FHA can remain financially solvent while still providing lower-income borrowers with access to mortgages, says nominee to head HUD

WASHINGTON , June 17, 2014 () – Julian Castro, President Barack Obama’s nominee to head the U.S. Department of Housing and Urban Development, said it’s possible to give lower-income borrowers access to mortgages while keeping the Federal Housing Administration financially solvent.

“My perspective, whether it relates to requirements for down payments or other measures, is that we achieve this balance to stay within the historic mission of the FHA to ensure that first-time homebuyers, that folks of modest means who are creditworthy, that they have the opportunity to reach the American dream of homeownership,” Castro, 39, said at a confirmation hearing today held by the Senate Banking Committee in Washington. “But at the same time that we have policies in place that ensure what happened a couple of years ago doesn’t happen again.”

The FHA is a mortgage insurer run by HUD that helps lower- income borrowers buy houses. Losses of more than $50 billion on mortgages it insured as the housing bubble burst caused it to take a taxpayer subsidy of $1.7 billion last year, the first in its 80-year history.

Castro, a third-term mayor of San Antonio, has focused on increasing the number of affordable rentals in his city and redeveloping neighborhoods plagued by crime and joblessness.

Democratic leaders have said they expect Castro will be approved by their party’s majority in the full Senate. He would replace outgoing HUD Secretary Shaun Donovan, who has been named to lead the Office of Management and Budget.

To contact the reporters on this story: Alexis Leondis in Washington at aleondis@bloomberg.net; Clea Benson in Washington at cbenson20@bloomberg.net To contact the editors responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net Anthony Gnoffo, Maura Reynolds

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.