HUD Secretary Announces Nearly $1 Billion To Improve Public Housing

Visit to Pennsylvania highlights grants that will help the elderly, boost energy efficiency and create jobs

WASHINGTON, D.C. – U.S. Department of Housing and Urban Development Secretary Donovan today announced that HUD is offering nearly $1 billion to make substantial improvements to thousands of public housing units nationwide. The Public Housing Capital Funds being offered are provided through The American Recovery and Reinvestment Act of 2009 (Recovery Act) and are designed to help public housing authorities improve the quality of their housing stock, promote energy efficiency and create jobs.

The announcement came during a visit to Marshall Lee Towers in Conshohocken, Pennsylvania, which is home to 91 elderly and disabled residents. Marshall Lee Towers is one of seven residential properties managed by the Montgomery County Housing Authority (MCHA), which has already received $1,141,093 in HUD Recovery Act Capital Fund dollars. Projects planned for Marshall Lee Towers with these funds include upgrades to facilities that will create a significant reduction in water and energy use. The Secretary highlighted MCHA as an example of how Recovery Act dollars are being used, not only to create jobs and jump start the nation’s economy, but also to reduce energy costs among public housing facilities. Montgomery County Housing Authority houses 1100 residents in 615 homes throughout the County.

“I am pleased to be at Marshall Lee Towers in Pennsylvania today to announce another substantial investment we are making to improve public housing in America, create jobs and grow local economies,” said Secretary Donovan. “The funding in the Recovery Act, signed by President Obama, will give local housing agencies the resources they need to provide quality housing, especially for the elderly and persons living with disabilities. These funds will also help to transform distressed public housing projects, improve energy efficiency and lower the operating costs for housing authorities.”

In March, HUD allocated nearly $3 billion in Recovery Act funding to more than 3,100 public housing authorities across the U.S. Distributed by formula, that funding is already being put to work to improve public housing and create safer, more livable environments for lower income residents. The additional $1 billion announced today will be awarded competitively.
More HERE

President Barack Obama, HUD, and Low-Income Homeowners

The Examiner.com is reporting on HUD in a great article regarding the man who will take over HUD. Wendy Gittleson of the North Denver Real Estate Examiner writes:

24 days from today, the man who campaigned on promises of “Hope” and “Change”, will be sworn in as the 44^th President of the United States. You’d arguably have to look back to FDR to see a new administration faced with so many dire challenges. While the cause of our situation is open for debate, it’s up to President Barack Obama to make fresh lemonade from the rotten lemons he’ll be handed.

If you’ve ever turned on a TV, read a blog or newspaper, or even walked down your block, you know the housing market is in deep trouble. Nationally, home values are down over 10% from a year ago. In nearly every neighborhood, there are homes in disrepair, showing signs of abandonment. Risky mortgages and job losses have put people in a position where they can’t afford their mortgage payments. They can’t sell without taking a serious loss, so they often just walk away and destroy their credit in the process. North Denver is faring better with a slight increase in property values, but hope is still a rare commodity in the real estate world.

The President Elect’s website lays out an ambitious agenda designed to help all homeowners, not just those in trouble. In my ongoing series, I’ll examine his policy agendas and his decisions and how they will affect the real estate market, especially in North Denver.

Until Obama takes office, we have little to judge but his promises. However, he has made some very concrete decisions in the form of cabinet nominees. One such nominee, Shaun Donovan, who has been chosen to head up the Department of Housing and Urban Development, has received rave reviews from economists and from the National Association of Realtors.

Donovan is currently the New York City Housing Commissioner. Senator Charles Schumer of New York calls Donovan, “one of the most effective housing commissioners in New York City’s history.” Prior to that position, he was a managing director at Prudential Mortgage Capital, where he was in charge of its portfolio of investments in affordable housing loans. Donovan worked for HUD under the Clinton administration.

