class families eligible for affordable loans backed by FHA, as well as Fannie Mae and Freddie Mac. FHA implemented the new higher loan limits in its programs just seven days after their enactment in the Recovery Act.
FHA's role has grown substantially, from 2 percent of lending activity in 2006 to 24 percent of single family mortgage dollar volume in the last quarter of 2008. This increase in volume has demanded a focused response to prevent fraud and abuse, as unscrupulous lenders enter the market. Confronting mortgage fraud has been a central focus of Secretary Donovan's first 100 days. Reflecting his commitment to strengthening HUD's role to combat mortgage abuse, particularly in disadvantaged and minority communities targeted by predatory lenders, HUD has taken strong steps to reinvigorate its enforcement abilities and prevent criminals from running free. In these first months, Secretary Donovan has:
The continuation of the Making Home Affordable outreach effort will provide consumers with astrong warning and tools to avoid foreclosure prevention scams. In the public service announcements, celebrities will present a simple message that homeowners do not need to pay to receive the help they need, but rather should seek free assistance offered by HUD-certified counseling organizations.
Policy and Budget Initiatives
Gulf Coast disaster recovery
Within days of his confirmation, Secretary Donovan learned that a pre-Obama Administration decision not to extend the Disaster Housing Assistance Program (DHAP) for families affected by Hurricanes Katrina or Rita would cause over 30,000 families to be displaced on February 28, and potentially become homeless.
Secretary Donovan partnered with Secretary of Homeland Security Janet Napolitano to quickly find a way to protect those families and stabilize the Gulf Coast with a firm plan. Together, they designed a transitional program to give displaced families an additional six months to find alternative housing, with the ability to transition to HUD's Housing Choice Voucher Program (HCV).
As of March 31, 2009, over 13,000 of those 30,000 families had already transitioned to Housing Choice Vouchers or no longer required assistance. Until families who have been issued a voucher sign a lease with a landlord, their rent will continue to be paid out of the DHAP Closeout program.
Secretary Donovan assessed Gulf Coast recovery efforts as he toured New Orleans, Louisiana on March 5 with Secretary Napolitano, continuing on his own to Houston, Texas on March 6. Secretaries Donovan and Napolitano participated in a listening tour in New Orleans, with three stops: Southern University in New Orleans; St. Bernard Parish; and the Abundance Square development (a HOPE VI project). Secretary Donovan spoke with Gulf Coast residents and local officials at the Houston DHAP center on March 6, saying that the Administration is committed to rebuilding and recovery efforts. While Secretaries Donovan and Napolitano saw signs of progress, they saw unfulfilled promises as well, and will continue to work with other members of the Administration toward full recovery in the Gulf Coast.
HUD has announced that it is creating an Office of Housing and Sustainability to oversee the agency's efforts to drive energy efficient housing and sustainable growth. The Office will oversee an Energy Innovation Fund designed to stimulate private sector investment in the energy efficiency of the nation's housing stock. It will also implement a Sustainable Communities Initiative to catalyze a new generation of metropolitan and rural growth efforts, integrating transportation, housing and land use planning to maximize choices for residents and businesses, lower transportation costs and energy use, and build a new geography of opportunity. The Office will also have primary responsibility for managing the agency's newly announced partnerships with the Departments of Transportation and Energy, the Environmental Protection Administration and other federal agencies.
HUD views the emphasis on energy efficiency in the Recovery Act funding as a model for the future of the agency. Across programs, HUD has invested Recovery Act funding in research and evaluation for energy efficiency, and the Recovery Team is coordinating cross-cutting energy efficiency issues across program areas. HUD will draw upon the innovative energy work at the state and local level as grantees begin implementing ARRA programs, using those advances to shape the future of HUD programs.
From his first day at HUD, Secretary Donovan has engaged in partnerships throughout the Obama Administration to tackle pressing crises and begin building innovative collaborations to address longstanding problems exacerbated by lack of cooperation between agencies.
Secretary Donovan and other key HUD staff worked closely with the National Economic Council, the Department of Treasury, and the Federal Regulatory Agencies to develop President Obama's Making Home Affordable plan to respond to the housing crisis. In repeated meetings with Secretary Timothy Geithner from the Department of Treasury, Larry Summers from the White House, and other Administration officials, Secretary Donovan and his team helped arrive at a solution quickly, with cooperation across the federal government.
