The New HUD Secretary Is Keen to Contain Foreclosures

The new secretary of HUD, Shaun Donovan is keen to contain the rising tide of foreclosures. The Treasury Secretary Tim Geithner is ready to launch new measures to help the banks as well as the house owners. The Senate is poised to launch a $780 billion bill to stimulate the sagging economy. Against this background HUD (Housing and Urban Development) has a very important role to play.

The grim situation is that one out of ten citizens are defaulting in the mortgage payments. Donovan analyzed that right now it is unemployment that is playing the lead role in pushing people into foreclosure. So the first target is the creating of four million jobs in the country.

The second aim is to limit the number of foreclosures and for this an aggressive plan is in the offing. Nearly half the houses in the real estate market for sale are coming from the foreclosure category.

The third objective is to see that when the foreclosures do take place they do not have a catastrophic effect on the families and the neighbourhoods. Here HUD plays a vital part in stabilizing the localities. Efforts have to be made so that there is sufficient rental housing available and to contain homelessness. In the forthcoming bill these points too have been covered. He added, “Finally, we’ve got to put a bottom on housing prices and begin to help the market turn back upwards.”

Donovan was asked what he planned to do with the programme of HUD known as Hope for Homeowners since this has largely been criticized to be full of flaws. He said that both the Senate and the House have been discussed on this matter and a” set of fixes” will be done to put it back on rails to make it “more efficient and more effective.”

Donovan felt that although a lot of change had been initiated in the housing at the state and local level HUD had been relatively ignored. It is a “generation behind”. So the first thing to be done is that HUD has to catch up. It has to make its programmes modern and make use of the private sector in a manner that has not been done hitherto.

One of the biggest challenges is the blight of the reo homes. Last summer 4 billion dollars had been put into Neighborhood Stabilization Program. HUD is distributing the same and overseeing its implementation, said Donovan.