What Awaits our new HUD Secretary
Gate House Strategies Chairman Brian Montgomery, in a piece for Housing Wire, shared a few of his thoughts on the opportunities awaiting the new HUD Secretary, Scott Turner.
As HUD turn 60, Brian writes, Secretary Turner, takes over as the 19th secretary at an extraordinary time: “The challenges in the housing market are many, including persistently high mortgage rates, a paucity of housing inventory, growing demand for subsidized housing, record levels of homelessness, and large-scale redevelopment needs following natural disasters.”
Turner, who led President Trump’s Opportunity Zones initiative in the first term, will lead “a $73 billion enterprise that additionally controls more than $2.6 trillion in government-guaranteed mortgages.” More than $43 billion of HUD’s current budget assists over 4.6 million households through public housing, with extraordinary unmet needs. This need and the rise in homelessness is not unrelated, Brian says, to “the housing affordability crisis that millions of Americans are encountering.”
Turner will head HUD’s robust fair housing enforcement while “resolving the Biden Administration’s withdrawal of the previous Trump administration “disparate impact” rule.”
Secretary Turner faces uncertainty with FHA’s $1.5 trillion portfolio, despite record levels of capital, given the large number of redefaults in recent months and “more than 1.7 million FHA borrowers who have utilized the “partial claim.” The HECM program has been under pressure, also despite strong capital levels “due to the current interest rate environment as “higher interest rates have slowed the origination volume and significantly impacted lenders’ warehouse lines.”
“Often overlooked,” Brian wrote, is Ginnie Mae, “whose senior leadership is understaffed with recent retirements and staff departures” and which, with an important link to global financial markets “will need to transition its Mortgage-Backed Securities (MBS) platform from pool-level to loan-level functionality.”