Who knew the place we count on for security and comfort—our refuge from life’s daily stresses and struggles—could itself be the eye of a nightmarish storm? For millions of Americans, the purchase of a home was also their financial Waterloo, and for the entire global economy, American housing will long be synonymous with classic swindles, financial tragedies and economic black holes. Unraveling this mess and shoring up our still free-falling economy will also mean restoring the real meaning and value of house and home.
The good news is that Barack Obama seems to understand exactly that point, and has chosen an apparently excellent candidate to lead the effort. In announcing his choice for Secretary of Housing and Urban Development (HUD), Shaun Donovan, he succinctly defined both the problem and his proposed tack toward a solution:
“To end this economic crisis, we must end the mortgage crisis where it began. This all started when Americans took out mortgages they couldn’t afford. Some were reckless, aware of the risks they were accepting, but many were innocent, tricked by lenders out to make a quick buck. With banks creating securities they could not value, and regulators looking the other way, the problem began infecting the whole economy, leading to the crisis we’re now facing.
It not only shakes the foundation of our economy, but the foundation of the American Dream. There is nothing more fundamental than having a home to call your own. It’s not just a place to live or raise your children or return after a hard day’s work — it’s the cornerstone of a family’s financial security.”
There is some lively debate about the merits of bailing out homeowners whose objectives were greedy or who should have been a lot more prudent. But the sins of these homebuyers pale in comparison to those of the lending agencies and the homebuilders, who knew they had stirred up a poison, but hoped—against the truth of 7th grade math—that the numbers of survivors would sufficiently exceed the numbers of victims. As I said in an earlier post, the greatest of crimes in this story was in the mixing of the Kool-Aid and offering the drink, not in accepting it. Therefore, it is unfortunate that the bailout has gone this far without offering a rescue path to the 1.5 million more homeowners now facing personal financial ruin. It looks as if Obama intends to change that:
“To stem the rising tide of foreclosures and strengthen our economy, I’ve asked my economic team to develop a bold plan that will dramatically increase the number of families who can stay in their homes.”
Along with the rest of the Obama’s economic brain trust, it is clear that dealing with the foreclosures would be one of the most important issues on Shaun Donovan’s plate as the Secretary of HUD (assuming he is confirmed by the Senate). An architect by training, he has most recently been the head of New York’s Housing Preservation and Development Department and already has a reputation for helping to prevent low-income foreclosures and developing low-income housing. He appears to be an excellent selection to lead HUD, but like everybody coming in with Obama to clean up this multi-faceted mess, he’ll need to rise like crazy to the nearly impossible looking situation. I do think it’s critical that Obama’s leaders and advisors include a person who will champion for homeowners and homeownership.
In promoting Donovan, Obama also acknowledged that HUD hasn’t always lived up to its mission and appears that he will expect change and improvement in the Housing Department, too.
“Since its founding, HUD has been dedicated to tearing down barriers in access to affordable housing — in an effort to make America more equal and more just. Too often, these efforts have had mixed results.”
HUD was founded in the civil rights era and therefore was intended to focus on developing initiatives and incentives to increase access to decent housing, particularly for minorities. Nothing could be more important. Its genesis was a high-minded, humanitarian mandate, but its four decade history is also about the loss of the original focus and the downward fate born of continual capitulation and compromise. It’s what happens when “low-income” and “affordable” become the excuse for just plain bad, as if the poor can somehow afford less energy efficiency, lower quality structures and worse investments. It’s a common, predictable refrain in which HUD should be the obstinate objector, but instead tends to help define the shoddy bottom. If you want to know just how bad things are allowed to be, HUD-code (manufactured homes) has the claim to that. They are shacks. In their urban programs, they have sometimes fostered the conditions for slums and unlivable tenements. In a 2006 article in The Village Voice, HUD was called “New York City’s worst landlord.”
So, as the head of HUD, Donovan would have both complex challenges and low fruit, but it’s all about how important affordable, good quality homes are to all of us. If we are a great nation, we have to prove it with our housing. To rephrase Churchill, how we live becomes who we are, and who we are becomes how we live. We need to change the perceived need for extravagance beyond our means on one side, while also creating methods that can provide for real needs within minimal means on the other. We can do it. We need new leadership and new creativity, but mostly there needs to be the simple resolve to get it right and no Plan B: we must put America’s housing on a better, more sustainable track. I hope the Obama-Donovan team will be up to the task.