This level of cooperation continued as the Administration pushed to combat mortgage abuse. Secretary Donovan partnered with Secretary Geithner, Attorney General Eric Holder, Federal Trade Commission Chair Jon Leibowitz, and Illinois Attorney General Lisa Madigan to announce new coordinated efforts to protect homeowners searching for help from the President's Making Home Affordable plan - efforts like the coordination of fair housing and fair lending enforcement resources that HUD has established with the Department of Justice.
These partnerships have extended beyond the Administration. To assess the impact of foreclosures on Los Angeles neighborhoods, Secretary Donovan toured foreclosed properties in South Los Angeles with Mayor Antonio Villaraigosa and U.S. Representative Maxine Waters, and visited properties that the City Housing Department plans to buy and rehabilitate through the Neighborhood Stabilization Program. He discussed similar topics with Connecticut homeowners and housing advocates at a forum and tour of foreclosure-affected neighborhoods with Senator Chris Dodd.
Since they took office, Secretary Donovan and Secretary of Homeland Security Janet Napolitano have partnered to repair the federal government's response to disasters in the Gulf Coast. When they determined that the pre-Obama Administration choice not to renew the DHAP program would displace 30,000 families, they began a swift process, working in conjunction with the White House, to create the Transitional Closeout Program and help those families move into permanent housing.
As HUD and the Department of Homeland Security continue to work together toward full recovery in the Gulf Coast and strengthening interagency disaster preparedness, they will be informed by the two Secretaries' joint visit to New Orleans on March 5, where they spoke with local residents who have weathered the hurricanes and their aftermath.
Energy and climate change
Energy policy has been at the forefront of the Obama Administration, and HUD has engaged with its Administration partners to break down bureaucratic barriers and find innovative paths to smart energy policy.
Secretary Donovan meets monthly with Carol Browner, the president's adviser on energy and climate change issues, and a number of other Cabinet Secretaries to coordinate their energy plans. HUD has also partnered with the Department of Energy (DOE) directly - on February 27, 2009, Secretary Donovan and Energy Secretary Steven Chu announced a major partnership between HUD and DOE that will coordinate home weatherization efforts under the American Recovery and Reinvestment Act, and leverage those funds to build a home energy efficiency industry and create green jobs, lowering energy costs and reducing greenhouse gas emissions.
HUD is meeting weekly with the Vice President's Office, the White House Office of Management and Budget, and a cross-section of Obama Administration agencies to coordinate green job generation. As a result of these meetings, the Department of Labor and HUD have begun forming a long-term partnership to connect residents of public housing and assisted housing to nearby job training. We are sharing information on training opportunities on the one hand, and the location of public housing residents on the other, to create clear pathways for employment in green jobs.
On March 18, 2009, Secretary Donovan and Transportation Secretary Ray LaHood announced a major partnership between HUD and DOT that will help American families gain better access to affordable housing, more transportation options, and lower transportation costs, and testified before a House appropriations subcommittee to that effect. The average working American family spends nearly 60 percent of its budget on housing and transportation costs, making these two areas the largest expenses for American families. Secretaries Donovan and LaHood want to cut these costs by focusing their efforts on creating affordable, sustainable communities.
HUD and DOT have created a high-level interagency task force to better coordinate federal transportation and housing investments and identify strategies to: enhance integrated regional housing, transportation, and land use planning and investment; develop federal housing affordability measures that include transportation costs; undertake joint research, data collection and outreach; and harmonize HUD and DOT programs.
Education and neighborhood renewal
HUD has begun discussions with the Department of Education over how the two agencies will work together to implement the Choice Neighborhoods initiative. This initiative will build on HOPE VI efforts to demolish troubled public housing and rebuild mixed-income, mixed-use neighborhoods, expanding the scope to include all neighborhoods of extreme poverty with a substantial presence of HUD public and assisted housing. HUD will challenge public, private, and non-profit partners to intervene with new housing and community-building tools in federal enclaves of concentrated poverty. The initiative will work in tandem with federal, state and local school-reform efforts, particularly Promise Neighborhoods.
HUD is partnering with the White House Domestic Policy Council, the Department of Education, and other agencies to begin making President Obama's goal of creating Promise Neighborhoods nationwide a reality. Modeled after the Harlem Children's Zone, the Promise Neighborhoods will provide a full array of services, including early childhood education, youth violence prevention efforts, and after-school activities, to an entire neighborhood's children, from birth to college.