Donovan will be part of an economic team lead by Tim Geithner, Obama's nominee for Treasury secretary, and Larry Summers, who will chair Obama's National Economic Council. As head of HUD, Donovan’s main challenge will be to confront the escalating foreclosure crisis. Despite the country’s deficit situation, Donovan will not be without funding. Obama plans on using the second half of the $700 billion bailout money to help homeowners in need. Congress set aside $300 billion to help homeowners trade their current mortgages for more affordable ones, though few have applied.

Donovan has a proven record of curtailing foreclosures and of making homeownership more affordable. His approach is to the left of center, though not anti private sector. In 2006, he was quoted as saying, “I’m in government because of the role of government in setting rules and working in partnership with the private sector. On the other hand, there’s no way you could ever get to a scale that can really affect the housing problems in this country without working with the market.” More HERE
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HUD secretary, could rebuild agency's Clinton-era HOPE VI initiative

Source: Baltimore Sun Editorial

In choosing Chicago schools chief Arne Duncan for secretary of education this week, President-elect Barack Obama tapped a leader with demonstrated hands-on experience navigating the pitfalls of urban public policy debates and the conflicting demands of rival political constituencies.

Mr. Duncan, a Harvard graduate and longtime ally of Mr. Obama's, has headed Chicago's public school system since 2001, where he earned a reputation for moving forcefully to improve troubled schools without alienating teachers and their unions.

As Mr. Obama's education secretary, he would be ideally positioned to mediate between two contending groups: advocates of greater school accountability and tougher teacher standards, and those who believe government isn't doing nearly enough to help failing schools.

Having served as superintendent of the nation's third-largest school system, Mr. Duncan showed his dedication to innovation as well as a keen awareness of the problems facing urban schools when he shut down the failing Dodge Renaissance Academy on Chicago's West Side in 2002, then reopened it as a lab school staffed by classroom teachers seeking advanced education degrees. The experiment has been cited as a model of reform that could be replicated in failing schools across the country.

Mr. Obama indicated a similar sensitivity to the problems of cities by his choice of Shaun Donovan, head of the New York City Department of Housing Preservation and Development, as secretary of housing and urban development. Mr. Donovan is best known as a leading advocate of affordable housing initiatives in New York and elsewhere. As HUD secretary, he could build on that reputation by revitalizing the agency's Clinton-era HOPE VI initiative, which provided money for cities like Baltimore to demolish crime-ridden high-rise public housing complexes and replace them with new, mixed-income, low-rise developments and urban green space.

More HERE

NAACP Claims Misuse of Katrina Funds

The Wall Street Journal is reporting on how Advocates for the poor filed a lawsuit Wednesday trying to derail Mississippi's plan to use $570 million of Hurricane Katrina disaster grants to rebuild and expand the state's commercial-shipping port in Gulfport.

In the lawsuit, filed in Washington, the Mississippi chapter of the NAACP and other plaintiffs contend that the Bush Administration did not do required reviews to make sure the disaster grants would benefit low- and moderate-income residents when it accepted the state's plan to super-size the port.

The plaintiffs asked Federal District Court Judge James Robertson to freeze the money, which they say should be used to rebuild low-income housing. Their lawyers said they believe the Obama Administration will be less deferential to Mississippi's governor, Haley Barbour, a former chairman of the Republican National Committee and a big backer of the port expansion.

The dispute over the state's use of $5.48 billion of federal disaster grants is flaring up at a time of economic turmoil as well as political transition. International shipping has slowed while unemployment has been rising, though at 5.7% the unemployment rate in Gulfport and neighboring Biloxi is under the national average of 6.1%.

Gov. Barbour has long argued that Gulf Coast residents need jobs as well as housing. In response to the lawsuit, he issued a statement saying restoration of the port "is critical to recovery of the Gulf Coast from the worst natural disaster in American history."

A spokesman for the Department of Housing and Urban Development, which manages the disaster-grant program, said the agency hasn't seen the lawsuit. In the past, HUD officials have expressed misgivings about the port plan but said the agency didn't have the power to block it.

