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Castro Sworn in, Faces New Challenges at HUD

As the newly sworn-in Secretary of the U.S. Department of Housing and Urban Development (HUD), Julian Castro will need to perform a complicated balancing act to move the agency forward during the current unsteady recovery.

President Barack Obama chose Castro, the former San Antonio mayor, to replace Shaun Donovan as the HUD secretary. In turn, Donovan was selected to be the White House budget chief. With Castro emerging as a key Hispanic leader in the Democratic Party, the appointment gives him a national platform to demonstrate his administrative skills and his political acumen in dealing with multiple parties who have strongly diverse interests.

He takes over an agency with 8,000 employees and a $46 billion annual budget.

With home prices finally starting to stabilize after the massive housing market drop in 2009, Castro will likely focus on providing HUD funding to boost disadvantaged communities.

The Obama administration has made it clear that it wants to make it easier for borrowers to get mortgages. The administration may call on Castro to do more on behalf of potential home buyers if the U.S. housing market does not gain momentum soon. The Federal Housing Administration (FHA), which insures home loans to make financing available to first-time and other types of home buyers, falls under HUD jurisdiction and will likely be influenced his policy goals.

“HUD is the department of opportunity,” said Castro on the day of his confirmation. He added that he looks forward to creating opportunity for Americans, whether in pursuing their dreams of home ownership or boosting the quality of neighborhoods.

Castro is likely to deal with a number of heated political issues. For example, several Republicans criticized FHA after it required for the first time a $1.7 billion infusion of government funding in 2013 to cover a shortfall in its insurance fund caused by many of the loans that it backed becoming delinquent.

“If the FHA was a private financial institution, likely somebody would be fired, somebody would be fined, or the institution would find itself in receivership,” House Financial Services Chairman Jeb Hensarling (R-Texas) said last year after the announcement was made.

As he navigates the political waters, Castro will no doubt call upon his past experience as a mayor, handling the demands of a wide variety of constituents.

About Author: Derek Templeton

Derek Templeton is an attorney based in Dallas, Texas. He practices in the areas of real estate, financial services, and general corporate transactional law. His experience includes time as an Attorney Adviser for the U.S. Small Business Administration and as General Counsel for a nonprofit organization in Dallas. A self-avowed "policy junkie," he has a keen interest in the effect that evolving federal policy has on the mortgage, default servicing, and greater housing industries.

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