N.E. HUD chief offers suggestions

The chief federal housing official in New England told a Harvard University audience that his department is poised to help foreclosure-imperiled homeowners navigate the nation’s economic crisis, but he called on President-elect Barack Obama to empower that effort by expanding the nation’s commitment to fair and affordable housing.

Taylor Caswell, New England regional director of the United States Department of Housing and Urban Development (HUD), addressed an audience of approximately 40 at Harvard Kennedy School (HKS) Monday (Nov. 17). He spoke from a personal perspective as outgoing director in a time of administration change, reflecting on his three and a half years at the post.

“There’s great opportunity right now for the next administration to really take a good look at the policies and the issues — and the internal challenges — that are going on at HUD and make it the kind of organization that I have seen it to be on the ground around New England,” Caswell said.

HUD officials are grappling with a national fiscal emergency that has left nearly a quarter of U.S. homes in a negative-equity scenario.

“You can pretty much draw a circle around the communities that are being affected by this,” Caswell said of his region, listing Boston, Brockton, Lawrence, Springfield, and areas of Cape Cod as “acute” in Massachusetts. “At HUD, so far, our response has been primarily driven through the [Federal Housing Administration (FHA)].”

Some FHA programs, Caswell said — such as expanding access to federally backed mortgages, as well as refinancing or adopting troubled federal and nonfederal mortgages into the federally insured system — have been less than “homeruns, in terms of the number of people … helped, or the scope with which [they have] been used by the lending community.”

What has helped, and what Caswell said an Obama administration or the next Congress should augment, is housing counseling. From single families facing the street to the emptying of multifamily houses after an owner loses a property, there are rights associated with each type of tenant. Caswell said education has been effective for both groups.

“Less than 1 percent of individuals who have been through some level of housing counseling have had homes foreclosed,” Caswell said of New England efforts. “HUD funds [these] organizations, places where people can go to learn. [Funding] comes out to be $50,000 to $60,000 in individual grants to these organizations. That could easily be expanded, and small increases will have a big payoff.”

Caswell is an advocate of this kind of boots-on-the-ground strategy. He cautioned that current federal top-down management would not help regional directors solve problems on a community-by-community basis.

“There’s been a move over the past several years, and this predates the current administration, to centralize a lot of the HUD control in Washington, D.C.,” he said. “The tendency is, whenever there’s a single bit of controversy — shoot it to Washington. That’s where [the trouble] begins. Problems languish, languish, and languish.”

Local HUD officials experience regional needs firsthand, Caswell said. Disregarding that direct experience and textured judgment could cause program casualties.

“Public housing … is overregulated to the tipping point,” said Caswell. “We are starting to see large numbers of housing authorities abandon public housing altogether. There is no incentive for [housing authorities] to be creative, because we are on them so much about exactly where their funds are going.”

New boundaries of regional autonomy should be set, according to Caswell, without abandoning consistency throughout HUD.

“There are ways of working out that little problem,” he said of consistency between regions. “It’s called management.”

Caswell’s portfolio of recommendations also includes energy-efficient construction and housing for senior citizens. Both represent revenue for New England housing authorities, he said.

“You want to talk about low-hanging fruit? This is an area that can see really substantial benefit for a minimal investment,” Caswell said.

For instance, energy performance contracts allow housing authorities to keep a large portion of savings generated by features such as high-efficiency boilers and windows. Recently, that meant $12 million for Lowell, Caswell said. On a smaller scale, energy-efficient mortgages incentivize the addition of green features to newly purchased properties — up to $15,000 per mortgage.

“Why [don’t] we have energy-efficient mortgages attached to every single FHA mortgage that is ever written?” Caswell asked. “It makes no sense that that kind of money gets left on the table.”

All of this requires an Obama administration and a Congress that place high value on individual field offices working directly with regional residents, said Caswell.

“I really hope, as this next administration comes in, they really take advantage of a lot of these issues … really push them beyond where we’ve been able to push them, so far,” Caswell said.