By: Brian Honea
Richard K. Green, Ph.D., is the Director of the USC Lusk Center for Real Estate and a former Senior Advisor for Housing Finance at HUD. He holds the Lusk Chair in Real Estate and is Professor in the USC Sol Price School of Public Policy and the Marshall School of Business. His research addresses housing markets, housing policy, tax policy, transportation, mortgage finance and urban growth. He is a member of two academic journal editorial boards, and a reviewer for several others. His work is published in a number of journals, including the American Economic Review, Journal of Economic Perspectives, Journal of Real Estate Finance and Economics, Journal of Urban Economics, Land Economics, Regional Science and Urban Economics, Real Estate Economics, Housing Policy Debate, Journal of Housing Economics, and Urban Studies. Green recently spoke with MReport about changes to HUD the new administration should make a priority.
What will be the new HUD Secretary’s top priorities?
No matter who the new Secretary is, modernization of the technology underlying the FHA programs is something that needs to be worked on. That's a very nonpartisan thing. It just needs to be done. Getting Congress to agree to fund the modernization of the computer systems is something that goes back to when George W. Bush was president. Brian Montgomery, who was FHA Commissioner at the time, tried to get Congress to agree to it and they wouldn't bend. Ed Golding, who is now running FHA, and Ted Tozer, who is now running Ginnie Mae, have been trying to get this done and they just haven't been able to get Congress to agree to it. Without modernizing the underlying technology, there are real problems ahead, especially for FHA. It's got to happen, or else it's going to shut down at some point, although I don't know exactly when. The computer system that makes it run was not built to be at the scale where it is right now. It's like having an airport with one runway that's designed to handle 10,000 flights a year and now you have 20,000 flights a year. You need more than the one runway.
Which major pieces of housing policy can change from administration to administration?
The size of the Section 8 budget. What the president recommends to Congress has some influence on what Congress does, so whether Section 8 money is frozen, increased, or cut, that's something the president and HUD Secretary have a lot of influence over.
In terms of administrative orders, there are a couple of things. One is how seriously they take fair housing as an issue. I don't have a lot of hope that this administration is going to take it very seriously. I hope I'm wrong about that. The Supreme Court ruled about a year and a half ago that disparate impact is sufficient grounds for determining the existence of discrimination in the housing market. But how resources are deployed in terms of fighting discrimination is something that's very critical and can vary a lot from administration to administration.
The other thing is that underwriting rules are almost entirely administratively determined. How the FHA program is managed—things like rules about servicing, loans that are in default—is something that the administration can decide.
What role is HUD going to play in the broader U.S. and global economy?
In the U.S., it's basically about how many people can afford their housing. Only about a quarter of the people who are eligible for housing assistance can get it now. Globally, the Ginnie Mae security is an important marketable security. Central banks around the world just love it. Sustaining that program is pretty important, because it's a vehicle that allows foreign people to invest in U.S. assets. For all the discussion about trade deficits, one of the things we do in the U.S. is run a capital markets surplus. Our investments, in particular Ginnie Mae, are so appealing. That's a $1.7 trillion market and about a third of that is foreign investors, so making sure that's run well is actually pretty critical to the investing public both nationally and internationally.
The original article can be found here.