HUD Secretary Shaun DonovanControversy continues to swirl around the Federal Housing Administration, as lawmakers are accusing the agency of exacerbating its problems by downplaying the extent of its financial struggles.

The Wall Street Journal reported that lawmakers are concerned the agency will need a bailout, a belief that both University of Pennsylvania research and an independent audit confirmed in recent weeks, and want Department of Housing and Urban Development Secretary Shaun Donovan to come clean.

The independent audit found that projected losses on the $1.1 trillion in mortgages the FHA backs would leave just $2.6 billion in reserves, or 0.24 percent of the value of the agency’s insured mortgages, to cover losses over the next three decades. [more]

Department of Housing and Urban Development Secretary Shaun Donovan responded to a recent report by Harvard Joint Center for Housing Studies today on CNBC. The report shows that one in every four U.S. households is paying more than half their income on rent and middle-income Americans are struggling just as badly and those in a low-income bracket. Rents are rising, vacancies are falling and buyers simply can’t get credit, the report revealed.

Asked about helping the rental housing market and pushing homeownership, Donovan says, in the video above, that HUD didn’t have the luxury of prioritizing one over the other. “We’ve had the biggest increase in worst-case rental housing needs over a two-year period, 2007 to 2009,” he said, “in the history of looking at those numbers.”
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AARP, a seniors’ organization formerly known as the American Association of Retired Persons, has filed suit against the U.S. Department of Housing and Urban Development, alleging that the federal agency’s policy changes on reverse mortgages have led many older homeowners into foreclosure, according to the New York Times. Reverse mortgages, available to individuals 62 years or older, allow homeowners to borrow against the equity of their homes and defer repayment until the loan holder dies. But while reverse mortgages have been popular among elderly property owners, the AARP suit claims that changes made to the program in 2008 are a significant detriment to loan holders. Under the altered program, a surviving spouse of a reverse mortgage holder who isn’t named in the loan document is on the hook to pay off the loan in order to keep his or her own home. [more]

The Department of Housing and Urban Development will release $1 billion
in mortgage assistance to the unemployed this spring, after receiving
complaints from lawmakers and advocacy groups that HUD was stalling in
their efforts. More than 60 national consumer advocacy groups called on
HUD to implement a program that would pay up to $50,000 per eligible
borrower, Housingwire reported. The HUD money comes with a 0 percent
interest rate and seeks to help homeowners with mortgage payments for up
to 24 months. [more]

A joint program from U.S. Housing and Urban Development and Health and Human Services will help nearly 1,000 non-elderly Americans with disabilities leave nursing homes or other facilities to live independently, the agencies announced today. HUD is providing $7.5 million in rental assistance vouchers to help these individuals rent private apartments. Those receiving rental assistance through the program will also receive health and social supports — from HHS’ Centers for Medicare and Medicaid’s “Money Follows the Person” grant program — that will enable them to live independently. TRD [more]

The Obama Administration has allocated $73 million for housing counseling, the Department of Housing and Urban Development announced today, aimed at helping families find suitable and affordable homes while avoiding foreclosure. The funds will be given to more than 500 different home counseling programs across the country. HUD Secretary Shaun Donovan said that the organizations receiving the funds “assist families in making more informed choices before they purchase a home and counsel families facing foreclosure.” The $73 million funding marks a 22 percent increase over last year’s allocation of $60 million. TRD

From left: Mike Kelly, John Rhea, Michael Bloomberg and Shaun Donovan

New York City Housing Authority general manager Mike Kelly has been asked to temporarily lead the Philadelphia Housing Authority — with Mayor Michael Bloomberg’s blessing. Kelly, who has operated under commissioner John Rhea, will be responsible for “leading Philadelphia through [a] transition period,” Bloomberg said. The new role, for which he was recruited by Shaun Donovan, the secretary of Housing and Urban Development, comes after Kelly completed a mixed-finance transaction that brought $300 million in additional capital to the city agency, Bloomberg said. Kelly has previously worked with housing agencies in San Francisco, New Orleans and the District of Columbia. TRD

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HUD Secretary Shaun Donovan

The Department of Housing and Urban Development announced today the allocation of $35 million for new the development of early childhood and adult education facilities. The federal funding will allow public housing authorities nationwide to construct, purchase or rehabilitate facilities for educational use, such as job training and childhood development programs. Local housing authorities must apply for funds by Jan. 14, 2011, and the maximum grant available is $5 million. TRD

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HUD Secretary Shaun Donovan

The U.S. Department of Housing and Urban Development unveiled a program today aimed at helping communities badly hit by the foreclosure crisis avoid sweeping vulture investors. The “National First Look Program” will offer select state and local governments a right of first refusal on foreclosed homes, before they’re made available to private buyers. The benefit of this, said HUD Secretary Shaun Donovan, is that it may help communities preserve buildings and put them to use based on the area’s specific needs. “Local communities will now get an exclusive option to buy foreclosed properties in targeted neighborhoods so they can turn the homes into affordable housing or, in some cases, tear them down,” Donovan said. This “will help rebuild neighborhoods that have been struggling with blight and declining home values due to foreclosures.” TRD

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