HUD is also partnering with the Department of Education to ensure their Homeless Education Coordinators are aware of the new resources available through HUD's homelessness programs. The Departments are also developing joint guidance on how the programs can be coordinated locally.
HUD has initiated the first-ever Interagency Healthy Homes Working Group to better coordinate federal efforts in making homes safe from housing-related health hazards, partnering with the Department of Energy, Department of Agriculture, Environmental Protection Agency, Centers for Disease Control, National Institute of Standards and Technology, and National Institute of Environmental Health Sciences. The working group is establishing a national strategy to address housing-related health hazards, broadening to include not just childhood lead poisoning, but other hazards that threaten children and families in their homes.
The Recovery Act has also become a platform for reform at HUD. Given the Recovery Act's unprecedented cross-cutting scope and aggressive timeframe, Secretary Donovan views its implementation as an opportunity to lay the groundwork for future transformation. The nature of the Recovery Act, particularly its many cross-cutting issues, has brought HUD staff together as "One HUD" working across program areas. This interconnectedness has made it possible to streamline and simplify programs. As Recovery Act funds must be spent quickly, HUD is redesigning its business processes, incorporating new tools for management oversight.
HUD has responded to President Obama's call for more innovative and efficient government, with a fiscal year 2010 budget that streamlines essential operations and consolidates or eliminates previously uncoordinated programs to increase efficiency.
HUD's 2010 budget proposal eliminates the American Dream Downpayment Initiative, which peaked at $200 million per year under President Bush, and eliminates funding for the Section 108 Loan Guarantee program, which cost the agency about $6 million per year.
Innovation in government
The housing crisis has sparked innovation in HUD programs, as seen in the new $1.5 billion Recovery Act Homelessness Prevention and Rapid Re-housing Program, which was adapted from HUD's current Emergency Shelter Grants program to enhance communities' ability to confront homelessness. The program provides much greater flexibility to prevent families from having to move to homeless shelters, and thenew and innovative Rapid Re-housing component allows communities to immediately assist persons who have fallen into shelters, and relocate them into conventional housing, avoiding further troubles down the line and lowering the ultimate cost to the public.
Transparency and public accessibility
HUD's Recovery Act programs will be implemented with an unprecedented level of transparency and accountability - and this new process will lead to a corresponding transformation of all HUD programs. HUD has already begun to provide regular, publicly accessible reports on the implementation of Recovery Act programs, so that partners and taxpayers know how HUD's ARRA funding is being spent. HUD holds itself accountable for the success of these programs by tracking milestones and accomplishments closely, and conducting rigorous analyses.
To make this information accessible to the public, HUD has introduced a new Recovery page on its website (www.hud.gov/recovery). This new page provides key information to state and local governments participating in Recovery Act programs, as well as the American public at large. It includes more information for the public on the progress of implementation, including the amounts of funding obligated across programs, a calendar listing Notice of Funding Availability submission deadlines, and guidance on how to comply with transparency and accountability requirements. We will also post information on best practices and highlight examples of the kinds of projects and jobs created through HUD Recovery Act funding.
Actions and Announcements
Protecting fair housing
In a potentially groundbreaking civil rights case, HUD has taken steps to promote fair housing principles and support an appropriate settlement between a private fair housing group and Westchester County. In conjunction with the Department of Justice (DOJ), HUD has indicated that it strongly supports the "affirmatively furthering fair housing principle" at issue in this case. HUD, in conjunction with DOJ, has also indicated that it believes the optimal solution is a settlement that would promote the use of funds to develop housing in communities that would further racial and ethnic integration, and thus has begun to engage the parties in a serious effort to develop a settlement before trial.
Major grant awards
HUD has made significant grant awards over the first 100 days, including the award of $1.64 billion of Neighborhood Stabilization Program funds from the Housing and Economic Recovery Bill of 2008, $1.6 billion in grants to homelessness programs through Continuum of Care, and $1.86 billion in disaster relief funds to recover from flooding in Iowa and hurricanes in Louisiana and Texas.
Root causes of foreclosure crisis
On April 8, 2009, HUD released an interim report to Congress examining the root causes of the foreclosure crisis, required by the Housing and Economic Recovery Act of 2008. This interim report contains a review of the academic literature and industry press, concluding that most of the initial increase in the foreclosures was driven by subprime loans, but as the economy deteriorated in 2008, foreclosures among prime fixed-rate loans also rose, exacerbating the crisis.