HUD Secretary Julian Castro has recently been the subject of harsh criticism from a handful of non-profit groups in connection to HUD’s administration of the Distressed Asset Stabilization Program (DASP). Implemented in 2012, a full two years before Secretary Castro’s appointment, the program was designed to maximize recovery to the FHA fund and, when possible, help borrowers avoid foreclosure.
The primary criticism suggests that HUD and FHA are harming communities by selling delinquent mortgage notes to large for-profit entities that are reaping excessive profits and which have very little regard for the economic well-being of the affected communities. Some groups have gone as far as to state that barring material changes to the program, Secretary Castro is unfit for consideration for higher office including Vice President of the United States.
“Secretary Castro is an outstanding leader with impeccable credentials and is more than qualified for any public office in America, including the Vice Presidency,” says Gary Acosta, CEO and co-founder of NAHREP. “Furthermore, NAHREP believes Secretary Castro has managed the office of HUD Secretary with the highest level of professionalism, skill and integrity”.
NAHREP also believes that the criticisms about DASP are not without merit and has consistently advocated for changes in the program. While NAHREP recognizes that keeping people in homes is of the utmost importance and improving the recovery execution for HUD is critical to the long-term viability of the FHA program, there are multiple ways to achieve similar outcomes without exacerbating the immense transfer of wealth that has accompanied the housing crisis. Homeownership rates in America are approaching forty year lows and NAHREP member surveys have indicated that a lack of affordable housing stock available for purchase is a primary barrier to homeownership for Hispanics and other first- time buyers. Independent studies have shown that as little as 10 percent of the homeowners in the DASP program have been able to live and maintain ownership in their home. While this is, without question, a positive outcome for those families the other 90 percent represent a substantial source of housing stock which, inside of DASP, are more likely to end up investor-owned.
Home equity is the largest source of household wealth for most Americans. NAHREP believes that government programs that further reduce the availability of affordable housing stock in the market should be modified or eliminated altogether.
NAHREP also believes HUD can do more to support homeownership by improving access to capital. There has been a great deal of debate over the issue of Loan-Level Certification and the False Claim Act. NAHREP supports the lending industry’s call for HUD to provide lenders with greater certainty and clarity, and believes that by doing so, HUD will help create greater access to affordable mortgage credit, while reducing the risk of predatory lending in our nation’s communities.
For more information, visit www.nahrep.org.
