Department of Housing and Urban Development Secretary Julián Castro says more people need to gain access to home financing.
The HUD secretary said that bad loans and risky secondary market products from a few years ago were responsible for the housing crisis.
While it might have been too easy to obtain approval for a home loan during that period, it has now become too hard.
Castro made the remarks Tuesday at the Bipartisan Policy Center 2014 Housing Summit, according to a prepared statement.
“The pendulum has swung too far in the other direction,” he said.
Castro noted that 13 million people have credit scores between 580 and 680 — far below the 750 average on Fannie Mae and Freddie Mac loans. While many of these consumers are ready to own a home, they can’t qualify.
He explained that the country needs to move from a government-dominated housing finance market to one that relies more on private capital.
This goal is being helped along with the passage of the Johnson-Crapo bill in the Senate Banking Committee. But such a bill needs to become law.
Castro highlight numerous steps being taken by the Federal Housing Administration to help lenders and FHA better manage risk.
He also noted that Ginnie Mae’s pilot program with the Federal Home Loan Bank of Chicago is expected to provided better access for small financial institutions to FHA, Department of Veterans Affairs and rural housing programs.
A nationwide effort planned for next year is expected to help even more lenders.
Mortgage Bankers Association President and Chief Executive Officer David Stevens issued a statement suggesting that Castro’s first major policy speech indicates an opportunity for the industry to collaborate with HUD.
“We welcome his invitation to work together and completely agree that we should be looking for ways to attract private capital back into the market, establish certainty for lenders and protect taxpayers for the future,” Stevens said.
Castro noted that HUD has 8,500 employees, down by nearly half from 16,500 in 1981.
