Envisioning Opportunity

Envisioning Opportunity

Katherine O’Regan, Assistant Secretary for Policy Development and Research. On September 16, HUD Secretary Julián Castro celebrated his 40th birthday by making his first major policy speech: a keynote address at the Bipartisan Policy Center’s 2014 Housing Summit. In this piece, I want to highlight a few key themes from that speech and the recently posted vision of HUD’s policy priorities.

HUD is about opportunity. Secretary Castro opened his remarks by stating that HUD “is the Department of Opportunity,” an agency with a mission to lift people up, and expand opportunity for all Americans. This emphasis on opportunity, on supporting outcomes beyond housing — continues an important theme at HUD. Our homes and communities are the platforms on which we build our lives. HUD’s mission to promote homeownership, support community development, and increase access to affordable housing free from discrimination is ultimately about improving peoples’ lives.

Housing plays a key role in opportunity, including the continued importance of homeownership. As the recent housing crisis revealed, housing finance reform is desperately needed to attract private capital and protect taxpayers. Achieving such reform continues to be one of HUD’s priorities going forward. Increasing access to credit is an immediate need. This year, the average FICO score of loans purchased by government-sponsored enterprises was approximately 750. The 13 million people with credit scores between 580 and 680 are essentially left out, even though many of them desire and are ready to own. The Federal Housing Administration’s (FHA’s) Blueprint for Access outlines how FHA will play its part. FHA’s Homeowners Armed With Knowledge initiative comprises several initiatives that link HUD’s Housing Counseling program (which covers affordability, mortgage alternatives, financial management, and homeownership) with FHA-insured mortgage origination and servicing. In addition, FHA’s revamped quality assurance policies are designed to boost lender confidence through clarified processes, an enhanced approach to assessing loans, a larger variety of loans, and strengthened metrics.

HUD’s role in preserving affordable housing is critical to addressing the rental affordability crisis. With one in four renters facing severe rent burdens, the need to preserve existing affordable housing is acute. Yet we are losing 10,000 units of public housing annually, and the remaining stock has a backlog of approximately $26 billion in needed capital repairs. HUD’s Rental Assistance Demonstration (RAD) is an innovative solution to this problem. By permitting public housing to move to a more stable financing platform, private-sector capital can be tapped to repair and renovate these units in a way that is budget neutral for the federal government. Removing the current 60,000-unit cap on HUD’s authority is a necessary step to meet the demand for this program, which has received applications for more than 180,000 units.

Our housing and communities need to be a springboard for success. To provide residents with the foundation for success, their housing needs to be located in thriving communities and connected to jobs, job training opportunities, and transit. HUD’s continuing employment-focused efforts such as Jobs-Plus and place-based initiatives such as Choice Neighborhoods and Strong Cities, Strong Communities are helping to form and strengthen these connections. The need for connection, however, also includes access to knowledge. In his keynote, Secretary Castro specifically called out limited internet access — in particular, broadband access — as a significant barrier to information and opportunity. The Secretary’s highlighting of broadband acknowledges HUD can and will play a role in closing the digital divide by partnering with other agencies and the private sector. HUD also needs to be forward-looking, helping all communities prosper in the face of the large predicted growth in urban areas. By 2050, the U.S. population is expected to increase by 80 million people, of which 60 million are likely to be living in urban areas. In this “Century of Cities,” HUD has a critical role to play in supporting thriving cities that provide opportunity for all and function as engines of growth in regional economies.

Finally, achieving these goals with fewer resources will require the continuation of HUD’s evidence-based practices and additional improvements in its internal operations. But it will also take partnering, a theme raised throughout the speech. HUD needs to partner with lenders to increase the flow of capital, with other federal agencies to address cross-silo issues, and with local governments and stakeholders to make the most of precious resources. Developing these partnerships comes naturally to a Secretary whose roots are in local government and whose perspective is informed by years of on-the-ground work on housing and community development issues.