Shaun Donovan, the second-longest serving secretary of the Department of Housing and Urban Development, plans to leave his post after more than five years on the job. Donovan, 48, is moving on to lead the White House’s Office of Management and Budget, if confirmed by the Senate. He appeared before two Senate panels Wednesday for confirmations hearings, but the lawmakers have yet to give him their approval.
During his tenure at HUD, Donovan became a point man for several key administration initiatives – leading everything from President Obama’s Hurricane Sandy Task Force to an inter-agency effort designed to reduce homelessness. But perhaps his most high-profile role involved steering HUD through the housing crisis by overseeing the Federal Housing Administration, the foreclosure-prevention programs and a landmark $25 billion settlement with mortgage servicers. Even before HUD, Donovan was known for his housing policy expertise, having served as commissioner of the New York City Department of Housing Preservation and Development.
In an interview with The Washington Post, Donovan reflected on his time at HUD. This interview was edited for clarity and length.
What’s one of your most memorable moments at HUD?
One would be when I walked into the Oval Office to tell the president that we had a deal on the $25 billion mortgage settlement. He gave me a big hug. It was the most complex negotiation I’ve ever been involved in. I told him it was one of the most important things we could do to move the housing market forward, and that, in fact, turned out to be true. The settlement delivered not just what we promised the president but far more. 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.
What was your role in that settlement?
I was leading the negotiations, and in fact, every other Friday for a number of months I hosted a meeting in my conference room, usually with cookies, with CEOs of the five mortgage companies that were part of it, and a number of the federal agencies and the leaders of the state attorneys general. I was intimately involved.
You’ve spoken passionately about homelessness, and you’ve even hit the streets to take part in a national homelessness count. Give us some background on your interest in this topic.
This issue goes right back to why I got started in housing. I grew up in New York, in the wealthiest country on Earth, and I saw families sleeping on our streets in Manhattan when I was walking to school as kid. It just stuck with me. That led me to volunteer at a homeless shelter in college and onto the path that I followed. It’s been an incredible experience for me to be able to lead the [homelessness] effort. It’s the first time an American president has ever said we’re not just going to put a band aid on homelessness but to end it.
A sizeable portion of the president’s budget request for HUD is geared toward helping the homeless, but the administration won’t be able to meet its goal of ending chronic homelessness by 2015. Why is that?
Our plan is called Opening Doors. It had a commitment to end veterans' homelessness and chronic homelessness by the end of 2015. We are on track with veterans' homelessness. In the first three years we lowered it by 24 percent, and we’re continuing to see progress on that around the country. Last week, with the first lady at the White House, we launched a mayor’s challenge to end veterans' homelessness. We actually think that goal is within reach.
Chronic homelessness, because of sequestration and other budget shortfalls, we have moved that goal to the end of 2016 and put in the president’s budget request adequate funding to allow us to get there. (In fiscal 2013, HUD had to cut about 5 percent of its budget in just seven months because of sequestration.)
For the chronically homeless, the most important tool we have is something called “supportive housing." It used to be that somebody who is struggling with mental health or substance abuse issues was put in a program while they’re in shelter or maybe given transitional housing, with the goal that if they take steps to get sober or get into job training that they’ll get a place to live at the end of that process. That’s absolutely backward. You should get people into housing right away. It’s much easier for them to stabilize their lives when they’re stably housed. 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. We’ve lowered chronic homelessness by 16 percent over the last three years, even with limited funding and coming out of the worst economic crisis of our lifetimes.
How did your work on the Hurricane Sandy task force inform the administration’s disaster relief policies?
It’s important to look back to Hurricane Katrina, and the fact that when we took office, even though it was three and a half years later, it was fresh in the nation’s mind. One of my first trips there was with (then-U.S. Homeland Security Secretary) Janet Napolitano, and many of the neighborhoods looked like the storm had happened the day before. The president asked me to do a review with Janet on national recovery, which led to the National Disaster Recovery Framework that we use today to handle long-term recovery from these major disasters.
Little did I realize at that point that a few years later, a similar kind of storm (Hurricane Sandy) would hit my hometown. I have friends who lost their homes, their businesses. In Brooklyn, I have a friend whose daughter was killed by a falling tree in the storm. Sandy was deeply personal to me in a way that I had never imagined when I started working on Katrina. I never realized the first time the federal government would fully implement the framework would be in a hurricane hitting my hometown. My wife is from New Jersey. I worked in New Jersey. I took my driver’s test as a high schooler on Long Beach in Long Island. Long Beach was devastated by Sandy.
What are some of the initiatives created through the framework?
One of the most important things I heard from residents of New Orleans is that the goal is not just rebuilding what was there. It’s rebuilding stronger and smarter. I’ll never forget going to visit a New Orleans school that had been devastated, and the mayor said FEMA will only give me money to build the same school in the same place, and it doesn’t make sense. With Sandy, we looked at building what makes sense today and what makes sense in protecting against the next storm. We took the best possible science and made it available to families in a way we never had before.
We have tools where you can click on a Web site and figure out what the sea level would be on a street 50 years or even 100 years into the future, and be able to think about how to rebuild that community differently. We created a Rebuild by Design competition, which attracted 148 teams from different countries that included the best scientists, engineers and architects for ideas on how to rebuild. CNN awarded it one of the best ideas of 2013. We awarded over $900 million to the winners and implemented it. 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.
The housing market’s recovery has sputtered this year. What can the administration do to help the market get back on track?
We have to remember that we were facing the worst housing crisis of our lifetimes 5 ½ years ago, and that we’ve made real progress that’s made a difference for families who were about to lose their homes, and added trillions of dollars in housing wealth for people who lost equity in their homes. It’s important to put that in context. On the question of what more can we do, I think 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.
(A brief explainer on housing finance reform: The government took control of Fannie Mae and Freddie Mac, the mortgage finance giants, in 2008 to keep them solvent and ward off a collapse of global financial markets. Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) introduced legislation that would shut down both companies and shift the risk of mortgage lending away from taxpayers to the private sector. The measure passed the Senate banking committee but is unlikely to get a full Senate vote this year.)
You once said that the Johnson-Crapo housing finance measure “might be the only real chance we have this decade to achieve reform.” Why is that?
There’s a real urgency to get this done for a number of reasons. The longer we wait for housing finance reform, the more uncertainty there is in the market, adding to the challenges that are making it difficult for people to get loans today. Getting a bipartisan bill through the banking committee was a major accomplishment, and if we don’t continue that momentum, I’m concerned that the opportunity will be lost with changes in committee or in seats after the election this fall.
If Congress does not act on housing finance reform, are there other steps the administration can take to jump-start the housing market?
We’ve done a lot of housing-specific work that has helped the market recover, but many things that are needed aren’t direct housing measures. Housing is intimately linked to factors that drive the economy more broadly. The most important things to accelerate the housing market’s recovery are to grow 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. Immigration reform would be a critical step in accelerating the housing market, as well. It would create millions of new homeowners and home buyers over the next decade.
The president has nominated Julian Castro, the mayor of San Antonio, to succeed you at HUD. What are the biggest challenges you think Castro will face at HUD if he’s confirmed?
He’s going through the confirmation process, and I don’t want to get into specifics about what he ought to do at HUD. I will say he’s a great choice, and he’s demonstrated, through a range of the work that he’s done in affordable housing and in the broader revitalization in San Antonio, that he understands not just how to improve housing in people’s lives but to make our cities and all our communities more vital places.