The House Financial Services Subcommittee on Insurance, Housing and Community Opportunity held a hearing, “The Obama Administration’s Response to the Housing Crisis,” on October 6.
Witnesses included officials from HUD, the Department of the Treasury, and the U.S. Department of Agriculture, as well as public witnesses, all of whom provided their insights on a number of foreclosure intervention and response programs, including the Emergency Homeowners’ Loan Program (EHLP) and the Neighborhood Stabilization Program (NSP). As part of his American Jobs Act, President Barack Obama included a $15 million Project Rebuild proposal, which would be the next iteration of the NSP programs.
Subcommittee Chair Judy Biggert (R-IL) said in her opening statement that she “feels that programs have failed to deliver” and also questioned the success of the NSP program as it has not prevented any foreclosures. In response to this concern, Yolanda Chavez, Deputy Assistant Secretary for Grant Programs, Office of Community Planning and Development, HUD, and Representative Maxine Waters (D-CA) noted that the purpose of NSP is to stabilize communities that have been impacted by the foreclosure crisis and not to prevent individual foreclosures from happening.
Several members raised concerns about the fact that no foreclosure intervention program implemented to date has served as many households as it was projected to. In response to a question from Ms. Biggert, Carol Galante, Acting Federal Housing Administration Commissioner and Assistant Secretary for Housing, HUD, said that EHLP did not serve as many unemployed homeowners as it could have because the program was open for only a very short period of time, something that was out of HUD’s control (see Memo, 7/8).
In a second panel, Mark Calabria of the Cato Institute said that there has been an increase in family homelessness since the recession began. In light of this finding he said that the Committee should revisit the current structure of McKinney-Vento Homeless Assistance Programs to address the current realities in the housing market.
Mr. Calabria said that the housing market will only improve if the labor market improves. He also said that while NSP has been aimed at rehabilitating properties, if there is truly an excess supply of housing in communities, perhaps some properties should actually be destroyed instead of rehabilitated.
Andrew Jakabovics, Enterprise Community Partners, said that the President’s proposed Project Rebuild program must be larger than the proposed $15 billion. Mr. Jakabovics also voiced support for a bulk REO-to-rental program as proposed by FHFA in a recent request for information, as did Laurie F. Goodman, Amherst Securities Group LP (see Memo, 9/16). Mr. Calabria also voiced support for an REO-to-rental program, although he cautioned that income targeting guidelines would make the program too cumbersome.
At the end of the hearing, Subcommittee Vice Chair Robert Hurt (R-VA) submitted into the hearing record a letter from NLIHC stating concerns about the lack of deep income targeting in Project Rebuild.
An archived hearing webcast and all witness testimony are available at: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=262363
NLIHC’s letter on Project Rebuild is available at: http://nlihc.org/doc/NLIHC_Project_Rebuild_Letter.pdf