Though New Orleans received most of the national attention after its levees failed and Hurricane Katrina flooded the city in 2005, the storm swept away entire communities in Mississippi. It also damaged the port, which before the hurricane mainly handled imports of bananas and exports of frozen chickens. The port today is handling shipping, but hasn't recovered to its previous level of activity.

The state government has been praised for its swift response to the disaster, but critics in Mississippi and Washington, D.C., contend that state-run recovery programs have favored the well-to-do, especially a grant program for homeowners.

Mississippi officials say 40% of the grants went to homeowners of low or moderate income, and that a second $605 million grant program is directed at those homeowners.

But programs to rebuild rental units have been slower to get off the ground, and efforts to build new apartments didn't get under way until last summer.

More than 5,500 families still live in trailers and temporary government housing, according to the lawsuit, and many others can't find adequate housing because rents have soared. Four low-income women and the Gulf Coast Fair Housing Center, an advocacy group, joined the NAACP in filing the lawsuit. More HERE

Feds Pushed Subprime Loans, Execs Say

Source: Michael P. Tremoglie, The Bulletin

Some former Fannie Mae and Freddie Mac CEOs, the government-sponsored enterprises (GSEs) that provide liquidity for the mortgage market, said they were pressured by the federal government and advocacy groups to purchase high-risk mortgages.

During a Dec. 9 hearing of the House Oversight and Government Reform Committee, which was investigating the role the companies had in the current mortgage crisis, four former CEOs; Richard Syron and Leland Brendsel of Freddie Mac, as well as, Franklin Raines and Daniel Mudd of Fannie Mae, were asked by U.S. Rep. Patrick T. McHenry, R-N.C., if they ever felt pressure by Congress to make risky loans.

“In order to fulfill your affordable housing goal … given to you by Congress … did you feel pressure from Congress to do riskier mortgages?” Mr. McHenry asked.

Initially, there was some confusion by Mr. McHenry’s use of the word Congress. Three of the four replied that the goals were furnished to them by HUD, not by Congress — and that they did feel pressure to make high risk transactions.

“The goals came from HUD (U.S. Department of Housing and Urban Development) and meeting those HUD goals created pressure,” Mr. Mudd said.

“As the goals went up, and the goals were specified by HUD, you … had to take more risk,” said Mr. Syron.

Mr. Raines said that the goals set by HUD were forcing the companies “to entertain loans they would not have otherwise entertained.”

Mr. McHenry then asked if there were pressure from advocacy groups and Mr. Syron responded that was true.

U.S. Rep. Michael Turner, R-Ohio, asked Mr. Raines if the Community Reinvestment Act (CRA) provided the “fuel” for increasing subprime loans.

Mr. Raines acknowledged the legitimacy of his point. He said it could have been possible they acted as a catalyst. But, he added, it was difficult to know if a policy went from participating in the market to encouraging bad behavior.

U.S. Rep. Stephen Lynch, D-Mass., said information gained from corporate communications, in the committee’s possession, indicated that warnings were issued to all of them about the dangerous ratio of loans to assets and the types of loans. But these warnings were ignored despite the fact the companies were jeopardized.

Mr. Lynch said that there was a huge commitment by Fannie Mae and Freddie Mac to purchase loans of “questionably quality.” Thirty-three percent of their total 2006 and 2007 mortgage portfolio came from these types of loans.

But not everyone wanted to blame Freddie Mac and Fannie Mae. U.S. Rep. Edolphus Towns, D-N.Y., defended the companies and criticized those who questioned them.

“We have heard some people claim that poor people are to blame for this,” he said during the hearing. “[T]he way this argument goes, the federal government forced the banks to give mortgages when they shouldn’t have — to people who were not credit-worthy, then forced Fannie Mae and Freddie Mac to buy up those bad mortgages.” More HERE

Tuscaloosa Housing Authority Under Fire!

TUSCALOOSA | Tuscaloosa Housing Authority officials are working on a response to a corrective action plan recommended by the U.S. Department of Housing and Urban Development.

