Former HUD Chief: Don't Blame Ownership Push for Crisis

It would be a "mistake" to blame the housing crisis on the government's home ownership push, a former housing secretary during the Clinton Administration said at a conference in Texas. Henry Cisneros, now executive chairman of CityView, a $2 billion urban institutional investment firm which finances commercial and residential developers, told reporters attending the National Association of Real Estate Editors' meeting that while it's clear some renters should never have been given loans, the heart of the downturn must be laid at the feet of "unscrupulous" companies "like Ameriquest and others" which "hijacked" the Clinton and later Bush housing strategies "to make money pushing mortgages" to borrowers who otherwise couldn't qualify. Cisneros, citing the fact that persons of color lag far behind whites in terms of home ownership, also said it "would be a mistake to walk away from the goal of homeownership because of this crisis." The nation's 10th Secretary of the Department of Housing and Urban Development, who served from 1993 to 1997, and the former mayor of San Antonio said current HUD Secretary Shaun Donovan "will be graded on one thing: How well he addresses the foreclosure problem." But he wasn't so sure Sec. Donovan will get high marks, no matter how hard he tries, because the Federal Housing Administration, the agency that has been asked to deal with the assignment, is simply not equipped to take it on. "You can't give a mission to an agency that does not have the capability to handle it," Cisneros told the conference. "The (foreclosure) numbers are too far off the scale" for the FHA to do any amount of meaningful loan modifications. After he left HUD, Cisneros became a director at Countrywide Financial Corp., once a top player in subprime and payment option ARMs. He sold most of his stock in the lender before it collapsed and eventually was sold to Bank of America.