Understanding the external factors that form and affect HUD’s operating environment is crucial for identifying risks to future mission performance.  External economic and legislative factors outside of HUD’s control affect its ability to influence key performance goals.  These external factors include economic conditions, unemployment rates, financial lending environment, tax regulations, as well as other federal, state and local conditions.

Sustained unemployment is a significant barrier to mitigating the foreclosure crisis and is subject to macroeconomic conditions that cannot be controlled by the Department.  High unemployment rates continue to exacerbate the foreclosure crisis by putting pressure on household incomes and credit ratings, and thereby reducing demand for home purchase and keeping many current homeowners underwater.  The continued economic weaknesses will hinder and create barriers to the ability of first-time home buyers to enter the housing market.  However, recent reductions in unemployment and the return of confidence to the residential construction market could indicate strengthening of the homeownership market.

The expiration of the Mortgage Debt Relief Act of 2007 at the end of 2012 will have short-term impacts including a rush to complete short-sales and foreclosure actions prior to the end of 2012 in order to avoid 2013 tax consequences.  Forced foreclosures and short-sales will have long-term negative impacts on the ability of millions of homeowners who go through this process to qualify for future home loans.  Read more...