WASHINGTON — In his first major policy speech as the new housing secretary, Julian Castro on Tuesday said policymakers should focus on steps to expand the housing market.
"It is time to remove the stigma associated with promoting homeownership," Castro, the former San Antonio mayor, said at a housing summit sponsored by the Bipartisan Policy Center.
Castro, who was sworn in to lead the Department of Housing and Urban Development in July, expressed support for a bipartisan Senate bill to reform the housing finance system and called for steps meant to make lenders more confident about extending credit.
Lending standards, he said, have become too tight. "This has to change," Castro said.
To try to boost lending, Castro has decided to stick with a roadmap laid out by Federal Housing Administration Commissioner Carol Galante, who will be stepping down later this year.
The FHA is planning to move ahead with a housing counseling program called Homeowners Armed with Knowledge — HAWK. FHA borrowers that adhere the counseling regime will "save on the average nearly $10,000 over the life of the loan," Castro said.
FHA has also put out a Loan Qualify Assessment Framework to provide lenders with clear underwriting guidelines to help them identify loan defects and determine how serious those defects are.
HUD posted the new framework online Tuesday for lenders to review, and the FHA is accepting feedback on the plan.
"By clarifying the compliance process, we're giving lenders the confidence they need to lend," Castro said.
The new secretary said he supports the housing finance reform bill co-sponsored by Senate Banking Committee leaders Tim Johnson, D-S.D., and Mike Crapo, R-Ida. The bill would wind down Fannie Mae and Freddie Mac but still create a new government backstop for the private securitization market. Yet even though the legislation passed the Senate Banking Committee with support from members of both parties, opposition from key Democrats has stalled its advance.
"The bipartisan passage of Johnson-Crapo by the Senate Banking Committee was a huge step forward," Castro said. "Now we must keep pushing until housing reform legislation gets over the finish line — once and for all."