WASHINGTON, DC - President-elect Barack Obama's choice for Housing secretary will face the daunting challenge of stemming foreclosures and stabilizing a housing crisis that has led to the nation's worst economic meltdown in decades. Shaun Donovan, a New York City housing official tapped by Obama to lead the Department of Housing and Urban Development (HUD), also will focus on keeping homes affordable in the first place, Obama said.
Banks are on pace to initiate 2.25 million foreclosures this year, up from the prior annual pace of fewer than 1 million, Federal Reserve Chairman Ben Bernanke said this month. One in 10 homeowners are behind on mortgage payments or in foreclosure, data from the Mortgage Bankers Association show. Obama has said he wants to use the second half of the $700 billion economic bailout fund approved by Congress this fall to reduce the rate of foreclosures.
Donovan, a 42-year-old Harvard-trained architect, oversees a $7.5 billion program in New York tasked with creating or preserving 165,000 affordable housing units as commissioner of the city's housing preservation and development agency for Mayor Michael Bloomberg. City leaders say they are about halfway toward the goal.
"New York City and cities like us across the country cannot preserve this resource on our own," Donovan said at a June congressional hearing on affordable housing. "We need the commitment and partnership of the federal government." Obama spokesman Nick Shapiro said Donovan, who needs Senate confirmation, was not available for interviews.
Obama, who was out with his daughters Sunday selecting a Christmas tree, has rapidly named Cabinet positions with oversight of the economy, including heads of the Treasury and Commerce departments. HUD, Obama said, will play a key role in his plans to create or save 2.5 million jobs in two years. "To end this economic crisis, we must end the mortgage crisis, where it began," Obama said during his weekly address Saturday. Donovan "knows that we can put the dream of owning a home within reach for more families so long as we're making loans in the right way."
Donovan, a New York native, has master's degrees in public administration and architecture. He served as an assistant HUD secretary for multifamily housing under former president Bill Clinton. He also worked as a managing director of lending and affordable housing investments at Prudential Mortgage Capital.
Conrad Egan, president of the non-partisan National Housing Conference, said Donovan's selection means Obama's administration will put a greater emphasis on affordable housing than HUD has in past years. "HUD has not been an articulate or persuasive spokesman for affordable housing in recent times," Egan said. "HUD, of all the Cabinet (departments), needs to take on that responsibility."
Howard Husock, vice president of policy research at the Manhattan Institute, called Donovan a "smart, capable and creative guy," but said the success New York has had creating affordable housing has been driven largely by the real-estate boom in New York. Husock said he hopes Donovan can find ways to help more small landlords get into business. "If he were willing to use his bully pulpit. I think it'd be an opportunity to help the private market address our current crisis," Husock said.
Source: USAtoday.com