13 December 2008 ~ 0 Comments

Obama Picks Housing Secretary

Sunday, December 14, 2008

CHICAGO — President-elect Barack Obama rounded out his economic team Saturday, naming his choice for housing secretary, and gave new prominence to the mortgage crisis that has helped drag the country into a recession.

New York housing commissioner Shaun Donovan has been nominated to be secretary of housing and urban development, a post that Obama said would play a lead role in his efforts to stem the tide of foreclosures and rebuild the nation’s efforts to expand homeownership.

Speaking Saturday during his weekly radio address, Obama also said he had asked his economic team to develop a “bold plan” to increase the number of people who can stay in their homes despite being threatened with foreclosure.

The Federal Reserve estimates that lenders are on track to initiate 2.25 million foreclosures this year, more than double the annual pace before the crisis. Also, falling home values and a plunging stock market contributed to a $2.8 trillion in lost household wealth in the third quarter.

Donovan is joining a team led by Timothy Geithner, Obama’s nominee for Treasury secretary, and Larry Summers, who will lead Obama’s National Economic Council.

“We need to approach the old challenge of affordable housing with new energy, new ideas, and a new, efficient style of leadership,” Obama said when naming Donovan as his nominee. “We need to understand that the old ways of looking at our cities just won’t do.”

Donovan will inherit various tools to confront the problem. Obama has said he wants to use the second half of a $700 billion financial industry rescue plan to help stem foreclosures.

Also, Congress put in place a $300 billion program this year that is designed to let troubled homeowners swap risky loans for more affordable ones. However, few have applied.

Moreover, homeowners have continued to default on mortgages despite government efforts to lower interest rates and modify repayment terms.

Obama said Donovan will bring “fresh thinking, unencumbered by old ideology and outdated ideas” to the Housing and Urban Development Department to help resolve the economic crisis.

Donovan, head of New York’s Housing Preservation and Development Department, is a former Clinton administration official with a reputation for curtailing foreclosures among low-income residents, developing affordable housing and managing the nation’s largest housing plan.

Additional material from The Washington Post.