Dept. of Housing and Urban Development Makes Progress for Latino Families

In his first congressional hearing since being confirmed last summer, Julián Castro, Secretary of Housing and Urban Development, testified before the House Financial Services Committee today on his agency’s progress and accomplishments.

This hearing couldn’t come at a more critical time, given that Latino families are still struggling to rebuild the wealth they lost during the Great Recession. Though an economic recovery is now under way, Latinos are not necessarily seeing improved outcomes in access to mortgage credit. Just last year, Hispanic home-buyers made up only 6 percent of the conventional mortgage market, despite comprising 17 percent of the population.

Fortunately, the U.S. Department of Housing and Urban Development (HUD) has the means to make mortgages more affordable for all creditworthy homebuyers through the Federal Housing Authority (FHA), which it oversees.

Thus far, Castro has helped FHA pivot toward a new focus on affordability and homeownership promotion. Just three months after taking office, he announced a new plan for HUD to expand mortgage credit access, which included measures affecting borrowers and lenders alike. In an effort to boost lenders’ willingness to make more loans, FHA will give lenders clarity on HUD policies and compliance issues. To the direct benefit of prospective homebuyers, FHA also lowered mortgage insurance premiums for all FHA loans by an average of $900 annually.

Castro also directed Ginnie Mae, a government corporation that creates mortgage-backed securities, to begin a new pilot program to give more mortgage lenders access to the secondary market and stimulate increased lending to borrowers.

While HUD has accomplished much during Castro’s tenure, the agency can do more to support homeownership and prevent foreclosure. Though the worst of the foreclosure crisis has subsided, far too many Latino families still risk losing their homes to foreclosure today. HUD should take concrete actions to keep struggling families in their homes and prevent needless foreclosure, including by continuing to require firms participating in its Distressed Asset Sales Program (DASP) to ensure that communities are stabilized.

HUD can also extend access to DASP properties to housing nonprofits, which are eager to help struggling homeowners stay in their homes. These properties have recently been prohibitively expensive for nonprofits, compared to for-profit investors. Under Secretary Castro, for the first time loans insured by FHA will be eligible for consumer relief that includes principal reduction as an option. This could also help prevent many foreclosures.

Finally, Congress should vote to restore full funding for the Homeowners Armed With Knowledge (HAWK) program, which would expand mortgage credit to homebuyers who complete pre- and post-purchase housing counseling. Housing counseling is a proven practice that works, providing families with certified professionals who can answer their crucial questions about mortgages and homeownership and help them avoid pitfalls.

As Secretary Castro continues implementing practices designed to boost homeownership and improve the housing sector, we urge him to consider the needs of struggling homeowners and prospective homebuyers from traditionally underserved communities. With half of all first-time home-buyers expected to be Latino by 2020, we cannot delay in ensuring that the American Dream remains accessible to all.