Housing Secretary Nominee Donovan Urged to Fight Foreclosures
Shaun Donovan, a housing official of New York City, has received a warm welcome from Senate banking committee members during a confirmation hearing for his nomination as secretary of the Department of Housing and Urban Development (HUD).
Committee members urged Donovan to intensity efforts to address the foreclosure crisis in order to stabilize the housing market and expedite the recovery of the U.S. economy.
During the confirmation hearing, Senator Robert Mendez called for the immediate change in the HUD.
Former HUD secretary Alphonse Jackson resigned from his post after he publicly bragged that he granted contracts based on political favoritism.
Meanwhile, Steve Preston, current HUD secretary, lacks expertise in handling housing policy despite his experience in financial services.
The HUD has been criticized over its lack of effort to prevent the increase in the number of foreclosed homes in the country. The agency has been overtaken by the Federal Deposit Insurance Corp. (FDIC) and the Treasury Department in terms of programs to help homeowners who are facing foreclosures.
The HUD’s Hope for Homeowners, a voluntary program to help struggling homeowners avoid foreclosures, is considered to be a failure.
Donovan noted that the program only received an estimated 100 applications during its first month of operation. The voluntary program is expected to help about 400,000 homeowners who are facing the threat of losing their properties.
Some Senate banking committee members urged Donovan to follow FDIC’s program which mandates several lenders to modify terms of mortgage loans to reduce the number of foreclosed properties.
Donovan made a commitment to the campaign, “Outreach and Education” to expedite the use of money after he expressed his concerns that several recipients of the fund lack experience in managing repossessed houses.
If confirmed, Donovan will have an automatic seat on the boards responsible for the $700 billion economic recovery fund, Troubled Assets Relief Program which is hoped to help homeowners avoid foreclosures.