Julian Castro believes the dream of homeownership is too far out of reach for too many Americans.
“This has to change,” he said. “Housing finance reform obviously represents an obvious step.”
Castro, secretary of the Department of Housing and Urban Development (HUD), scoffed at the amount of people being turned down because of their credit scores, citing an Urban Institute report that states the average credit score for loans sold to the government-sponsored enterprises this year is around 750.
“Currently, there are 13 million people with credit scores ranging from 580 to 680,” he said. “Many of them are ready to own, but are being left out in the cold.”
As he addressed housing industry stakeholders at the Bipartisan Policy Center’s 2014 Housing Summit in Washington, D.C., on Tuesday, he called on housing advocates to keep pushing until housing reform is taken “over the finish line” despite the standstill on the Hill.
He urged lenders to come back to the market and called out the Federal Housing Administration for making lenders skittish.
“In the wake of the crisis, we’ve see a lot of frustration from lenders when it comes to their FHA business,” Castro said. “Many have been reluctant to lend because they fear unanticipated consequences. They need to be able to manage their risk better–and so does FHA.”
As part of his goal to strengthen the country’s housing stock, Castro outlined the plan to overhaul the “Single Family Handbook," the FHA's comprehensive lending guide. He also welcomed feedback from lenders online to help identify loan defects.
“By clarifying the compliance process, we’re giving lenders the confidence they need to lend, while protecting our financial health. This is a win for the industry. This is a win for FHA.”
Affordable Housing Crisis
When it comes to advocating for affordable housing in the multifamily space, Castro expressed his desire to give Americans a shot at achieving decent, secure and affordable rental housing.
“The nation is losing 10,000 units of public housing every year mainly due to disrepair,” he said. “Making things worse, this is happening as funding from Washington decreases.”
Castro applauded the Rental Assistance Demonstration Program’s successes, noting that HUD has received applications to convert more than 180,000 units of public housing. However, the program is limited to 60,000 units. Castro vowed to continue rallying and said his staff has asked Congress to lift the cap in the 2015 fiscal budget and stressed the importance of preserving the existing rental housing stock.
His plan was armed with personal anecdotes from his most recent travels across the country, from Gary, Ind., to New Orleans. Castro was proud to boast the recovery’s economic growth and vowed to continue expanding on opportunity.
“These are days of tremendous progress across the board, and now our challenge is to accelerate this progress for every American,” he said. “And that’s where HUD comes in.”
Lindsay Machak is an associate editor for Multifamily Executive. Connect with her on Twitter @LMachak.