HUD’s Donovan: Congress needs to act to restore housing market

WASHINGTON, D.C. - The housing market is making a slow recovery, but more needs to be done, Housing and Urban Development Secretary Shaun Donovan told an audience of builders and remodelers at the NAHB Spring Board meeting here Thursday.

Donovan said Congress needs to enact all of President Obama’s American Job Acts, proposed last year, to not only create more jobs but also to allow more underwater homeowners to refinance with today’s record-low interest rates.

“The tools we need” to restore the housing market “are right in front of Congress,” Donovan said.

Donovan also addressed other challenges facing the industry:

• Difficulty in obtaining financing – Donovan said the administration is concerned by the over-cautiousness of some lenders. “It’s absolutely an area we’re looking at,” he said “We have to be clear with lenders (about the standards) and we’re pushing lenders on that.”
• Opening up 203k loans to investors – Problems with the program in the 1990s lead to investors not being able to take advantage of the low-interest loans, but some have argued that letting them back into the program would help get more distressed homes off the market. Donovan said the administration agrees that there is an opportunity there. “We’re looking at how to restart it for investors in a safe way so we don’t run into problems,” he said.
• Getting capital to builders and developers – Donovan said some of the independent regulators overseeing small banks have “gone too far” in restricting their ability to lend. Getting capital to smaller local and regional banks, the ones that usually lend to builders, continues to be a priority, he said. “It’s an area we have to continue to push to make sure we are safe but sane,” he said.