Donovan: $25 Billion Mortgage Settlement Was Biggest HUD Accomplishment

After more than five years as secretary of the Department of Housing and Urban Development, Shaun Donovan has played a role in many of the department’s key initiatives, and reminisces on his work in an interview with The Washington Post. Donovan, who played an integral role in reforming the Home Equity Conversion Mortgage program, did not mention anything reverse mortgage-related in his comments.

Among the notable accomplishments he reflected on include sealing a $25 billion mortgage settlement, working to find a solution to homelessness and creating a framework to manage long-term recovery from major disasters.

In an attempt to move the housing market forward, Donovan led negotiations for several months to help secure a $25 billion settlement with mortgage servicers.

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“The settlement delivered not just what we promised the president but far more,” Donovan told The Washington Post. “It held financial institutions accountable for their actions, and it also delivered more than $50 billion in assistance to homeowners and communities when we expected it to deliver $35 billion.”

That settlement, Donovan says, was one of his most memorable moments at HUD. 

Throughout his time as secretary, Donovan faced a sputtering housing market. Going forward, Donovan said housing finance reform “is the single most important thing we can do in the short run to accelerate the recovery and provide more affordable housing.” 

But helping the market recover doesn’t necessarily have to involve housing-specific work, he said. Housing is linked to many factors that drive the economy more broadly, such as growing incomes and household formation. 

“That’s why the president is fighting to raise the minimum wage and to invest in infrastructure that would create jobs,” Donovan said. 

Another problem Donovan faced was working to end homelessness. Finding a way to combat the problem had interested him since his childhood, he told The Washington Post. And through the plan Opening Doors, the department established a commitment to ending veterans’ and chronic homelessness. Within the first three years, Opening Doors lowered veterans’ homelessness by 24%, but has fallen behind on its goal to end chronic homelessness by the end of 2015. Due to budget shortfalls, that goal has been moved to the end of 2016, Donovan said.

The Opening Doors program seeks to create more than just a shelter or transitional housing.

“It’s much easier for them to stabilize their lives when they’re stably housed,” Donovan told The Washington Post. “We get them into supportive housing that has services attached to it, like a case manager who works with the residents and regular medical visits that come into that housing.”

With a focus on creating supportive housing, Opening Doors has lowered chronic homelessness by 16% over the past three years.

Another topic that struck a personal chord with Donovan was his work in creating the National Disaster Recovery Framework, which stemmed from reviewing the affected areas of Hurricane Katrina more than three years after the disaster struck. This framework was later used after Hurricane Sandy devastated parts of the country, hitting Donovan’s hometown and areas where his family and friends lived or owned businesses. 

Through the framework, a website was created which shows what the sea level would be on a street 50 or 100 years into the future — a project that helps demonstrate how communities should be rebuilt to withstand time. Another initiative developed through the framework, a competition called Rebuild by Design, solicited ideas on how to rebuild from people around the country. 

“We awarded over $900 million to the winners and implemented it,” Donovan said in the Washington Post interview. “We also know, to be frank, that these kinds of investments save money. For every $1 you invest in these kinds of measures, you save $4 down the road.”

Donovan is moving into the job of Office of Management and Budget director, replacing Sylvia Mathews Burwell who was nominated to lead the Department of Health and Human Services. 

To read the full interview, click here

Written by Emily Study

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