“I’m just one commissioner, but my inclination is to do exactly what HUD asked us to do,” said Jim Phillips, a member of the Housing Authority board of commissioners. “I don’t understand any other position but that.”

In September, HUD officials made an on-site visit to the Housing Authority and generated a report in October. The report took exception to some recent THA real estate purchases, its relationship with the nonprofit Tuscaloosa Affordable Housing Corp. and personnel and management issues.

The corrective action plan addresses each of the issues raised in the report and asks the authority what steps it will take to remedy the problems.

Rick Herbert, THA executive director, took issue with some of the recommended remedies.

“Some of this stuff we’ve answered repeatedly,” Herbert said. “How many times do we have to answer them before they’re answered?”

He also said that since HUD drafted the corrective action plan, THA has been taken off “manual review.” That means that HUD no longer reviews all of THA’s expenditures before the agency spends money.

The most pressing issue for THA is property bought with loans that encumber Housing Authority assets. HUD has told THA that it must repay any federal funds used to buy the property or make debt service on the property. And THA can’t make any debt service with federal funds.

The Housing Authority has some non-federal funds that it can use to make debt payments, Herbert said.

“I’ve got enough right now to do debt service, and the banks are willing to give us an extension,” Herbert said.

The property will be refinanced and eventually transferred into the Tuscaloosa Affordable Housing Corp.’s name.

But the THA board hasn’t determined yet how it will repay the loans without federal funds. The nonprofit has no dedicated funding source.

If necessary, THA can sell the property, Herbert said. He said he’s been approached by a developer who offered to buy all of it. But he hesitates to do that because it would kill the authority’s chances of getting a Hope VI grant.

In its corrective action plan, HUD wants a list of property that has been and will be deeded to Tuscaloosa Affordable Housing and copies of the deeds. It also wants specifically to know when a house purchased from City Council President Harrison Taylor is transferred to the nonprofit.

HUD wants a complete list of loans used to purchase the property and it wants documentation showing the loans have been terminated or transferred to Tuscaloosa Affordable Housing Corp. THA must repay $153,000 in developers’ fees from the McKenzie Court Hope VI project, $15,000 from the THA operating fund and $9,400 from the THA rental account used to make interest payments on the loans. Repayment must come from non-federal funds. More HERE

Who Obama Pick To Run HUD

Obama Teams Casting a Wide Net

According to Andrew Ackerman , Audrey Dutton , Peter Schroeder , and Patrick Temple-West

at Financial-Planning.com Obama's choice for Housing and Urban Development would likely revitalize the department, according to sources who contend it has lost its focus on helping communities with affordable housing initiatives in favor of home ownership under the Bush administration.

"The first way to start making things better is stop making them worse," said Anthony Freedman, a tax lawyer with Holland & Knight LLP here.

During the past eight years, the White House has tried to severely cut funding for, or kill, several HUD programs that provide funds used in conjunction with bonds, claiming the programs are inefficient. The administration has tried to downsize the community development block grant program, which provides grants to state and local governments to fund economic development projects financed by muni bonds. It has tried to abolish the HOPE VI program, which provides grants to public housing authorities to demolish severely distressed public housing units and replace them with mixed-use, mixed-income developments. The grants are often used as leverage for projects that are financed with tax-exempt bonds.

Freedman contends an Obama administration would fully fund the CDBG program and "provide a sufficient budget for the department to function."

Obama and Democratic lawmakers could put HUD in a better position to work on new affordable housing initiatives, he said.

"Those two factors would lend to a significantly increased role for HUD and really a serious effort to rebuild the department's capacity," Freedman said. "I think there are a lot of department alumni who have hopes for a resurrected Department of Housing and Urban Development. You can only imagine what a reinvigorated HUD could do."

Another housing advocate agreed. "Regardless of who it is - and we're not pushing anyone - we won't have to play defense as we've had to do the past eight years," he said.

