Donovan: Not Every American Should be a Homeowner
Housing and Urban Development Secretary Shaun Donovan says he saw the signs of a national housing crisis during his tenure as New York City's housing chief and suggests in an interview with The Washington Post that home ownership is not for everyone.
"Not every American wants to be, nor should be, a homeowner," Donovan told The Post's Lois Romano for the latest installment of the Voices of Power interview series with Obama administration officials. (Watch portions of his comments in the video clip above.)
"I think what's critical, though, what got us into the mess was a set of mortgage products that shouldn't be offered," he said. "We shouldn't make loans to people when we know they can't afford them. We shouldn't set people up for failure by having rates that increase dramatically. We shouldn't be making loans that are only successful if house prices keep rising indefinitely."
Elaborating further, Donovan said "The real problem here is not whether or not to become a homeowner, but can you find a home that you can afford and a mortgage product that will help you be successful in the long term."
Donovan said his first indications of wider housing issues came in 2005, when New York City began a program to help families taken advantage of by lenders.
"I think there were definitely some early signs that we were headed for trouble in the housing market," he said. The city later expanded the program to provide counseling to more residents.
"One of the things that you see...that oftentimes, families who are in this situation of being behind on their mortgage, they're paralyzed with fear. They are embarrassed to pick up the phone to ask for help, and so we have to get the efforts right" on loan modifications, Donovan said.
Read and see more of Romano's interview with Donovan tomorrow in the pages of The Washington Post and at washingtonpost.com.
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