Miami Mayor Manuel Diaz and Atlanta Mayor Shirley Franklin are among the leading candidates for the top HUD [pst, with Diaz currently thought to be the favorite for the position, according to housing sources.

Diaz, a Cuban native who immigrated to the United States when he was seven years old, has served as Miami's mayor since 2001. During his tenure, he oversaw the city's bond rating upgraded from junk to single-A by all three rating agencies. Since 2008, he also has served as the president of the U.S. Conference of Mayors. Due to term limits, Diaz's tenure as Miami mayor will end in 2009.

Franklin has served as Atlanta's mayor since 2001, and has been praised for reining in the city's budget deficit and repairing its ailing sewer system.

Other names mentioned for the post include Los Angeles Mayor Antonio Villaraigosa, Saul Ramirez Jr., a former deputy HUD secretary and executive director of the National Association of Housing and Redevelopment Officials, Bronx borough president Adolfo Carrion Jr., and Nelson Diaz, a former judge and HUD general counsel.

Vallaraigosa told reporters last week that while he spoke with Obama about positions in the new administration, he will not accept any because he wants to stay on as mayor.

Shaun Donovan—who left his position as chairman of the New York City Housing Development Corp. and commissioner of the city's Department of Housing Preservation and Development to work on the Obama campaign—has been mentioned for a "high post" in HUD, though sources have indicated he would not get the top spot. More HERE

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HUD Secretary Alphonso Jackson under investigation

U.S. Housing and Urban Development Secretary Alphonso Jackson under investigation

He denies influencing selection of friend as contractor in N.O.

By David Hammer

U.S. Housing and Urban Development Secretary Alphonso Jackson said Thursday he will cooperate with investigators after questions arose about how one of his friends got nearly half a million dollars for work at the Housing Authority of New Orleans, which currently is under the oversight of the federal government.

Jackson, who testified before Congress this year that he doesn't intervene in awarding contracts, acknowledged he may be under investigation in a case that involves just that.

Others connected to the case say HUD's inspector general and the FBI have seized HANO equipment and have asked questions about Jackson's possible role in HANO's hiring of Jackson's friend, South Carolina construction contractor William Hairston. Hairston's construction company was hired by HANO in January 2006 and subsequently won a no-bid "emergency" contract awarded to Hairston's construction company in July 2006. More HERE

Federal Budget Cuts' Impact Public Housing

10 percent of phoenix's public housing units empty.

Crystal Lopez paints the toenails of her daughter Alexis, 2, while Areana, 5, and Anthony, 11 months, play outside her Phoenix apartment. Lopez says she moved more than 15 times in the two years she waited to get into public housing.

Thousands of people in Phoenix are waiting for a place to call home

Casey Newton
The Arizona Republic

More than 13,000 people are desperate to move into Phoenix public housing, which offers stable, affordable and relatively safe housing to the city's poorest residents.

Despite the long waiting list, nearly 10 percent of Phoenix's public housing is vacant, with the average unit sitting empty for more than five months before the city's housing staff places a new tenant.

Some 250 units are going unused, costing the city as much as $600,000 a year in lost revenue - revenue that would fund the very operations needed to fill the units more quickly.
The reason, housing officials say, is a staff shortage brought about by budget cuts at the federal Department of Housing and Urban Development.

Two years ago, Phoenix laid off 30 percent of its Housing Department staff. Today, the city lacks the resources to quickly refurbish apartments after they're vacated, officials say, or to process applications in a reasonable amount of time.

Funding shortfalls have required painful cuts across the nation, with housing authorities laying off staff members by the hundreds. But in other cities, vacancy rates remain far lower.

Phoenix maintains 2,473 federally subsidized apartments and homes, and the average unit sits empty for more than 23 weeks. Despite facing similar budget pressures, cities such as Dallas and San Antonio move new tenants into vacated units in as little as three weeks.

Concerned about the department's performance, some Phoenix City Council members are discussing dismantling the Housing Department, either privatizing it or folding it into another city department. More HERE